The agricultural industry of Ukraine is one of the most profitable in terms of economic development. Before the full-scale invasion, the industry provided 40% of the country’s income. Ukraine held a leading position in the sale of sunflower oil, rapeseed and barley. Trade on the world market brought the country an average of 22 billion US dollars of profit annually.
But the war did not pass by its negative impact on this industry either, throwing Ukrainian farmers considerable trials. Burnt fields, destroyed elevators and agricultural machinery, mined fields, damaged soil – all these are the consequences of barbaric actions of the aggressor.
The state of the agricultural industry during hostilities
At the beginning of the full-scale invasion, the amount of damage was already 34.25 billion US dollars. As a result of hostilities, farmers suffered heavy losses: 15.73% of granaries were completely destroyed, entire fields – 350,000 hectares – were burned. As noted in the reports of the State Commission of Inspection, at the beginning of the full-scale invasion, 3,000 fires were recorded, namely 690,000 hectares of agricultural land and 270,000 hectares of forest.
According to statistical data, provided by the site, as of 2022, 13 million tons of granaries were in complete destruction. In 2023, the situation stabilized somewhat, as grain storage was restored for 49.26 million tons. However, 8 million tons of capacity are temporarily lost or completely damaged. Mykolayivsk (1,832.5 thousand tons), Zaporizhzhya (1,828.7 thousand tons) and Kherson regions (1,686.5 thousand tons) suffered the greatest losses. Damage to the elevators made it impossible to store grain crops and led to serious spoilage of products.
As of June 2023, it was established that the total capacity of operating elevators in the country is 11.757 million tons.
In 2024, an amount of 1.8 billion dollars is calculated in damages from damage to granaries, but the country is no longer in a critical state due to the problem of granaries, according to the president Associations of Elevators of Ukraine, Oleg Klymenko. Since the hostilities are concentrated in the east and south of the country, the state plans to place its main forces in the west.
According to research According to the Ministry of Agrarian Policy of Ukraine, the total amount of losses of the agro-industrial complex as of 2022 was 6.6 billion US dollars. In 2023, this figure increased to 8.7 billion US dollars. At the same time, losses from production reduction in crop production in 2022 amount to 11.2 billion US dollars, and in livestock production – 348.7 billion US dollars. In 2023 – 1.26 billion US dollars and 0.98 billion US dollars, respectively. In 2024, losses from a decrease in crop production will already amount to $35.1 billion, and livestock production will amount to $5.6 billion.
According to data According to the Food and Land Use Research Center of the Kyiv School of Economics, the total amount of losses suffered by the agricultural industry as of June 2024 is $10.3 billion. This is 18% higher than the amount in 2023 ($8.7 billion). Moreover, the war caused the greatest damage to agricultural machinery. During the hostilities, 181,000 units worth $5.8 billion were damaged, which exceeds the figure for 2023 ($4.7 billion).
Damages from soil loss should be noted separately. In Kharkiv region alone, 4.2 thousand hectares of arable land were damaged as a result of explosions. As a result of the movement of military equipment, 3.4 hectares of soil was compacted. 28.2 thousand hectares are considered unsuitable for use. As stated in the study of the Society of Researchers of Ukraine, losses from soil loss amount to UAH 37 billion.
In what conditions do Ukrainian farmers work?
According to NASA data, there is a significant amount of abandoned arable land on the territory of Ukraine. About 84,000 pieces of equipment were destroyed. In 2022, 2.8 million tons of grain were stolen and illegally exported by the occupiers. 9.4 million tons of granaries were damaged. Due to the temporary occupation, a certain number of granaries remains out of reach. Fuel, fertilizers and plant protection products totaling $95 million were appropriated by the invader. The total amount of losses of the agro-industrial complex is estimated at 6.6 billion dollars, which is 23% of the entire value of the industry’s assets. In addition, the blockade of export routes caused a shift from seaports to rail and trucks, which affected shipping costs of US$30 per ton. As a result, grain exports in the country decreased by 5 times. The grain deal improved the situation somewhat, but transportation costs remained unprofitable.
According to the results of the study, the loss of farmers’ income exceeds the damage caused by the Russian Federation by 5 times. In such conditions of uncertainty, farmers are trying to restore the functionality of industry.
Perhaps the most acute problem for all farmers now is the problem of demining fields. According to the Ministry of Economy of Ukraine, 5.6 million hectares of fields are mined on the territory of Ukraine. This means that fields lie idle and farmers lose about $2.5 billion in revenue. The demining procedure is quite complicated, step-by-step (examination, detection, disposal of explosives) and expensive. Yes, the cost of demining 10,000 hectares costs about 60,000 dollars. Accordingly, the greater the number of mines, the longer and more expensive the demining process. Therefore, the help of international partners is directly related to the promotion of this process in the difficult territories of the country. As it turned out, this test put Ukraine in a somewhat difficult situation. Until recently, the state was forced to purchase equipment for sappers in Zimbabwe. But currently the situation has improved, and our own manufacturers are already meeting the needs.
As of 2023, 40,000 square km of land has been returned to use, which is 23%. Currently, 5.6 million hectares are still dangerous for exploitation, so in 2024, the demining process will continue – 305,000 hectares have already been demined.
According to the Minister of Economy Yulia Svyridenko, the cost of complete demining of Ukraine may reach 50 billion dollars. For the state budget and farmers, these are very large funds, so international aid cannot be dispensed with. However, foreign donors finance the salaries of sappers, training and the purchase of demining machines. As of February 24, 2022, over $300 million in specialized aid has already been allocated to Ukraine, which is significantly more than the government allocates. Thanks to it, since 2022, the number of mine action operator organizations has increased from 4 to 17, and another 29 are undergoing certification. The number of sappers tripled in 2023, and the number of machines for mechanized demining is planned to increase to 99 in 2024 (there were only a few of them before the war). The government has planned to allocate UAH 2 billion for humanitarian demining in 2024, for which operators will compete in Prozorro tenders.
According to the study “UKRAINE: The impact of war on the profitability of agricultural production”, in general, the situation with the cultivation of grain crops in Ukraine as a result of hostilities has become unprofitable. Although compared to 2022, the situation in 2024 improved. For two years in a row, farmers are forced to save on fertilizers, as costs in this direction have increased by 28%. In comparison with 2022, in 2023, the costs of exports to the ports in Odesa decreased by 33%, through the ports to the Danube River by 40%. In 2024, compared to 2023, the ports of Odesa region increased their profitability, which gave farmers the possibility of stable grain export. In 2024, the profitability of poultry and milk production increased, but beef and pork remained unprofitable, due to significant losses of livestock and reduction of pastures during hostilities.
According to forecasts farmers expect a slight increase in the yield of wheat and stable profitability of sunflower oil in 2024. At the same time, the profit of corn and barley will decrease. In connection with the costs of electricity and fodder, a decline in profits in animal husbandry is expected.
The war greatly complicated the functionality of the agricultural industry and put farmers in a rather difficult situation. Farmers lose profits from idle mined fields, significantly lose fuel, save on fertilizers and suffer from the impossibility of preserving grain receipts in dilapidated granaries. Slowdown of agricultural work due to mining of fields and lack of damaged equipment has also occurred in the last two years. But Ukrainian agrarians showed true resilience and endurance, putting their own stocks into operation and through austerity were able to bring the structure of the agricultural industry to the path of profitability. Despite all the bad weather, Ukrainian farmers continue to cultivate the fields and sow them in order to satisfy the population’s needs for food products.
