Analysis: Ukrainian corn seed flows to Europe in further farm trade shift
24/10/2024 13:55
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Corn seed part of rise in Ukrainian farm exports to EU
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EU regulatory clearance and war fuelled seed trade
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EU growers fear competition, Ukraine sees own import
reliance
By Gus Trompiz and Pavel Polityuk
PARIS/KYIV, Oct 24 (Reuters) - Ukraine has rapidly
expanded exports of corn seed to the EU in the past two years in
rare good news for its war-hit agricultural sector but adding to
European farmers' grievances about what they say is unfair
competition from Kyiv.
It is ramping up shipments under free trade terms granted by
the European Union following Russia's invasion, partly reversing
the bloc's longstanding seed exports to Ukraine.
That has injected some income into its farm industry which
is struggling with losses from destruction of land and
infrastructure in the war with Russia.
Ukraine's total seed exports, mostly for corn (maize),
reached $121 million last year against a pre-war level of just
$22 million in 2021, according to the Seed Association of
Ukraine, an industry group. Its share of the EU corn seed market
has gone from zero to around 10% share since 2021, French corn
growers' group AGPM estimates.
Although seeds represented a fraction of an estimated $23
billion in Ukrainian agricultural exports last year where grain
dominated the volume, they offer bigger profits for farmers than
bulk crops like corn and wheat. Ukrainian farm exports were
about $27.7 billion in 2021.
"It was exports that allowed seed producers to last in
2022-23," said Siuzana Grygorenko, head of the Seed Association
of Ukraine, referring to shipments to the EU.
Growing seed is more demanding than standard crops but the
profit margin is nearly twice that from corn production,
according to Ukraine's agriculture ministry.
The ministry's data shows that a metric ton of corn seed can
be sold at $3,900 compared with $200 for one ton of corn, more
than offsetting higher costs of production estimated at $1,800
per hectare for seed versus $900 for grain.
The EU, which gave regulatory approval for Ukrainian corn
seed imports a year before Russia's invasion, is a big supporter
of Kyiv in the conflict. However, agricultural imports have been
a bone of contention for farmers in the bloc who struggle to
compete with the lower-cost Ukrainian products.
The EU this year introduced import curbs on some
agricultural products from Ukraine including sugar, eggs and
corn grain following protests from farmers. The EU continues to
monitor agri-food exports from Ukraine, an EU spokesperson said.
FRANCE'S SEED EXPORTS TO UKRAINE TUMBLE
European corn growers association CEPM is seeking measures
to limit corn seed imports "which are extremely destabilising
for our market", Arthur Boy, its economic affairs advisor, said.
The trade shift has been stark in France, the EU's biggest
seed exporter. Its seed trade surplus with Ukraine shrank from a
record 100 million euros ($108 million) in 2020/21 to 41 million
euros in 2022/23, according to seed sector body Semae.
Ukrainian authorities and industry say their aim is to cover
more of their domestic demand rather than exporting per se.
The country is still mostly reliant on imports to grow
oilseeds, with imports in January-September worth $346.5
million, customs data shows.
"We have a huge potential for import substitution,"
Agriculture Minister Vitaliy Koval told Reuters.
Companies like U.S. group Corteva CTVA.N , France's
Maisadour and Germany's Bayer BAYGn.DE established farm
networks and seed processing facilities in Ukraine long before
the war.
The conflict slashed domestic seed demand, with Ukraine's
area planted for corn dropping by a quarter, while cutting off
the Russian market which some firms had supplied from Ukraine.
Among international companies, Bayer and German peer KWS
KWSG.DE have invested tens of millions of euros to expand
their respective processing facilities in Ukraine.
Farm operator HarvEast increased its area devoted to seed
production by 20% this year and plans at least the same size of
increase again next year, CEO Dmitry Skornyakov said.
Ukraine's farms benefit both from lower labour costs and
larger acreage compared with the EU. Farm size makes it more
worthwhile to invest in the specialist machinery needed,
Skornyakov said.
($1 = 0.9259 euros)
(Reporting by Gus Trompiz in Paris and Pavel Polityuk in Kyiv;
additional reporting by Anna Wlodarczak-Semczuk in Warsaw, John
Revill in Zurich and Nigel Hunt in London; Editing by Emelia
Sithole-Matarise)
((gus.trompiz@thomsonreuters.com;))