Dietrich Treis, CEO of “UIFK-Agro”, shared his thoughts on the consequences of the war for the agro-sector, how they will affect the export of products this year and the harvest of 2023. He also spoke about trends in agriculture that emerged due to the war in Ukraine.
LDaily: The war has significantly impacted all spheres of business in the country, including agricultural activities. What challenges have arisen for agriculture and specifically for your enterprise since the beginning of the war?
D.Treis: Our enterprise is located in the Kyiv region, so Russian occupiers approached it at a distance of about 20 km. Our fields were even located just two kilometers away from the occupied zone. Initially, it was about protecting workers and the company, but of course, also about supporting the defense. We handed over four trucks and several passenger cars to the Ukrainian army. After traditional food supply routes for the population were interrupted, we handed over 80 tons of wheat: part of it went to Kyiv, and part to the local population. Fortunately, at the beginning of April, the occupiers left our territory, and we were able to carry out normal spring soil treatment. However, we had to search the fields located near the occupied territories for the presence of mines. It is good that we purchased seeds, fertilizers, and diesel fuel before the war, so we were able to start the season normally. The biggest damage was caused by the drop in prices and problems with exports.
LDaily: What losses are you experiencing now? In what percentage ratio has your business recovered in the Ukrainian market?
D.Treis: The share of grain that we sell in Ukraine varies every year. A significant part of Ukrainian production always goes for export, so it is more important than the domestic market. The price in Ukraine is based on the world market price. We sold most of the last harvest. Export costs have increased sharply, but this was partially offset by the growth of grain prices on the world market. However, prices have fallen again now. If export costs remain as high, the next season will be very problematic.
LDaily: In what way have you adapted your enterprise to new challenges that arose as a result of the war? What measures have you taken to reduce losses and support your enterprise during the war?
D.Treis: Due to the long production cycle, we cannot respond to requests in the shortest time possible. This year, we have reduced the area under corn and sunflower and are growing more wheat and rapeseed. We have also reduced the intensity of field work. However, all fields are being cultivated.
LDaily: Currently, we hear a lot about the “grain corridor,” which allows the country to export grains, even in small volumes. We understand: if the grain cannot be fully exported, it must be stored somewhere. Please tell us, what is the situation with the storage of agricultural products?
D.Treis: That’s why we are growing more wheat and rapeseed. The yield per hectare is lower than for corn, so we need less capacity for storage. We planned production for the 2023 harvest in July-August 2022 when it was still unknown whether it would be possible to export grain at all, and if so, in what volumes. At the moment, we have sold most of the harvest, and I have enough space for storage until the next harvest.
LDaily: How do you react to the situation that the cost of storing agricultural products may increase even more due to export restrictions?
D.Treis: We have sufficient own capacity for storage, so we are independent. What we could not store in stationary warehouses, we stored in sleeves.
LDaily: How has your export logistics changed? How have you adapted your logistics to the changes in export conditions?
D.Treis: For the first time, we exported our goods directly, without a trader. We brought part of the rapeseed to Germany by trucks. We sold the rest in the traditional, usual way, i.e., through the Black Sea ports. Direct export to Western Europe is more interesting for companies in Western Ukraine. However, this route is very long for us, so the transport costs are high.
LDaily: Are you still investing or have investments been suspended?
D.Treis: We continue to work without changes.
LDaily: What new investment projects do you plan to implement after the end of the war?
D.Treis: If there is an opportunity, we want to expand the business and build a warehouse. But it does not depend on the end of the war. However, I hope the war will end soon.
LDaily: What prospects do you see for agriculture after the end of the war? What are the main challenges facing this industry in the future?
D.Treis: The world’s population is growing, and it needs to be fed. Agriculture depends little on the economy. One can do without cars and televisions, but not without food. Agriculture depends more on the global market than on the Ukrainian one. The prospects for agriculture in Ukraine were good and will remain so.
