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Challenges and Prospects of Ukraine’s Agricultural Sector

— Mr. Sergii, what challenges do you see for the crop sector this season?

— We hope there will be no new challenges; the ones from last year remain. Primarily these are limited opportunities to sell crops due to logistics difficulties and low grain prices. Recently, maritime trade has somewhat stabilized but remains insufficient. Compared to last year, the situation has only worsened because agricultural prices are too low, the financial resilience of farms is decreasing (if it still exists at all), and survival is getting harder.

— How does the increase in production costs exacerbate the situation?

— Rising input costs are the main factor affecting profitability. Fertilizers, plant-protection products, and other inputs all shape the product’s cost price. Still, that doesn’t mean costs have risen by that exact amount. It’s already good that fertilizers, pesticides, and fuel are available in the country. Their price fluctuations are not critical. What truly matters is that farms lack sufficient financial reserves to run a proper sowing campaign — to renew machinery, purchase enough fertilizers and quality crop-protection products. Naturally, this affects yields and quality.

— Have you had to adjust your technology due to higher costs, and how do you plan to act this season?

— We’ve already optimized everything possible, so fertilizer rates will remain at last year’s level. Of course, we’ll make spring adjustments depending on rainfall forecasts.

Generally speaking, rapid innovation in sustainable agriculture is impossible, especially under current conditions. Therefore, like most of our colleagues, we’re maintaining last year’s technologies. New technologies require new machinery, and equipment renewal is difficult due to a lack of resources. Previously we upgraded machinery on schedule; now that’s not really feasible. You keep thinking, “it can work another year,” but then repair costs rise, and resale value drops. That’s a trap we avoid — we still try to upgrade gradually.

— How does falling behind the renewal schedule affect production?

— It increases cultivation time and spare-part costs. Delays accumulate a cumulative effect that becomes hard to overcome after a couple of years.

Drones are also used in field crops where economically justified. We contract specialized service companies. Efficiency depends on crop type and conditions — sometimes they save costs, sometimes they literally save the crop. But drones will never replace full-scale technology, at least not yet.

— How will your production cost compare to last year?

— We expect the cost in foreign currency to remain similar to last year. In hryvnia terms, it depends on the exchange rate. Overall, changes are minor — fertilizer and pesticide prices have dropped slightly. Whether the cost of corn is ₴3,500 or ₴3,400 per ton doesn’t make a big difference — the level remains roughly the same.

We work only with proven products — fertilizers, crop-protection agents, reliable suppliers. This is not the time for experiments. Even switching from a premium to an economy line from the same manufacturer means entering an experiment zone. We’ve long adapted and use products of different grades as conditions require.

The same applies to seeds. Every year we test new hybrids and gradually include them in crop rotation. But radically changing seed suppliers or switching to cheaper hybrids is wrong — it’s too risky.

Like any major agri-holding, we benefit from early bulk purchases of inputs — but that’s not a cure-all. You can’t buy fuel 20 % cheaper; the only advantage is catching price dips and buying larger batches slightly cheaper.

Future Projects and Production Diversification

— Your company has a diversified production structure. When has that helped the most?

— Over the past 25 years — always. Every year one area falls while another compensates. Diversification is not only product-based but also regional. There may be drought or low corn prices, but sugar prices rise. If pork prices drop, turkey helps. An agri-holding must have several strong directions — that’s what saves you.

In the last two years, sugar prices have been near the profitability threshold but helped offset grain losses. Thanks to that, we can still keep livestock and poultry profitable — mainly because of domestic grain prices. If we tied to global grain prices, livestock would be unprofitable. The ability to either sell grain or feed it to animals gives flexibility and resilience.

— Experts predict that this year sugar beet may be one of the few profitable crops, rivaled only by soybeans. Many are expanding beet acreage. Will that competition devalue the product?

— There is no competition for commodities — only fair pricing. For those planning to grow sugar beet, especially large holdings: had you planted last year or the year before, you could easily have earned €1,000+ per hectare. Farms on traditional beet lands lost huge profits by not planting it.

However, it’s never too late to join. Sugar has a globally strong price, much higher than grain. Shipping a truckload of grain to Odesa worth $3,000 differs greatly from a truck of sugar worth $12,000 plus.

Agri-holdings avoid sugar beet because their agronomists have grown too comfortable producing only corn and sunflower. Each farmer in Iowa grows corn with better results. But sugar beet requires hard work — day and night in the field. Middle managers often resist beets, finding 1,000 reasons not to. Meanwhile, owners lose money.

— In your opinion, how long will the “beet trend” last?

— In the past 25 years there hasn’t been a single year when sugar beet was unprofitable. At minimum, it’s always been more profitable than grains. Yes, there were short low-price periods, especially before the full-scale war, but that was an anomaly. Over any three-year span, beet has always outperformed grains.

— Farmers increasingly emphasize focusing on profit per hectare and reducing costs. What’s the right approach?

— We never calculate it that way — profit per hectare varies too much. Diversified companies should assess total costs and revenue. Livestock expenses may exceed the cultivated area, so per-hectare logic doesn’t work. The figure is calculated, but I care about the bigger picture.

Unfortunately, the state doesn’t see how much tax it receives per hectare. Small farms sell produce for cash, pay wages and rent in cash — how much tax do they pay? Public agri-holdings can show reports proving at least ₴4,000 per ha in taxes — a significant figure. The main thing is for the state to ensure fair tax payment across the sector.

“Gals Agro” is one of the largest turkey-meat producers in Ukraine.

— What projects do you plan to implement this year and in the medium term?

— This year we’ll continue our pre-war plans — developing bioenergy, livestock, and perennial crops. We may lag slightly for objective reasons but not much. We stick to our plan because it’s right. Our plans aren’t for one or two years — not even ten. War isn’t a force majeure; even in bad times, you must structure your operations to emerge stronger. Yes, we work with fewer people since many were mobilized, and some equipment was taken for defense needs — but we find solutions.