April 16, 2024


The Legal System

The West needs to support Ukraine’s agricultural sector — now – POLITICO

The West needs to support Ukraine’s agricultural sector — now – POLITICO

Andriy Vadaturskyy became the owner and CEO of Nibulon after his mother and father, the company’s founder, were killed, when a Russian missile struck their home on July 31. Two Nibulon employees died on November 1 and another is reported missing, after Russian forces attacked their vessels in the Black Sea.

Since Russia began its full-scale invasion of Ukraine, examples of its escalation dominance abound, as clearly demonstrated by its decision to suspend the Black Sea grain corridor late last month, only to restart it days later.

By mitigating a crisis it created in the first place, Moscow tried to show Ukraine’s Western backers that it’s the one holding the cards, and that compromise on Russia’s terms will be the only way to end the war.

Russia has also been blaming Ukraine for the reduced grain supply to global markets in Africa and other parts of the world hit hard by increased food prices, presenting itself as a benevolent country concerned about world hunger.

But at the same time, as a way of inflicting further damage on the country’s economy, Russia is severely limiting the ability of farmers in Ukraine to export their products by sea to Africa and elsewhere. Before the war, Ukraine’s agriculture sector accounted for 11 percent of the country’s GDP and 41 percent of its exports, which were worth $27 billion. And this vital sector is now in dire need of assistance.

My company, Nibulon, is an agricultural producer in Ukraine and one of the country’s largest grain exporters. Our experience since the start of the war provides a prime example of the disruption the sector has been facing.

For example, between March and August, our exports dropped by 88 percent because we could no longer use our usual routes through the port of Mykolaiv. We also have assets valued up to $82 million that are trapped in temporarily occupied territories.

Additionally, over 40 percent of our employees are currently unable to work due to the war. Some are fighting for Ukraine on the front lines , others have been forced from their homes and can’t work remotely, and others still are in areas illegally annexed by Russia, unable to leave.

Small wonder that, according to U.N. estimates, as a whole, the sector has already suffered damage and losses of $30.5 billion.

For our part, Nibulon is doing what it can to keep Ukraine’s agriculture sector functioning. We’ve rerouted some exports by rail and road; we’ve also been using river transport and are currently constructing a new river terminal on the Danube as insurance against future disruption.

However, overland routes are significantly more expensive and, on average, logistics costs have already risen 10 to 40 times over, depending on the route. Exports through Poland and Romania have also been particularly slow because of bureaucratic delays at the border.

Meanwhile, due to disruption from the war — including shortages in fertilizer — the amount of wheat seeded this year is already 40 percent down from last year, and the demining of Ukraine’s agricultural land could take decades, if not longer.

To counter Russia’s strategy, Western countries need to recognize they have a direct interest in supporting Ukraine’s agricultural sector as soon as possible. Keeping Ukrainian farmers employed will not only contribute to sustaining the country’s economy, it will also help lower global food prices and prevent migration from the world’s poorest countries.

Western governments and lenders should increase financing options and provide flexibility on debt repayments as a matter of urgency, so that farmers, traders, and logistics providers can keep this vitally important industry working.

The replacement of facilities and equipment damaged by the war is also key. With over half of Ukraine’s grain storage capacity no longer available, farmers desperately need temporary silos to store grain, as well as machinery to load and unload.

In addition to Odesa, the grain corridor should be expanded to include the port of Mykolaiv as well, which accounted for 30 percent of Ukraine’s exports before the war.

There can be no doubt that Ukrainian farmers will play a key role in getting the country back on its feet. Before the invasion, Ukraine was the world’s second largest grain exporter after the United States, accounting for around 14 percent of the European Union’s total grain imports, while also being a significant supplier of wheat to countries like Bangladesh, Egypt, Libya and Yemen.

With demand for food increasing as the world’s population continues to grow, Ukraine should have a bright future as an agricultural powerhouse. And while restoring the country’s output is undoubtedly going to be a long-term task, we also need immediate help.

The Ukraine Recovery Conference hosted by the German government at the start of November focused on the huge challenge of preparing for Ukraine’s postwar reconstruction and the need for an initiative on the scale of the Marshall Plan.

And while it’s important to plan for tomorrow, Ukraine’s allies must remember that today’s challenge is survival.