Ukrainian agricultural market: trends and challenges in 2024

Trends in the Ukrainian agricultural market are changing due to various factors. It is important to keep track of them to prepare for possible price spikes, to be guided by transportation tariffs, and to understand what crops farmers are betting on this year. 

New perspectives are what the future holds, as the search for solutions does not stop, nor does the hard work of specialists in this field. 

Overview of agricultural trends for 2024

Ukraine faces challenges and new trends in agricultural policy in 2024. Grain production in the country decreased significantly in 2023, falling by at least half compared to 2022. This is a result of several factors, including the temporary occupation of some territories, lack of funds for cultivation and land processing, climate change, and a general decrease in investment per hectare.

In particular, grain prices are justified given the challenges faced by farmers this year. Several billion hryvnias in losses were caused by significant infrastructure damage and complications in the process of exporting products.

This year's grain harvest is expected to be in the range of 50-60 million tons. Of these, 35-40 million tons will be exported. The most promising crops for 2024 include:

• оil seeds,

• soybeans,

• sugar beet. 

This structure is based on the level of profitability of a particular crop.

Regional features in the context of 2024

Farmers in the eastern part of Ukraine face greater risks than those in the western part. This season, winter crops sowing in Dnipropetrovs'k region decreased by 60%, while in Volyn it increased by 2%.. 

Many farmers will continue sowing, even if they face potential losses due to crop rotation requirements. This means that planned losses are already taken into account at the initial stages of calculations.

Analysis of the decline in grain production in the Ukrainian market

According to a report by the U.S. Department of Agriculture (USDA), Ukraine's wheat production is expected to decrease by 21% for the 2023/2024 marketing year. This means that Ukraine could export 10 million tons of wheat, down from 15 million tons in 2022/23. 

As for corn, production is expected to decline by 35% to 16.5 million tons compared to 25.5 million tons last year. As of January 4, soybean prices amounted to UAH 17,310 per ton, including VAT.

The Ministry explains this decline by a smaller harvest and reduced export stocks. At the same time, the USDA improved its forecasts for wheat exports for the current year, announcing 15 million tons, which is 0.5 million tons more than expected. This is due to better performance of the grain corridor and solidarity lines. 

However, the Ministry expects the total grain harvest to decrease by 4.4 million tons to 16.5 million tons compared to the previous year. The largest decline is expected in the cultivation of food crops such as wheat, barley, and corn. This decline affects both the production and sales of these crops, creating serious challenges for the agricultural sector.

Corn is expected to be harvested at 22 million tons, which is 5 million tons less than in the previous year. Barley production will be reduced to 5.9 million tons and oats to 350 thousand tons, which also indicates a general decline in this area. These views of the USDA point to the difficult situation faced by the Ukrainian agricultural sector and suggest the need to carefully search for new strategies to overcome these challenges. In particular, large volumes of corn will remain unable to be exported, which will affect the already difficult situation among farmers. 

Regional trends and risks for farmers

In recent years, farmers have been facing high volatility in sunflower prices, and not only that, but also the risks of climate change and possible changes in the country's agricultural policy. Nevertheless, sunflower remains one of the key crops, as it is cultivated in the country and sold as a high value-added product in the form of oil. This allows farmers to get more profit from each hectare grown.

Demand for rapeseed remains strong in Europe, as its use for biodiesel and other biofuels makes it a crop that has a stable and high value on the market. As people become more aware of environmental issues, demand for products grown in environmentally friendly conditions remains high.

Experts recommend spreading risks and using more than one crop in a crop rotation, taking into account the following factors:

• Not only sunflower, but also soybeans are expected to be profitable. High export rates could lead to a shortage of this crop, which could result in strong demand from exporters and processors.

• The forecast for a decrease in corn production in Brazil and China's interest in buying large volumes of corn and wheat on the international market.

• Farmers are now selecting crops in such a way as to effectively get through the difficult period and return to normal crop rotation, so soybean plantings are expected to increase next season. 

Revision of crop specialization in the agricultural sector

Ukraine's national agricultural sector is going to revise its strategy for growing different types of crops due to changes in the global market and domestic conditions.

One of the main aspects affecting this strategy is changes in demand and consumer preferences in the global market. For example, due to changes in consumer eating behavior, the demand for organic products is growing, which is reflected in the choice of crops to grow. In response to this, farmers in Ukraine can reorient their specialization to growing organic products, such as vegetables, fruits, or herbs, which are in high demand on the global market.

Changes in climatic conditions also require a revision of the crop strategy. High temperatures, droughts or, conversely, floods can lead to reduced yields of certain types of crops, while others may be better adapted to such conditions.

Forecasts for domestic consumption and harvest

There has been an increase in the sowing of pulses, such as soybeans, peas and buckwheat. This is due to the growing demand for protein in people's diets, as well as the use of pulses for biofuel production. These crops are also known for their nitrogen content, which helps to improve soil quality for further cultivation of other crops.

However, grain plantings are expected to decline, especially winter wheat and barley. This is due to previous periods of unfavorable weather conditions, as well as to the growing demand for other crops. Farmers are forced to look for alternative crops that are less sensitive to changes in climate conditions.

Many farmers may continue to plant crops knowing that they will likely suffer losses in the fall due to crop rotation requirements. This is due to the risks and financial constraints that may hurt their operations, which may affect yields and product quality.

Despite all the challenges, domestic consumption is projected to be fully covered, even if the most pessimistic harvest forecasts come true. Many countries are pursuing proactive economic policies to ensure stable development of the agricultural sector and domestic consumption. Thus, while there are challenges, there are also opportunities for development and improvement in Ukrainian agriculture.