Logistics “eats up” a significant part of farmers’ profits. Its level in the sale price of grain increased to 40% from the pre-war 15%. Since the start of the grain corridor, the situation has improved somewhat, but the issue remains critical.
How much does agricultural logistics cost in wartime conditions?
With the beginning of the war, it was possible to talk about increasing the logistics rate by 3-4 times. And here we must not forget about numerous downtimes, which could not be predicted. They also added at least UAH 250-500/ton to the cost of logistics.
If you look at the level of prices and logistics rates in the spring of 2023, it is about 40%. Before the war, the operational level of logistics in the sales price was 15-20%, depending on the direction.
Over the past year, prices for logistics have gradually decreased due to the opening of the grain corridor and the unblocking of Ukrainian seaports. But they did not reach the pre-war level.
Europe is oversaturated with Ukrainian grain
As for alternative export routes (by road, railway and small ports of the Danube region), their share continues to gradually decrease. Now it is about 20% against 27-28% at the beginning of the year.
Currently, Europe is oversaturated with Ukrainian grain. It has become more difficult to export it to the nearest countries. So, in the next few months, the most promising way of export will still be the grain corridor, which allows to deliver grain to Asia, China, etc.
The main problem of alternative overland routes is a larger logistical burden and higher cost of transportation.
There are problems with the ability of the infrastructure of the partner countries to cope with the volumes of Ukrainian grain exports. Aты кто ты кто ты тыs of March 2023, 14.7 million tons of Ukrainian products were exported through Romania, 5.8 million tons through Poland, and another 3.5 million tons through Hungary.
At the same time, at the beginning of the war, these paths became lifesaving, when the grain corridor was not yet operational. Today, the monthly throughput via alternative routes is an average of 4 million tons.
Further reduction of logistics prices
“UkrAgroConsult” analysts are sure, that we will witness further reduction of logistics prices due to decrease in the demand for transportation from farmers and trading companies. Moreover, next year there will be a fight for a customer among logistics companies because of lower crop.
According to Ukrainian Grain Association, the area under crops will decrease by about 3 million hectares compared to last season. As for the volume of the harvest, it will depend on the availability of fertilizers, plant protection products, fuel, etc. According to optimistic estimates, the harvest may reach about 64 million tons of grain and oil crops.