In Survival Mode: Why Ukrainian Farmers May Need to Revise Their Plans for the Fall Planting Season
7 August 17:37
ANALYSIS FROM 
Ukrainian farmers are harvesting their crops, preparing as best they can for the next planting season, and awaiting support from government officials. The government must help agricultural producers weather the current conditions, in which export opportunities are limited and grain prices are falling. "Komersant Ukrainian" investigated how the government is supporting farmers.
Due to the blockade of Black Sea ports, exports from Ukraine of approximately half of this year’s projected total volume of grains and oilseeds are now at risk.
“The situation is extremely difficult. In some respects, it is even more difficult than it was in March–April 2022,” said Agriculture Minister Taras Vysotsky in an interview with Reuters, referring to the current state of affairs and the situation during the first months of Russia’s full-scale invasion.
According to the minister, Ukrainian agricultural producers are already feeling the impact, as prices for oilseeds and grains have fallen by an average of 30%. Direct losses for Ukraine’s agricultural sector this year could range from $1.5 billion to $3 billion.
Ukrainian farmers have their own calculations, based on the economics of their own farms, which dictate their course of action. Here’s how Ivan Yakub, head of the “Sonata” farm and chairman of the Chernihiv Region Farmers’ Association, describes the situation.
“Farmers are currently holding onto their harvest and not selling it. Because if they sell at the current price, they’ll operate at a loss. They might have to plant less to cut costs. We’d like to see the ports up and running. And we’d like our so-called partners not to block our borders but to help us export our grain. Especially since many regions in Europe are experiencing drought and crop failures this year,” says the farmer.
Ukrainian government officials—who are, in fact, responsible for negotiating with those same European partners—are trying to increase the capacity of alternative logistics routes: via the Danube and overland, that is, through the country’s western borders. At the same time, everyone realizes that these alternative routes—whose total throughput capacity will, at best, amount to only about 50–55% of the monthly capacity of the Black Sea ports—can only alleviate the export logistics situation, but not resolve it. In fact, the measures announced by government officials in recent days promise farmers exactly the same thing—namely, some relief—for the time being.
Anti-Crisis Initiatives
The first step, which government officials believe will support farmers, was to update the minimum permissible export prices for grains and oilseeds. The government states that this will allow for the additional logistics costs caused by the war to be factored in and ensure the continuity of Ukrainian agricultural exports. A government resolution stipulates that in August 2026, when determining the minimum permissible export prices for certain types of products, a coefficient of 0.714 will be applied relative to the base price. This applies to wheat, rye, barley, oats, corn, soybeans, rapeseed, sunflower seeds, as well as sunflower, soybean, and rapeseed oils and certain products derived from them. In fact, this decision will facilitate the conclusion of some export contracts. Experts describe it as a technical measure. Bogdan Kostetsky, co-owner and chief operating officer of the analytical firm Barva Invest, explains:
“With the blockage of deep-water ports, we faced a situation where it was impossible to clear goods through customs because the prices that had formed at alternative export hubs—on the Danube and at the borders with Romania and Poland— were significantly lower than the published minimum prices, since they factored in more expensive logistics. And what our government officials have so vividly and publicly touted—this rapid reduction in minimum prices—is absolutely not a solution for farmers. This decision simply makes it possible to process exports at an abysmally low price. Consequently, it is merely a way to resolve a bureaucratic impasse related to the rising costs of export logistics. Although… If we set aside the low price that farmers receive, then, in principle, the very fact and the opportunity to export and complete customs clearance are normal and, in principle, positive,” the expert notes.
In addition, farmers have been promised loans secured by their harvested crops. As Minister of Agrarian Policy Taras Vysotsky explained, such loans are intended to help farms carry out the fall planting season without being forced to sell their produce at below-market prices.
“We must urgently develop and implement an affordable financing program for agricultural producers—essentially to support the planting campaign. They will be able to secure funds using their existing grain as collateral, weather the crisis, and avoid selling grain at prices significantly below its value on international markets,” emphasized Taras Vysotsky.
He reported that the ministry has already held consultations with representatives of the agricultural sector and banks. The next steps involve drafting the relevant decision at the Ministry of Economy and the Ministry of Finance and submitting it for consideration by the Cabinet of Ministers. Denis Marchuk, deputy chairman of the All-Ukrainian Agrarian Council, comments:
“We have previously stated the advisability of such a decision. It was developed jointly. In fact, farmers are currently not receiving any money for selling their produce. This is because they are operating at a loss given the current market price. And farmers still need to harvest late crops and plant winter crops. This requires significant working capital, which they effectively lack. And the banking system, in theory, needs to operate with some form of collateral. Therefore, in fact, a loan secured by the “grain group” with an increased collateral ratio is actually a pretty good, favorable outcome,” the expert emphasizes.
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Next steps
The government’s anti-crisis measures have not yet been exhausted. For example, at the All-Ukrainian Agrarian Council, in addition to preferential loans to replenish working capital for the fall planting season, for instance, officials were urged to consider providing state guarantees for loans, revising certain terms of the “5-7-9%” program, restructuring existing agricultural loans, and so on. The All-Ukrainian Agrarian Council also points out that a reduction in export opportunities due to the shutdown of seaports could lead to a surplus of produce on the domestic market. And, as a result, a shortage of storage capacity. We need to prepare for such a turn of events. Denis Marchuk, deputy chairman of the All-Ukrainian Agrarian Council, continues:
“Looking ahead to the fall, when we’ll begin harvesting corn—which will total more than 33 million metric tons—our storage shortfall could reach up to 10 million metric tons. We’ll have to resort to using plastic sleeves. We saw this happen in 2022–2023. I know that large businesses have already signed contracts with companies to purchase these plastic sleeves. We are reaching out to international projects to help our country with this issue, so that the government can then transfer these sleeves to frontline regions, where the situation is actually the worst. Local farmers thought they would harvest and sell their crops, but there are no shipping options, and they lack storage facilities because everything has been destroyed. That’s why this is a very important area of support,” the expert notes.
The government has also announced changes to the “5-7-9” program that will allow Ukrainian farmers to access preferential loans to replenish their working capital. Specifically, a government decision has removed the restriction on loans for agricultural activities—which previously limited the use of working capital to no more than 20% of the loan amount—and reduced the interest rate on such loans from 15% to 10% per annum. However, some “bottlenecks” remain. Bogdan Kostetsky, co-owner and COO of the analytical firm Barva Invest, explains.
“The government’s debt to banks for compensation—the difference between the 18 percent market rate and the 5–9 percent rate under the ‘5-7-9’ program—stands at around 9 billion hryvnias. Officials have said there is no money in the budget for this. But that’s disingenuous. It’s only 200 million euros. I think everyone knows what kind of support funds the country is receiving. I know that relevant decisions are currently being worked out. I just wish they would be adopted more quickly,” the expert emphasizes.
He also explains why a faster response to the situation is needed.
“When talking to many farmers, I hear that they are now critically and very seriously reevaluating their planting plans. For example, we need to start sowing rapeseed in just a week. And if no decisions are made, we’ll face a massive shortfall in winter crops. And this isn’t just an emotional decision on the part of farmers: circumstances are simply such that they have to switch to survival mode and even ignore crop rotation, wait for spring, and plant more sunflowers—which is actually very harmful to the soil. They’ll have to plant more soybeans and even more corn, even though the carryover stocks of corn are already enormous. In other words, the situation is critical, and solutions need to be worked out very quickly,” the expert emphasizes.
Funds from the European Union could help Ukrainian farmers carry out this year’s fall planting campaign. Government officials have already submitted a proposal to the European Commission. The amount in question is 220 million, which is intended to cover interest on loans for Ukrainian small and medium-sized agricultural producers.
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