Ukraine crop likely to halve, warns Zelensky
Kyiv says the fighting with Russia threatens the coming harvest, as fears of a global food crisis grow
Volodymyr Zelensky said Ukraine’s harvest could be halved by Russia’s invasion which could trigger a global food crisis. The Ukrainian president warned of a catastrophic impact on this year’s harvest in the “breadbasket of Europe” but insisted the country was finding an alternative way to deliver its grain. John Rich, of MHP, Ukraine’s largest agricultural produce company, said ongoing hostilities could hit the rebuilding of ports and roads crucial to restarting grain exports.
VOLODYMYR ZELENSKY has warned that Ukraine’s next harvest could be halved by Russia’s invasion, a toll which could trigger a global food crisis.
The Ukrainian president warned of a catastrophic impact on this year’s harvest in the “breadbasket of Europe” but insisted his country was finding an alternative way to deliver its grain.
His comments came as John Rich, chairman of MHP, Ukraine’s largest agricultural produce company, said that a push by Ukrainian forces in the south of the country – and an associated uptick in hostilities – could hit the rebuilding of ports and roads that are crucial to restarting grain exports.
The blockade of Ukrainian ports by Russia has cut off the giant producer of wheat, corn and sunflower seed and hampered production, leading to global shortages and price rises.
Mr Zelensky said on Twitter yesterday that the Ukrainian harvest threatens to be “twice” as small as normal.
He said their main goal was to prevent a global food crisis and find an alternative way to deliver grain.
On Friday, he said that grain shipments were ready and waiting since a United Nations brokered pact between Ukraine and Russia was signed last month to resume exports for the first time since the start of the war.
However, Mr Rich, an Australian executive and agribusiness adviser for the World Bank, said that MHP would employ a “wait and see” approach and stockpile produce.
He said: “Reality tells me this is not going to be an easy task. The spirit is there by the Ukrainian government to try and get all this grain out.
“Everybody is trying to do their best. But you only can do within the physical limitations. First, the ports have to be repaired. Second, we have road infrastructure to the ports that have to be repaired. Third, we have to have those ports de-mined.”
Ukraine accounts for 12pc of global wheat exports, 16pc of corn and 18pc of barley. Its exports were enough to feed up to 400m people globally before the war broke out.
Mr Rich estimated that the wheat harvest will be 20-21m tons compared to up to 40m last year while corn production will fall from 38m tons to 27m and sunflower seed output will drop by 8m tons to 9m.
He said: “The next month will make the real situation clearer. But we must be cognisant of the fog of war being raged in the south, where these ports are in the vicinity of the Ukraine counter-attacks using the latest Western ordinance and weaponry.”
Western military sources say that a counter-offence in regions in the south of the country such as Kherson is “gathering pace” as forces use Us-supplied long-range rockets to cut it off from the rest of the Russian-occupied territories. The military efforts will likely define whether grain exports can go ahead in any meaningful way, Mr Rich said.
“It very much depends on the war. And we all know that particular region is going to be quite hot [militarily] because Ukrainian forces are in a much better position right now to start reclaiming land from that region,” he said.
“If it is going to be hotter, militarily, in an area we could really encounter significant difficulties in relation to the export of that grain.” He added that companies trying to export grain were now storing it rather than attempting distribution. “The right strategy for companies such as ourselves is to store, sit and wait. And see if the system starts to work,” he said.
Meanwhile, Mr Rich was sceptical about comments made last week by the Lloyd’s of London chief executive that the insurance market would underwrite the dangerous sea transit of millions of tons of grain across mine-laden waters. John Neal had said: “The cover is literally being put in place today.”
Premiums would be 15-20pc higher and would not need government guarantees, he added.
But Mr Rich said: “Nobody is quoting war premiums [to us]. I believe that insurance companies will need some kind of guarantee from governments to get this [grain] out.
The MHP executive said that insurance for transporting grain via river channels was “extremely expensive”.
“Under normal circumstances, there would be no war premium. There is a lot of talk, but it hasn’t happened.”
‘Reality tells me this is not going to be an easy task. Everybody is trying to do their best’