Blockade of Ports and Cash Deficits: Challenges for Ukraine's Agricultural Sector – Suspicion

Photo: Zoryana Stelmakh

Ihor Lisky, Alex Lissitsa, Taras Vysotsky, Ivan Chaikivsky and Viktor Goncharenko (on the right)

Export works only at 50 %

In the last 20 years, Ukraine’s agricultural sector has developed as export-oriented. 70 % of the produced crop grown in Ukraine was exported, says Minister of Agricultural Policy and Food Taras Vysootsky. In 2021 year there was a peak — Ukraine exported goods worth 27 billion dollars. Almost 90 % of agri-products have always gone by sea.

Since the start of the full-scale invasion, only a limited number of ports were used for export — mainly the deep-water ports of the Odesa region. But since August 2026 year — due to targeted Russian strikes on ships and port infrastructure — they have been blocked as well.

Export is carried out through alternative land routes, which, the minister claims, provide at most half of the required volumes.

“By the end of September we had up to 50 % of the necessary export volume via other routes, not through deep-sea ports. For 27 days in October — 47 %. Objectively, this confirms that 50 % is the maximum. If there are no additional force majeure events, the corridor will be 45–50 %, at most,” Taras Vysootsky said.

Photo: Zoryana Stelmakh

Taras Vysootsky, Minister of Agricultural Policy and Food

Approximately half of exports currently go via the Danube, half by rail, with road transport accounting for only 3–4 % due to high costs, the official said.

“But even these volumes are lower than in 2022–2023 years, when there were no such mass attacks on Danube logistics. Each of these directions can provide no more than 20–25 % of the capacity of the port of Greater Odessa,” noted the head of the Ministry of Agrarian Policy.

And this situation, adds Alex Lissitsa, founder and head of the Ukrainian Agricultural Business Club, is radically different from what it was at the start of the full-scale invasion, when marine port work was also paralyzed.

“Back then the world suddenly realized how much it depended on Ukrainian agricultural products. Germans, who were used to eating sausages with mustard, suddenly found out that 50 % of mustard seed came from Ukraine. And there are many such examples.

Moreover, in 2022 year Ukraine was already a strong exporter, and the agricultural sector had a financial cushion formed in previous years. In addition, the shock to the world market caused a sharp rise in grain prices: wheat rose from about 220–230 dollars to 500 dollars per ton. This partly offset logistical problems. Ukraine’s traditional competitive advantage has been cheap delivery of products to sea ports. In 2022 year it disappeared, but high global prices allowed compensating the significant rise in logistics costs,” explains the entrepreneur.

Photo: Zoryana Stelmakh

Alex Lissitsa, founder and head of the Ukrainian Agricultural Business Club

Today, however, the rise in world prices to 300–400 dollars per ton, which Ukrainian farmers counted on, did not occur, states Alex Lissitsa: there are still previous stockpiles in the world market, and in Australia and South America this was a bumper year.

Also, importing countries, such as Turkey and Egypt, from which Ukraine expected pressure on Russia to resolve the sea export problem, did not influence the situation at all.

And prolonged logistics, notes Alex Lissitsa, kills the quality of raw materials.

“If grain takes a month to a month and a half to reach Danube or via Poland, we ship food-grade wheat, and receive fodder on-site. Formally we do not fulfill the contract terms.

We face these problems almost constantly, because to Constanţa the grain in wagons takes about a month. To the Danube likewise is problematic. If you take the route to Hamburg or Bremen — it’s a month and a half with huge problems,” the businessman complains.

“Is there anywhere in the European Union an example of you, growing product with added value, having to drive for 1500 kilometers? Sending a container from Kharkiv to Gdańsk or to Constanța and remaining competitive?” said the Minister of Agricultural Policy Taras Vysootsky. In his view, without maritime logistics, exporting agricultural products at full capacity will not work.

Photo: Zoryana Stelmakh

Taras Vysootsky, Minister of Agricultural Policy and Food (center)

What about the harvest that cannot be exported?

There are no problems with storage in Ukraine — the state offers stationary elevators and temporary spaces (so-called “bags”). These capacities should be enough for most of the produce to be stored in proper quality, the minister assures. In addition, some of the corn will presumably be harvested in spring.

But the problem is that most produce is stored at elevators that are also targets of attacks, notes Taras Vysootsky.

How does the sowing go and what to expect in spring?

Usually farmers sow one-third of the fields (about 7 million hectares of 20) in autumn and two-thirds in spring, the minister notes. So the autumn campaign results can already be summarized.

“In rapeseed the sown area will be even a few percent larger. For wheat, it will probably be 15 % less. They will continue sowing for another week. But autumn sowing occurred at a fairly high level, given all circumstances. There was enough stock for it,” Taras Vysootsky said.

Photo: Zoryana Stelmakh

Ihor Lisky, Alex Lissitsa, Taras Vysootsky, Ivan Chaikivsky and Viktor Goncharenko (on the right)

But the spring sowing campaign, according to him, will be a real challenge: more area, thus more money is needed, export is not increasing or speeding up, stocks are shrinking.

“This year we attracted 35 billion UAH more in credit resources than last year at the same date, including under the program 5-7-9.” But these are loans contingent on the ability to realize the collateralized product,” the minister added.

It will be difficult to attract additional loans before the spring campaign.

“Perhaps this will be another 10–15 billion. Unlikely more. This instrument helped for autumn sowing, but it is becoming limited. Under this model, for about 5 million hectares, funding may not be enough by mid-spring sowing,” Turas Vysootsky guesses.

According to Alex Lissitsa, head of the Ukrainian Agricultural Business Club, today it is already possible to say that the spring sowing campaign will proceed under strict cost-saving conditions.

Photo: Zoryana Stelmakh

Alex Lissitsa, founder and head of the Ukrainian Agricultural Business Club

“In agribusiness, preparation for the next year begins long before spring. Roughly by 1 December, companies decide on sowing structures. I can say that next year fertilizer use will be cut by 40 %, we will move from original hybrid seeds to cheaper generics, from original crop protection products to generics. The main goal is to minimize unit cost of production, says Alex Lissitsa. — Because last year's fuel price was 7 % of cost, now 23 %. 40 hryvnias per liter of diesel last year vs 110 hryvnias this. Fuel prices have tripled, while product prices have fallen. Reducing fertilizer use and plant protection means yields will be lower. We will fall significantly.”

March, in his view, will be a turning point for how much product has been sold, whether sea ports are functioning, and which crops should be sown. Whether Ukraine’s agricultural sector will remain a global player will become clear around June, Lissitsa suggests.

Where farmers will get money

According to the Ministry of Agrarian Policy, Ukraine may under-export by 10 billion dollars. Farmers lack working capital. Especially hard for small farmers, adds Viktor Goncharenko, president of the NGO “Association of Farmers and Private Landowners of Ukraine.”

Photo: Zoryana Stelmakh

Viktor Goncharenko, president of the NGO ‘Association of Farmers and Private Landowners of Ukraine’

According to him, the low corn yield (one and a half tons per hectare instead of the usual 10 tons) — this is the main crop for both large enterprises and small farmers — will only cover operating costs for fuel during harvest and transport. And these funds are frozen while the raw material stays in grain storages.

Government credit programs, as Minister Vysootsky noted, have limited resources and are nearly exhausted.

“Agriculture” is actively being lent by commercial banks, emphasized former Deputy Head of the National Bank of Ukraine Kateryna Rozhko, — the agro sector occupies third place in banks’ loan portfolios. But now financial institutions, she said, have raised lending standards and are talking about a potential increase in the cost of lending.

Photo: Zoryana Stelmakh

Former First Deputy Head of the National Bank Kateryna Rozhkova

“This is not the result of a good life. Unfortunately there is no insurance or compensation programs to protect producers, both small and medium, and even the bank. But there are a large number of tools both for individual banks and for the National Bank.”

If bank requirements, including European ones, were adjusted to today’s situation, taking into account the huge capital buffer (even despite 50% taxation of the banking sector), banks could increase lending manifold without facing difficulties,” commented the expert.

Also in the situation with agro lending, portfolio guarantees would help, Rozhkova believes.

“I understand that the state has limited capabilities, but we have representatives of international financial institutions who, I think, should look comprehensively at the problem and perhaps broaden their capabilities to help our agro sector together with the financial sector overcome these difficulties,” Rozhkova noted.

Will alternative logistics save farmers?

EFI Group’s supervisory board chair Ihor Lisky sees solving export problems, in particular, through developing alternative logistics routes.

Photo: Zoryana Stelmakh

Ihor Lisky, head of the EFI Group's Supervisory Board

“Dry ports, transshipment over narrow-gauge rail, extending the rail line as far as possible, expanding corridors, simplifying customs clearance — this is what can yield results under port blockades. These capacities should be built in the closest possible cooperation with the European Union,” the businessman says. “Do not think the war will end tomorrow. This situation could last long. Building new logistics is part of our resilience. It can be used after the war too. At minimum, products from western and central regions could be shipped by rail. This will be our resilience and advantage.”

However, all of this will still take years, notes the head of the Ministry of Agrarian Policy Taras Vysootsky.

“In 2022 year it was calculated that infrastructure railway projects would take best 10 years. The Baltic states agreed in the 2004–2005 year to abandon broad gauge and build a European one, and by 20 years they still hadn’t completed it. A broad-gauge line through Poland from Ukraine to the Baltics would take seven years plus design work, he explained. “It seems more likely—and one wants to believe it—that our military tech will find solutions: corridors of cover to cut 90 % and move by sea. And put maximum resources into this. It will be faster than changing everything.”

Photo: Zoryana Stelmakh

Taras Vysootsky, Minister of Agricultural Policy and Food

Pessimistic scenario

Current export routes without restoring marine logistics do not give Ukraine’s agricultural sector hopeful prospects, says the head of the Ministry of Agrarian Policy Taras Vysootsky. In his view, without restoring sea exports, the agricultural sector will cease to be one of the key pillars of the Ukrainian economy for at least ten years. Export volumes could fall to the level of 2001 year, when abroad received only about 30% of agricultural production.

At the same time, the minister believes that 2027-year will be an adaptation year for the sector.

Secretary of the Verkhovna Rada Committee on Agricultural and Land Policy, Ivan Chaikivsky, believes current circumstances show the need to reform Ukraine’s agricultural sector.

Photo: Zoryana Stelmakh

Ivan Chaikivsky, Secretary of the Verkhovna Rada Committee on Agricultural and Land Policy

“To be frank: the agricultural sector will never be what it was before August 26 year (when sea export stopped). We must understand that simply growing wheat or corn will not make Ukraine what it used to be. And what to do about it, each actor — small farmer or large holding — will decide for themselves.

But the tradition of sowing grain and taking it to the port in Ukraine, to be honest, is over. Now the search for new opportunities begins. And everyone must find their own way out of the situation,” the committee secretary said.

In his view, farmers will cut costs as much as possible; some will return land to landlords, and so-called casual investors — those who had no special ties to agriculture but hoped for large and quick profits — will leave the industry altogether.

In addition, farmers face problems not only with sales and prices. Small farmers, according to Viktor Goncharenko, president of the NGO Association of Farmers and Private Landowners of Ukraine, are experiencing a total shortage of labor.

Photo: Zoryana Stelmakh

Viktor Goncharenko, president of the NGO ‘Association of Farmers and Private Landowners of Ukraine’

“The male population in villages has declined so much that there is no one to drive tractors or cars. A large number of workers from small farms have moved to large enterprises, realizing they can be guaranteed work there. Small farmers remain alone with problems. And with pensioners 70+ there’s not much you can do,” the farmer said.

In addition, he regards the irrigation crisis and water shortages for irrigation as another misfortune.

“Small rivers where they still exist no longer save. And their number declines every year. Irrigating agricultural fields with artesian wells is a crime: we take water from future generations. Irrigating fields with such water is, in my view, abnormal,” added the NGO president.

Processing as a Chance for Agribusiness

Speakers unanimously agree that processing could become a chance for agribusiness.

EFI Group head Ihor Lisky believes that developing the processing industry will help correct the imbalance between the low price of Ukrainian raw materials and the high cost of final European product. Ukraine already has the necessary base: land, secure property rights, and opportunities for long-term projects, etc.

“One thing is to grow sunflowers, another is to make oil from them. Plant a vineyard and make wine from grapes, grow soy and process it into soy concentrate, protein, etc. I sincerely believe Ukraine has matured to create branded final products that can be used in pharmaceuticals, chemical industry, and various sectors. And not fear competition in Europe,” the businessman believes.

Photo: Zoryana Stelmakh

Ihor Lisky, head of the EFI Group Supervisory Board

The only thing lacking, in Igor Lisky’s view, is project financing.

This aspect was noted by Alex Lissitsa, head of the Ukrainian Agricultural Business Club. The traditional banking model, under which credit is issued against collateral, in wartime often does not work due to the significant depreciation of many Ukrainian assets.

“If I go to a bank and say I want to collateralize an asset that used to cost 30 million dollars, and now is valued at best at three, then for these three million I won’t be able to build anything,” Lissitsa notes.

Thus Ukrainian agribusiness needs a different financing model — lending directly for investment projects, he notes. Equally important is attracting private equity funds that could invest in agribusiness and new production projects, at least initially in western regions.

“It is not a problem today to mill flour, make grain products or press oil,” notes Viktor Goncharenko. “But who will eat it? Where will they put it? When we talk to European farmer colleagues, they fear our presence, our interference, accession to the EU. They say they do not know where to place their products.”, the farmer says.

Photo: Zoryana Stelmakh

Viktor Goncharenko, president of the NGO ‘Association of Farmers and Private Landowners of Ukraine’

He predicts that the development of processing will push small farmers, who cannot build large productions themselves, to form cooperatives. He cites the cooperative movement in the USA and Europe as an example.

“There, cooperatives own not only processing but also trading and retail — operating on a ‘field to table’ principle. This is one way out. When we reach a critical point, we will unite and seek a joint solution. Now Ukrainians act individually, trying different options. When we reach the edge, a proper movement will emerge. And our path is to Europe. With such a powerful market, we must do everything to work together,” the farmer noted.

But such an approach, notes Ivan Chaikivsky, secretary of the Verkhovna Rada Committee on Agricultural and Land Policy, requires revising national legislation, since cooperative activity in Ukraine has been rendered null.

“Cooperation began to work in Ukraine and did quite well in the early 2000-s years. But today’s legislation has undermined the development of cooperation, as servicing cooperatives are not regarded by our tax authorities as a business entity, but as a profit organization. And the seeds of cooperation planted in the early 2000-s years are today practically nullified,” the MP said.

Photo: Zoryana Stelmakh

Ivan Chaikivsky, Secretary of the Verkhovna Rada Committee on Agricultural and Land Policy

According to Alex Lissitsa, Ukraine’s processing industry can fully develop and be profitable if Ukraine integrates with the European Union.

“There is no other market for us. The 500-million market has the potential to absorb significant volumes of Ukrainian products: starch, mushrooms, raspberries, preserved foods, etc.,” he argues.

EU — a strategic opportunity for Ukraine’s agrarian sector, but competition will be fierce

Ukraine has no alternative to the European Union, asserts Alex Lissitsa. And for saving the agrarian sector and the country, we must go there as quickly as possible.

The same view is shared by businessman Ihor Lisky.

Photo: Zoryana Stelmakh

Ihor Lisky, Alex Lissitsa, Taras Vysotsky, Ivan Chaikivsky and Viktor Goncharenko (on the right)

“It’s strange that there’s still a debate about whether Ukraine needs the European Union with its rules, regulations, standards, and restrictions. Some say we might manage on our own. But in today’s conditions we must discard rosy fantasies.

The European Union is, in fact, one big player ready to engage with us for various reasons. Even Americans are willing to trade us for Iran or for closer ties with Russia and China. And that is a dangerous trend. For the EU we have cards — we invest in building Europe’s security architecture. We can talk on equal terms.

Moreover, if we are located next to the largest market, why look for strange structures in a world that is increasingly fragmented,” emphasized Ihor Lisky. Therefore, Ukrainian farmers should already start preparing—for example, by raising quality standards.

But Europe will also require Ukrainian farmers to fight for their place, believes Alex Lissitsa, head of the Ukrainian Agricultural Business Club. So Ukraine should learn to defend its interests, like Brazil, which is similar in development, dynamics, and innovation in the agricultural sector.

Photo: Zoryana Stelmakh

Alex Lissitsa, founder and head of the Ukrainian Agricultural Business Club

“Brazil opened its Brussels office 15 years ago. And it works steadily, lobbies its interests. We, the Ukrainian Agricultural Business Club, opened our representation only two years ago. We’re at the beginning of the journey, and believe me — this is not an easy story. Nobody is simply waiting for us somewhere. Everything has to be fought for.

Brazil, which exports 4,5 million tons of sugar, is not touched. And about Ukraine, which exports 100 thousand tons within the quota, they say it flooded Europe with sugar. Poland bangs Ukraine with honey, while China imports honey twice as much and no one touches it. Serbia imports three times more raspberries to the European Union than Ukraine, but lobbying structures hammer Ukraine.

We face heavy work. We must defend all of this, fight for it, and work. But this is a market economy; it cannot be any other way,” the businessman emphasized.