Organic exports from Ukraine: success stories and challenges
by Ina Hiester (comments: 0)
Four months ago, Russia’s invasion of its neighbouring country Ukraine has not only shocked Ukraine and its many allied countries all over the world, but also triggered a series of large-scale economic disruptions. With Ukraine being a major exporter of both conventional and organic food products, many trading partners have been concerned whether their Ukrainian suppliers would be able to fulfil their export contracts. During an international online conference, success stories and challenges for organic exports from Ukraine were explored by government representatives, certification experts, exporters, and importers.
2022 sowing campaign is completed by 99 percent
According to Liudmyla Khomichak from the Ukrainian Ministry of Agrarian Policy and Food, 30 percent of certified organic land in Ukraine is currently either occupied or mined. Nevertheless, she announced that the overall 2022 sowing campaign has been completed by 99 percent. Therefore, Ukraine should be able to maintain its high production levels of key crops such as cereals, legumes, and oilseeds. Anastasiia Bilych from Arnika Organic, a company that produces soybeans, sunflowers, corn and other organic crops on more than 15.000 hectares in the Poltova region, shared her experience: “At the beginning of the war, we struggled a lot with the lack of seeds, fuel, and spare parts. But we are proud to say that we managed to finish our sowing season.”
Liluck Ltd., on the other hand, a producer of organic birch sap, was less fortunate: the birch sap harvest only takes place once a year in March and April – when the war had just started. Therefore, the company only managed to harvest half of what they had originally planned. “We are still pleased how we managed despite all difficulties but are now facing other problems. One of them is the lack of glass bottles since some major glass production facilities in Eastern Ukraine have been occupied or shut down”, said commercial director Andrii Martyniuk.
Logistics: Ukraine thinks outside the box
Whilst on the production site Ukraine is doing remarkably well, logistics remain a major challenge. According to Sergiy Galashevskiy, general manager of the certification body Organic Standard, 70 percent of organic exports by his certified operators (who produce about one third of Ukraine’s organic exports) used to be transported by truck – before the war. Since the war started, destroyed bridges and a lack of fuel and drivers has caused huge logistic bottlenecks. Meanwhile, only 45 percent of their exports are transported by truck, whilst transportation via railway and river vessels has increased by 35 percent. Since all Ukrainian seaports are blocked by the Russian army, it has become nearly impossible to export large amounts of commodities.
“Our exporters are now thinking outside the box and discovering new export routes. For example, they deliver their products via trucks and trains to Constanza in Romania, to Gdansk in Poland and to Klaipeda in Lithuania, from where they can be further exported via sea vessels. The river port of Reni has also become a big transfer site. Here, we have a certified organic facility, Danube Prom Agro LLC, with a storage capacity of about 10.000 metric tons. From there onwards, goods are transported via the Danube River directly to Austria and Germany”, said Galashevskiy. Already in 2016, the Agrofirma Pole, Ukraine’s biggest millet exporter, had outsourced their main distribution centre to Poland.
“For many Ukrainians, the war already started in 2014 when Russia annexed the Crimean Peninsula. Only two years later, we established a subsidiary company in Poland and had the warehouse certified organic. Of course, we are also struggling with increased costs and transport availabilities, but we are glad that we had these export schemes already set up before the 24th of February”, said commercial director Andriy Yelsukov.
High transport costs, huge delays
Although the logistical efforts for exporting goods from Ukraine are admirable, they do come at a high price. “Since the beginning of the war, the prices for our trucks going to Switzerland and Germany have doubled”, reported Anastasiia Bilych from Arnika Organic. At the same time, her company still has thousands of tons of organic products in stock waiting to be shipped. “Even if you pay three times more for freight, this does not solve the problem of transport shortage”, confirmed Oleg Makasak, procurement and sales representative from FMM Europe B.V.
The rule ‘pay more, get more’ no longer applies in times of war. Instead, costs are skyrocketing, whilst delivery times are getting longer and longer. “Our logistic costs have increased by 40 percent. At the same time, we have huge traffic jams at the borders. For some trucks, it takes about 5-6 days to leave the country”, said Andrii Martyniuk from Liluck Ltd. The same happens for rail transports: “At the moment, we are still waiting for 400 tons of organic soya that was loaded three weeks ago on railway waggons, but the waggons are still in a queue on the border”, said Amos Ramsauer from the German company Agriprotein.
Rising challenges in guaranteeing organic integrity
Already before the Russian invasion, on December 31, 2021, Ukraine had been removed of the list of high-risk-countries for organic imports into the European Union. Halfway through the conference, the news broke that Ukraine was granted EU candidate status, which – in case of success – would ease future imports substantially. Despite all efforts that are being made to support Ukraine’s export activities, Dr. Jochen Neuendorff from the German certification body GfRS advised caution: “Precautionary measures must be taken against contamination and comingling with conventional goods. Especially with the increased amount of goods being shipped by rail, contamination risk is high”, he warned.
A major problem is that for conventional goods, pesticides such as bromide or phosphide are allowed to increase product shelf life, leaving residues in storage facilities, terminals, and waggons. “It is crucial that organic operators do anything possible to make sure that Ukraine does not become again part of the list of EU-high-risk countries again. So, make sure you don’t choose certification bodies that make false and easy promises. It’s better to be safe than sorry!”, advised Neuendorff.
We need orders, not regrets
After four months of war, the Ukrainian people as well as the organic sector of Ukraine have proven high resilience and stamina. Toralf Richter, Senior Advisor at FiBL Switzerland, is not surprised: “Ukraine is well known for finding innovative solutions for existing problems”. Andrii Lytvyn from the Ukrainian Entrepreneurship and Export Promotion Office (EEPO) highlighted that because of the geographical closeness and the blockage of seaports, Europe has now become an even more important trading partner than it was already before the war.
Closing the conference, he referred to a quote of the Ukrainian president Zelensky who, when being asked if he was considering fleeing his country, replied that he needed ammunition, not a ride. “We need orders, not regrets”, stated Lytvin, calling Ukraine’s international partners for continuous trade support. “We are ready to fulfil our contracts – despite the challenges the war has posed upon us.” Those looking to find new business contacts in Ukraine can refer to EEPO’s regularly updated catalogue of Ukrainian organic exporters which currently includes more than 70 company profiles. Furthermore, representatives of the Ukrainian organic sector will be present at BIOFACH in Nuremberg from July 26 to 29 at their Business HUB in Hall 4a, Stand 511.
The event was organised by the Ukrainian Entrepreneurship and Export Promotion Office in the framework of the state project Diia Business together with the Organic Standard certification body and the Ukrainian platform Organic Initiative, and supported through the Swiss-Ukrainian Programs «Higher Value Added Trade from the Organic and Dairy Sector in Ukraine» (QFTP) and «Organic Trade 4 Development in Eastern Europe» (OT4D), projects which are implemented by Research Institute of Organic Agriculture FiBL, IFOAM - Organics International, and Helvetas.