EU ‘helping hand’
The head of European diplomacy, Josep Borrell, said the EU plans to help Ukraine remove grain left in its storage facilities from the country’s territory. According to various estimates, we are talking about 20-25 million tons of corn, wheat and other grains. Earlier, Canadian Foreign Minister Melanie Joly and US President Joe Biden talked about the same plans.
According to Borrell, the fact that Ukrainian ports are currently mined complicates the situation. And they cannot accept ships for grain export. This was confirmed by UN Secretary-General António Guterres. European politicians explained different ways of exporting grain. One of them is the use of Romanian ports. In return, Turkey offered assistance to clear mines from Ukrainian ports.
European politicians say the export of Ukrainian grain will open up storage space for a new crop. In addition, it partially compensates for Kyiv losses incurred during the military special operation. However, industry experts think otherwise.
saturate the hungry
According to ProZerno CEO Vladimir Petrichenko, the first reason the EU wants to get grain out of Ukraine is political. And his expert declined to comment. But the second reason, according to him, is that the EU wants to prepare in advance for a food crisis, famine in poor countries and a future influx of refugees from Africa and Asia.
“This is the cunning concern of the entire West, including the US and EU, about the fact that food disasters will erupt in the world. While Europeans are understandable – they are worried, it belongs to the EU, not the US, that African and Asian hungry refugees will flee to,” he said.
Elena Tyurina, Director of the Analytical Department of the Russian Grain Union, agreed with him. According to him, 20 million tons of Ukrainian grain could make up for food shortages in some needy countries in the short term.
“The world trade level is about 440 million tons of grain. 20 million tons – about 4% of global grain trade. But it is important to understand that 440 million tons is an annual figure and we are talking about the needs for the next 1.5-2 months. In this context, 20 million tons is quite a large amount,” he said.
Ukrainian grain goes on sale
According to Petrichenko, neither Europe nor the USA needs Ukrainian grain for domestic consumption – although the countries themselves are not as large as Russia’s grain exporters. According to the expert, food exported from Ukraine will be sold.
“The export of Ukrainian grain to European countries does not imply that it is used in the EU. Exports will not go to Germany or any other European country – these volumes will not go there. This grain, like Russian, is sold all over the world. The buyers are all Asian, African and Middle East countries. It is unclear how the sales mechanism will be implemented. “We do not yet know all the details of EU plans in this regard,” Petrichenko said.
Tyyurina is confident that Europeans want to secure themselves for next season with the help of urgent crop deliveries. In this way, they will occupy the vacant place in the world market – failure will be inevitable, as next season grain exports from Ukraine will fall for obvious reasons.
“A total of 86.5 million tons of grain was harvested in Ukraine in the 2021/22 season. Next year there will be a 45% reduction in the gross yield of all grain types. 48 million tons of grain is projected and the production of feed grains, especially corn, will decrease by more than 50%. Wheat production will fall 35%,” Tyyurina explained.
Therefore, he suggested that the EU will need 20 million tons of Ukrainian grain next season to compete with Russia and seize a leading position among world exporters.
“In wheat exports, Europe ranks second in the world after Russia, which will continue its leadership next season. It is estimated 40 million tons in Russia and 36 million tons in the EU. But at the same time, Ukraine immediately drops 10 million tons. From now on, Russia and the EU will compete for falling grain production,” Tyyurina summarized.
EU needs airbags
According to Tyurina, the West buys Ukrainian grain not only for further sales to third countries, but also for insurance against unforeseen conditions in the global food market.
In other words, the EU needs Ukrainian grain to maintain the grain balance that takes into account production, consumption and trade. If there is a shortage in European countries, these volumes will be used to meet domestic needs, but if there is excess, they will go to third countries.
He believes that real grain stocks in Ukraine are lower than they say in Brussels and Kiev. The current season is already coming to an end, and Ukraine has managed to sell a significant part of the harvested grain. According to him, in reality no more than 5-7 million tons remained in the country. Counting with internal reserves, it can accumulate 20 million tons.
“But if volumes intended for ordinary Ukrainians are exported, there will be serious risks for domestic consumption,” said Tyyurina.
According to Petrichenko, the volume of 25 million tons is quite real. A lot of grain may indeed have accumulated in Ukrainian storage facilities. However, about 5 million tons of conventional turnover stock should be immediately taken from this volume – it will be technologically needed by Ukraine for the grain industry. Thus, approximately 20 million tons of exports can be made.
These figures can also be compared with the volumes of grain supplied by Russia to foreign markets. According to Petrichenko’s estimation, in 2022 Russia will export about 40 million tons of grain of all kinds. Therefore, the simultaneous emergence of another 20 million tons can significantly affect the world market.
“Ukraine’s 20 million tons of grain will be able to alleviate the current tension in the global food market. But it will only be traded next season. I still can’t think of any other solution. It is impossible to sell large quantities of grain from Polish and Romanian ports,” Petrichenko added.
He also pointed out that Ukrainian ports are mined by the Ukrainian army. And technically it is possible to lift their blockade quite quickly – in a few weeks. But for this, Kiev has to take a political decision.