Miller Magazine Issue: 156 December 2022

80 ARTICLE MILLER / DECEMBER 2022 Pessimistic scenario: the “grain deal” will be terminated due to any factor (the 120 days will expire with no extension of the deal, the port infrastructure will get shelled etc.) 1. How will this affect prices? The termination of the deal will cause a rise in world pric- es and a fall in domestic. However, these movements will not be so significant as at the end of February because a more or less established system of exports through the land borders and small Danube ports is already in place. 2. How will this affect exports? The monthly volume of grain and oilseed exports will shrink to at most 3.5 M mt, provided the energy system is functioning normally. If the impossibility to export by sea gets aggravated by further shelling of critical infrastructure, monthly shipments will continue to decrease. 3. How will logistics change? If for any reason the deal is not extended, Ukraine will have the following routes left: Exports by rail and road through the western borders Exports through the small Danube ports Ukraine has significantly improved the alternative ways of exporting agricultural products since the beginning of Russia’s full-scale aggression. Below are only the latest projects: Nibulon’s Izmail terminal will supply Europe with up to 300 K mt of grain per month. The construction began in June 2022 and the first stage was completed as early as in September. Ukrainian Danube Shipping Company has launched the “Danube Grain Route” project for delivering agricultur- al products by barges from a Danube river port directly to large sea vessels off Romania’s port. Under this scenario, the maximum export potential will decrease to 3-3.5 M mt, which may entail problems with the storage of this and next year’s crops. 4. How will it affect the agricultural sector as a whole? The share of logistics costs in the commodity price will in- crease again, the profit margin of farmers, which is still low, will keep falling. The foreign currency revenues will remain at a low level, and inflation in the country will continue grow- ing. Farmers will not receive enough money for next year’s spring planting and the planted areas will reduce. The agri- cultural sector of the economy will shrink. It will take at least 3-5 years to restore previous production volumes. Conclusions: 1. The grain corridor is vital to Ukraine’s agricultural sector and its economy as a whole. Very serious talks are ongoing with the participation of international partners. And, in order to slightly reduce the risks, the grain deal’s extension for as long as one year and the inclusion of the Mykolaiv ports are