Kernel agricultural holding CEO Yevhen Osypov expects Ukraine's grain production to decline by 12 million tonnes next year in a stress scenario, due to a possible reduction in acreage by farmers if a solution to resume exports is not found within the next six months, an Interfax-Ukraine correspondent reports.
"It is difficult to make such forecasts today. We hope that some solution will be found within the next six months. If a physical solution is not found, then objectively the planted areas will be reduced. In such a stress scenario, we estimated this as an underproduction of 12 million tonnes of grain next year," he said at the Forbes Ukraine Economic Resilience Forum in Kyiv on Wednesday.
According to Osypov, with the seaports closed, Ukraine will be able to export only about 20 million tonnes out of the 50 million tonnes of agricultural products required, or 40% of the necessary volume, meaning companies have to shift to other business models.
"Based on our own experience within the most recent corridors, efficiency was about 50%, which is insufficient, so new routes need to be sought. Because for business now, this is a matter of building a new business model. In other words, the old business model does not work there. Therefore, for our part, we are focusing on processing and exporting processed products," Osypov said.
According to him, under its new business model, Kernel is focusing on exporting smaller volumes of products with higher added value, while retaining the ability to purchase oilseeds from Ukrainian farmers, settle payments with them and export processed products.
Osypov also added that at present, due to restrictions related to security and logistics, as well as external factors, it cannot be expected that the Danube ports will be able to handle the volumes of cargo that Ukraine had in 2022-2023.
As reported, the U.S. Department of Agriculture (USDA), in its September report, raised its estimate of wheat production in Ukraine this year by 0.6 million tonnes from its August forecast, to 26 million tonnes, due to record yields. It also raised its estimate for other grains, excluding wheat and corn, by 0.5 million tonnes, to 7.29 million tonnes, while maintaining its corn production forecast at 31.8 million tonnes. Thus, the USDA estimates Ukraine's total grain production this year at 65.09 million tonnes.
