Profitability of oilseeds is improving, but cereals are still unprofitable - analysis of the Ministry of Agrarian Policy

Since the beginning of 2024, the profitability of oilseeds has been improving, cereals are still in the range of unprofitability, and the situation in livestock production is stable. This is stated in the study of the Ministry of Agrarian Policy, UNN writes.

Details

The fourth edition of the study "Ukraine: The Impact of the War on Agricultural Profitability" reports that since July 2023, the profitability of major crops has been steadily improving. However, grain production has not yet reached breakeven, and the profitability of oilseeds remains minimal. According to the updated forecast, in 2024, the profitability of oilseeds will be higher than previously forecast, but grain production will continue to be unprofitable. The profitability of sunflower is expected to reach USD 45 per ton, soybeans - USD 83 per ton, and rapeseed - USD 78 per ton.

The improvement in profitability compared to the previous period is due to  the restoration of export sea routes. This reduced the cost of logistics and allowed us to increase purchase prices on the domestic market, despite the decline in global prices for all types of grains and oilseeds

It is also reported that the structure of export routes has changed since the beginning of 2024. The logistics of agricultural products through the Danube river ports played an important role for Ukraine when the deep-water ports of Odesa were not working. However, today the potential of the Danube export route is not fully utilized due to the higher cost of logistics in this direction compared to the deep-water ports of Odesa.

This year's crop production results will be most affected by such factors as reduced fertilizer application rates and, as a result, a slight decrease in yields. Also, lower export logistics costs and a narrower price gap between prices at elevators and in Ukrainian ports due to the establishment of export shipments, which will contribute to a more active recovery in domestic purchase prices.

The situation in the livestock sector has been generally stable since the beginning of 2024: most types of products remain profitable, except for beef production. In April 2024, there was a decrease in the profitability of production of all types of products, except poultry. This was driven by rising barley and corn prices on the domestic market, a seasonal decline in milk prices, and lower pork prices due to increased supply on the domestic market. At the same time, chicken, which is the most affordable type of meat for the end consumer, demonstrates a positive trend in profitability.

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The analysis was conducted  by the Ministry of Agrarian Policy and Food of Ukraine in cooperation with the Ukrainian Agribusiness Club with the support of the Global Facility for Disaster Risk Reduction and Recovery (GFDRR), which is administered by the World Bank.