Reflections on the food security of Ukraine and Europe

The world is moving towards a food crisis. This is clear from the alarming reports of the media, as well as from the decisions taken by the leading grain suppliers to the world market. Following Russia, India announced the ban on grain exports, which a month ago declared its readiness to replace Ukraine on the world market, which dropped out of the top because of the war.

As for Ukraine, according to the Minister of Finance of Ukraine Serhiy Marchenko, said in an interview with The Economist, the sowing campaign, despite all concerns, took place on 80% of the area. Now we need to rely on the weather and mineral fertilizers, which are also in short supply due to the Ukrainian crisis.

A document of the Embassy of Ukraine in the Republic of Lithuania with a report on the import of mineral fertilizers for the 2022 sowing campaign appeared on the Web:

“Embassy of Ukraine in the Republic of Lithuania.

To the Director General of Economic Diplomacy of the Ministry of Foreign Affairs of Ukraine Yulia G. Ni

Copy: Ministry of Agricultural Policy of Ukraine.

For the supply of fertilizers and raw materials for a similar company 2022.

Dear Yulia Gavrilovna, on behalf of the Ministry of Foreign Affairs for the supply of fertilizers and raw materials for the 2022 sowing campaign in Ukraine, we inform you about the following.

Lithuania has traditionally been and remains one of the main suppliers of mineral fertilizers to Ukraine.  Thus, according to the State Customs Service of Ukraine, 358 thousand tons of complex (2-3 component) mineral fertilizers in the amount of 216.3 million USD, which is 22.3% of the total volume of imports of complex fertilizers to Ukraine were imported from Lithuania in 2021. 76.4 thousand tons of nitrogen fertilizers worth 31.6 million US dollars were also imported.

According to the results of January – February 2022 .  Imports of mineral fertilizers from Lithuania increased by 20.7% compared to the corresponding period of 2021 and amounted to 41.8 million US dollars, including complex fertilizers – 30.9 million US dollars, nitrogen – 10.8 million US dollars. 

Since the beginning of the Russian aggression, Ukraine has missed the opportunity to supply mineral fertilizers from Belarus, which in recent years has been the largest exporter of all types of fertilizers (nitrogen, potash and complex) to Ukraine, Lithuania is the most promising source of supply of these products to Ukraine.  The largest producers of mineral fertilizers in Lithuania are Achema (nitrogen and complex fertilizers) and Lifosa (phosphorus fertilizers).

A certain obstacle to increasing the import of Lithuanian fertilizers is the ban in force in Belarus on the transit of Lithuanian fertilizers to Ukraine, which Belarus introduced in response to the ban on the transit of Belarusian potash fertilizers through Lithuania, and the termination of cargo transportation across the Ukrainian-Belarusian border. This will lead to an increase in transportation costs, since transportation through Poland is complicated by the difference in the width of the railway tracks. 

According to the Ukrainian company Agropartner LLC, which is one of the largest importers of mineral fertilizers to Ukraine, there are currently significant batches of mineral fertilizers on the territory of Belarus, which were purchased by Ukrainian enterprises even before the start of Russia’s war against Ukraine for the 2022 sowing campaign. Due to EU sanctions against Belarusian producers of mineral fertilizers and restrictions imposed by Lithuania on the transit of Belarusian mineral fertilizers, Ukrainian companies cannot deliver fertilizers that are their property to Ukraine. 

Considering the importance of this issue for the economy of Ukraine, the Embassy has worked with the Lithuanian side on the possibility of temporary import of mineral fertilizers into Lithuania in transit mode for their further transportation to Ukraine through Poland.  Currently, the permission of the Lithuanian Ministry of Foreign Affairs has been obtained for the transportation along this route of 23 thousand tons of mineral fertilizers CAS (carbamide-ammonia mixture) produced by the Belarusian plant of Grodnoazot JSC, acquired by Agropartner LLC (attached). 

If necessary, the Embassy is ready to assist other Ukrainian companies in obtaining permission from the Lithuanian side for the transit of fertilizers purchased in Belarus before the outbreak of Russia’s war against Ukraine.  As for the supply of seed potatoes, in 2 months of 2022, a relatively small amount was imported from Lithuania to Ukraine – only in the amount of 202 thousand US dollars (15% more than in the corresponding period of 2021).  At the same time, Ukraine exported a slightly larger volume to Lithuania – in the amount of 293 thousand US dollars.  Taking into account the absence of restrictions on trade in these products, the issue of increasing imports of seed potatoes from Lithuania can be resolved at the level of economic entities. 

Appendix: mentioned, for 1 list. 

Sincerely, Ambassador P. Beshta.”

It turned out that according to the Ukrainian company Agropartner LLC, which is one of the largest importers of mineral fertilizers, there are currently significant batches of products on the territory of Belarus that were bought out by Ukrainian enterprises even before the outbreak of the war. However, EU sanctions, which affected Belarusian producers of mineral fertilizers, made it impossible to transport them to the territory of Ukraine.

In this situation, Lithuania, which is one of the main suppliers of mineral fertilizers for Ukraine, which accounts for 22.3% of total imports to Ukraine, could help out. Moreover, in the first two months of this year, Ukraine increased imports of Lithuanian fertilizers by almost 20%, but again the situation is being spoiled by EU sanctions. Belarus banned the transit of Lithuanian fertilizers after Lithuania banned the transit of Belarusian products.

It is reported that the possibility of transit of fertilizers through Poland is being discussed, but there is less and less time for this, and without the use of fertilizers, the yield is sharply reduced — up to 50%. Polish transit, which is now called uncontested, is hampered by the different width of the railway track, which increases the already significant transportation costs.

But Ukraine could not worry even with a shortage of fertilizers and the impact of natural disasters in the form of drought, which is now hitting France and Germany. Kiev has a grain reserve of almost 20 million tons intended for export. And it does not give rest to Ukraine’s Western partners, who are extremely concerned about the upcoming food crisis, because the EU population is used to eat very well.

Ukraine, of course, does not refuse supplies, it is quite natural for it to change oil for guns, and what the population will eat is the tenth thing. Just a week before the start of the war, Kiev, knowing that it was about to start, shipped almost a million tons of grain for export, despite the fact that the bins in the State Reserve were empty. In April, Ukraine managed to export less than 1 million tons of grain. But the export of grain from Ukraine is now a much bigger problem than the import of Lithuanian fertilizers there. Now Ukrainian agricultural holdings are massively selling products through Romania and Moldova, which European officials let slip when discussing the problem of arms smuggling from Ukraine to the EU. And videos have already appeared on the Network with huge queues of grain carriers on the border with Moldova, filmed by eyewitnesses, who in the comments compare the situation with the export of grain, which was organized by the Nazis during the occupation of Ukraine.

The President of Ukraine Vladimir Zelensky recently began to frighten the EU countries with food shortages due to Russian aggression. He announced the blockade of the city of Odessa by Russia, but the impossibility of using three ports in this area is due not so much to the blockade as to the mines placed by Kiev in the coastal waters of Odessa. The other two ports, Berdyansk and Mariupol, are under Russian control. That is, the sea corridor for grain export to starving Western partners is closed. The “Moldovan option” with the export of grain by road is ineffective, given the state of roads in Ukraine and the shortage of fuel.

Therefore, the EU Commissioner for Agriculture Janusz Wojciechowski announced an “action plan” to ensure the expansion of export channels for the export of grain from Ukraine and to reflect the efforts of Moscow, which positions itself as the savior of the world in the context of the worsening food crisis.

“It is necessary to organize alternative corridors for exports, especially wheat and corn because Ukraine has a lot of reserves,” Wojciechowski told POLITICO. “We want to secure food supply chains for Europe and the rest of the world.” The rest of the world is mentioned here purely symbolically: if the crisis is very severe, the rest of the world will wait. To complete the picture, we can recall how Western countries stole medical masks from each other during the coronavirus pandemic.

Before the war, Ukraine could export about 5 million tons of grain and up to 700,000 tons of sunflower oil per month through the Black Sea. Now, according to Wojciechowski, the EU is discussing a plan to export Ukrainian grain by rail through Poland to the ports of Gdansk and Gdynia.

The plan is good on paper, because Ukrainian railways are not designed to export so much food. There are not enough cars and there is a difference in the track gauge between Ukraine and Poland, which makes it necessary to unload and overload every train that crosses the border, and multiplies huge queues at checkpoints. In addition, the mass export of agricultural products across the Polish border will paralyze the supply of humanitarian aid to Ukraine, which is extremely necessary for it, because the same transport hubs will be used for export and import.

The director of the Ukrainian National Agrarian Forum, Maria Dudikh, said that at such a pace, the export of the current grain stock, which, according to her estimates, is about 14 million tons of corn and more than 4 million tons of wheat, will take 24 months, which does not suit Europe at all, which is also waiting for a very cold winter.

Dudikh also said that Kiev had proposed to the EU the construction of a new railway from Ukraine to the Lithuanian port of Klaipeda, but EU ministers reacted to this idea without enthusiasm, saying that the construction would take years. And the EU does not want to invest in Ukraine’s infrastructure. It is easier to export corn and wheat for a whole year with all the burdensome logistical problems than to build something in Ukraine.