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By Pavel Polityuk
MALOPOLOVETSKE, Ukraine, April 10 (Reuters) – Mykola Maliienko, who farms the rich, black soil of central Ukraine and exports crops to Europe, is sowing 100 fewer hectares of corn this spring. The 70-year-old needs to save money after fertiliser prices soared following the war in Iran.
His biggest worry is about buying the diesel he will need to harvest his 1,200 hectares later this year. The cost of fuel has nearly doubled since U.S.-Israeli strikes on Iran led to unprecedented disruption of energy supplies.
Despite its four-year war with Russia, Ukraine is still a major producer of grains, oilseeds and vegetable oils.
Ukraine exports its food products to 150 countries, economy ministry data showed, down from around 190 countries before Russia’s full-scale invasion in February 2022.
The geographical distribution of shipments has changed as shipments to Asia, Oceania and the Middle East have declined, exports to Europe have increased and analysts say Russia has taken market share from Ukraine, especially for wheat.
The risk for Ukraine is that the Middle Eastern conflict is increasing Russia’s economic advantage.
As a major oil and gas producer, Russia stands to gain from high energy prices and its farmers have cheap domestic supplies of the fertilisers and diesel Ukraine has to import.
Maliienko expects his production costs to climb by at least 10-15%. Unless a rapid resolution is achieved to the Middle Eastern conflict, they could soar by 60%.
“Our export potential could fall substantially,” Maliienko said, standing before a row of tractors and seeders at his farm outside the village of Malopolovetske, less than 100 kilometres (62 miles) southwest of Kyiv.
“This year it will decline by 15% to 20%, and if the situation continues that could reach as much as 40%.”
FARMING IS VITAL FOR UKRAINE
After Russia invaded and the Black Sea ports through which 90% of agricultural exports flowed were blocked, Ukraine’s farmers rerouted cargoes through small Danube River ports and by rail to Eastern Europe.
As a result, logistics costs rose, exports fell and grain surpluses mounted at home. Domestic prices fell and farmers made losses.
The situation began to stabilise in 2023, when a U.N.-brokered grain corridor opened, allowing shipments to recover.
Last year, farm exports generated more than $22 billion for Ukraine, according to government figures, over half of its total export revenues – a vital source of hard currency and tax for President Volodymyr Zelenskiy’s government.
But exports totalling 47 million metric tons of grain and oilseeds last season were down by a quarter from before the war. Russia’s invasion means farmers face a catastrophic labour shortage, as well as disrupted transport links and power supplies.
Russian drone and missile strikes have also destroyed Ukraine’s refineries, leaving the country dependent on imports from Europe of the diesel needed to run farm machinery – and for its military.
Diesel demand in Ukraine peaks in the northern hemisphere spring when farmers sow crops, during the harvest in late summer, and in early autumn when winter grains, mainly wheat, are planted.
Maliienko said diesel prices have already nearly doubled to 92 hryvnias ($2.11) a litre since the end of February.
The dilemma is whether to buy fuel now in case it runs out or prices rise further or wait in the hope the markets will cool.
“I don’t want someone calling me and saying, 150 hryvnias, when grain is falling from the ear and I have nothing to harvest it with,” said Maliienko.
He spoke at the start of this week, before Iran and the U.S. agreed a two-week ceasefire on Tuesday, prompting a drop in oil prices.
International oil prices are volatile, however, as oil analysts say it will take months for supplies to recover from the current disruption even if the fragile ceasefire holds.
The trade division of Ukraine’s major farmers’ union, UAC, predicted on Tuesday that high fuel and fertiliser prices would last at least three months. The UAC said expensive oil had already been purchased and was being refined, while oil has also been contracted for future processing at high prices.
LESS GRAIN AND LOWER EXPORTS
Many farmers say high fertiliser prices – due to shortages of natural gas used to make nitrogen fertilisers – will also squeeze their budgets.
“The increase in average production costs will probably be around 20%, maybe 30% in the short term,” said Dmytro Skorniakov, CEO of Ukrainian agricultural company HarvEast, which farms tens of thousands of hectares of land, exporting grain and oilseeds.
Skorniakov forecast a 5% to 10% drop in Ukraine’s farm output this season. “There will definitely be a decline, unless we’re extremely lucky with the weather,” he said.
In the longer term, a rise in food prices would help to maintain the value of Ukraine’s exports, he said.
“This will be a delayed effect, and so there may be a negative impact this year and a positive one next year.”
The government, meanwhile, predicts a stable harvest. It is trying to support farmers by selling cheap fuel via state oil company Ukrnafta.
Deputy Economy Minister Taras Vysotskyi said grain output would not decline from last year, when Ukraine harvested about 60 million tons. France, the European Union’s largest grain producer, harvested 63 million tons in 2025.
“Weather conditions this year are better than last year, so they may offset the reduction in fertiliser use,” Vysotskyi told Reuters.
A LACK OF FUEL STORAGE ADDS TO THE PROBLEM
Maliienko and Skorniakov said modern technologies can reduce the impact of using less fertiliser, but there is little farmers can do to offset fuel costs, particularly at harvest time.
“We need to be stockpiling fuel for the harvest already,” Maliienko said, predicting that some producers could go bankrupt. “If we cannot bring the crop in, that will lead to a total collapse.”
Skorniakov said fuel prices could force farmers to cut the area planted with winter grains. Some may abandon winter sowing altogether.
Russia has attacked Ukrainian fuel depots, forcing suppliers to avoid building up large stocks – which Skorniakov called “a huge disadvantage”.
“That’s actually the biggest problem in Ukraine, because fertiliser can be bought ahead of time – there is storage capacity, there are long-term agreements – but in Ukraine it is practically impossible to buy fuel far in advance,” Skorniakov said.
(Reporting by Pavel Polityuk; Editing by Daniel Flynn and Barbara Lewis)
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