Reduction of grain exports costs Ukraine $800 million every month
11.07.2023 - 16:30
According to estimates of the International Monetary Fund, Ukraine may lose up to $800 million every month. This is affected by the reduction in grain exports due to the blockade of the Grain Agreement and EU restrictions.
Due to low harvests and mined fields, the International Monetary Fund (IMF) expects a reduction in Ukrainian agricultural exports. Thus, Ukraine’s losses due to interruptions in the work of the Grain Agreement and import restrictions in some EU countries are estimated at up to $800 million every month, writes Ukrinform.
According to forecasts, the volume of grain exports will decrease due to a decrease in stocks and harvests. Cessation of the “grain corridor” may lead to additional unearned export earnings. We are talking about $290 million per month.
“Further trade disruptions will affect GDP growth and exports, depending on their scale and duration. At the same time, the total export of agricultural products amounted to about $2 billion per month from the beginning of 2023 and $2.3 billion per month in 2021,” says the IMF document based on the results of the first review of the Extended Financing Program (EFF) for Ukraine.
If individual EU countries maintain import restrictions, the reorientation of trade will be difficult even if transit is maintained.
Read also: Termination of the Grain Agreement may put pressure on the Ukrainian hryvnia.
In particular, there are risks associated with a lack of capacity. We are talking about grain storage and transport capacity, which are outside the control of Ukraine.
In the near term, the priority for Ukraine is to strengthen and diversify trade channels, while long-term recovery will require solving the problem of demining agricultural lands.
In turn, the Ministry of Agrarian Policy of Ukraine notes that farmers will cope with disruptions by reducing the sown area by another 20-30%. In particular, the transition to other crops, such as rapeseed, soybeans and sunflowers, will be accelerated. Instead, farmers may need more financial support.
As previously reported by USM, the Russian Federation continues to block the Grain Agreement. Since the beginning of July, six ships with 215,000 tons of agricultural products left the Black Sea ports.
