Russian attacks could cut Ukraine grain exports by a third, say officials

Ukraine, one of the world’s major grain exporters, relies heavily on its Black Sea ports, which handle more than 90 per cent of its exports.

KYIV – A rise in Russian attacks on Ukrainian seaports and vessels could cut monthly grain shipments by as much as a third and have left terminal operators facing mounting losses they say they cannot cover alone, officials and industry executives said.

Three exporters and industry officials told Reuters that intensified missile and drone attacks on ports, ships, railways and energy infrastructure are threatening the flow of cargoes.

Russia for a time had blocked Ukraine’s key seaports following its full-scale invasion in February 2022, forcing Ukraine to shift its exports to the Danube ports in the 2022/23 season.

But, following a deal to allow grain through the Black Sea, ports in the Odesa region have recently been handling about 6 million tonnes of cargo a month.

“Potentially, export volumes from Odesa ports could fall to 4 million tonnes a month because of the attacks,” said Taras Vysotskyi, Ukraine’s deputy economy minister.

“About 1 million tonnes could be redirected to Danube terminals, but not more than that – logistics there are expensive.”

Denys Marchuk, deputy head of Ukraine’s largest farming union UAC, said he agreed with the assessment of the decline and that strikes on ports were now among the biggest constraints for the sector.

A 30 per cent fall in key exporting months would pose a significant challenge for exporters as Ukraine enters the new season with large carry-over stocks, which will put downward pressure on domestic prices, reducing farmers’ incomes.

It could also impact global markets. Ukraine in recent seasons has accounted for about 6 per cent of global wheat exports and about 11 per cent of global corn exports.

Russia has repeatedly attacked Ukrainian ports and energy infrastructure during the war. Kyiv says the attacks are aimed at undermining Ukraine’s economy and its ability to export food to global markets.

The pressure on logistics is acute for private terminal operators, who have suffered repeated damage since Russia’s invasion.

Losses incurred by port terminals since the start of the war are at US$1.5 billion (S$1.9 billion), Marchuk said, adding that terminals “really do not have enough money for restoration”.

Vysotskyi said the government was aware but budgetary resources were currently focused on preparing Ukraine’s electricity sector for the winter, when Russia is expected to intensify strikes on the power sector.

For terminal operators, the damage is not limited