Russia’s full-scale invasion of Ukraine has significantly disrupted the Ukrainian agriculture sector and threatened global food security.
Andriy Vadaturskyy, chief executive of Nibulon, spoke at an event yesterday, which was run by the Atlantic Council, a think tank based in Washington, DC. He advocated for a ‘financing corridor’ to ensure Ukraine’s agricultural industry survives the war and continues to play a critical role in the country's economy and global food security.
The CEO urged international partners to provide increased financial support and flexibility to allow Ukraine’s grain exporters and other hard currency earners to access new financing.
Currently, Ukrainian agribusinesses have no access to international financial markets and face prohibitive borrowing rates at home. This means that there are limited resources available to prepare for the next agricultural season and to invest in strategic solutions to overcome the disruption caused by the war, he explained.
“There has been significant international support for the grain corridor, but Ukrainian agricultural businesses also need a financing corridor. The main task for agribusinesses is to survive the war, then we must prepare for future innovation, investments, and growth. None of this will be possible without financial guarantees.”
In Vadaturskyy’s view, a financing corridor for Ukrainian agricultural businesses could include flexibility on debt repayments and interest payments, partial guarantees from G7 and international financial institutions, concessional credit lines, and fresh financing for urgent working capital needs as well as targeted investments to counter the effects of the war.
Prior to the conflict, Ukraine and Russia were responsible for roughly 30% of global wheat exports and around 20% of corn exports. Moreover, they also accounted for nearly 80% of all sunflower seed and oil exports, according to data from CRM Agri.
Slowdown in Ukrainian grain exports
The Black Sea grain corridor was renewed mid-November until March next year, but activity continues to be sluggish since the grain deal extension, according to a report in Argus Media. Slow vessel inspections and a general decrease in their number mean a reduction in exports of agricultural products out of Ukraine.
There are now fewer daily vessel inspections by the Joint Co-ordination Centre (JCC), their number having dropped to about 3.5 per day for inbound ships and three per day for outbound vessels in November, with the Russian side deliberately slowing them, alleged Ukraine's deputy infrastructure minister, Yuriy Vaskov, earlier this week.
Last month, COCERAL, the EU association of trade in cereals, oilseeds, rice, pulses, olive oil, oils and fats, animal feed and agricultural supplies, expressed concern over the long-term possibility of exporting Ukrainian grain and oilseeds to the world market. It said a signifcant escalation of the war on November 23, with Russia firing over 70 cruise missiles across the country, caused major damage to infrastructure. "This left over half the country without power, which resulted in ports becoming inoperable, including those on the Danube River. Continuous attacks on infrastructure are impacting the viability of grain exports.”