Miroshnichenko: Every third “export” dollar comes from the agrarian sector

Export of Ukrainian grain and agricultural products is growing annually and it brings significant revenue to the state budget of Ukraine. Every third “export” dollar comes from the agrarian sector.
Last year’s season we exported more than 39 million tons of grain. According to judgmental forecasts, in the current marketing year this figure will increase to 41 million tons. At the same time, due to the government’s restrictions on weight and dimensional limitations of vehicles, due to lack of freight-cars, farmers are now facing the greatest logistical difficulties ever and they are spending enormous sums of money on carriage of grain from the fields to the elevators and ports. The number of trucking trips, loading and unloading works, laboratory analyses has increased. And all this requires a lot more time and money. Transportation costs for farmers and producers this season will increase by 4-5 billion hryvnias only because of an unbalanced and ill-considered policy of the government.
So, about 63% of grain cargoes in the country are delivered to the ports by rail, 5% – by river transport, and 32% – by road. Therefore, if we have 41 million tons of grain to export, the roads will get the load of 13-14 million tons, the railway – 26 million tons. And these are just grain crops. There will also be rapeseed, soybeans, sunflower seeds, meal, vegetable oil, and more.
The number of grain cars is insufficient, because new ones have not been purchased and built since 1993. Why? It is not clear when this is necessary, given the demand, the need to support the economy and domestic producers, the demand for the products of our companies. At the time when 16-18 thousand grain cars are needed, there are only 13 thousand of which 7-8 thousand are serviceable. Last season the railroad worked at its maximum capacity. Commodity producers and market participants have already encountered the existing problems in railway transportation.
This entails non-fulfillment of obligations to foreign partners, demurrage of vessels in ports, paying fines. At the same time the cars are clearly distributed between the “big guys” of this business. And what about the others? How can Ukraine cope with the transportation and delivery of record harvests? Every month it is necessary to transport and ship 4 million tons.
Railways will not cope. Our river transport has not developed over the past decades and today it can only carry 2-2.5 million tons of grain per year. The answer is obvious – in the current situation only road transport can help out.
However, if the government innovations on the “outdated” weight and dimensions restrictions are not immediately canceled, the farmers and truckers will not manage. After all, restriction of the total weight of a vehicle and its load up to 24 and 40 tons is unreasonable. Trade and transport has long ago evolved, while officials remained at the level of the “old Zils”. The weight of a modern truck can be 18 tons, its cargo capacity – 40.
Why? Because modern vehicles are constructed in such a way that they do not overload roads. That is, their total weight can reach to 58-60 tons. At the same time, these vehicles distribute the load correctly, so that they do no harm to the road surface.
These restrictions threaten the export of agricultural products and our global positions; they also entail billions of hryvnias expenditures for producers and market participants. As a result of such a policy there will neither be any increased budget revenues, nor funds for the construction of roads. Therefore, instead of making 5-6 billion hryvnias, necessary for the construction of roads, out of paid freight traffic within the permissible loads on roads, we are generating losses for everybody, except for those who are in charge of weighting.
Moreover, at the level of the Government, the Ministry of Infrastructure, and Ukrzaliznytsia it is necessary to solve problems with an immediate increase in the number of grain cars, to invest in their construction, and through the monopolist’s provision of discount in fees to stimulate the construction of our own fleet of cars by the market participants. We should review the set by the state fees for transportation by river transport, introduce a simplified procedure for the foreign fleet entry in the inland waters of Ukraine.
As practice shows, solution of these issues at the level of the Ministry of Infrastructure is impossible because of the inactions of the latter. Therefore, we need the Prime Minister and the Government to intervene in the situation.
In this regard, we will initiate consideration of the stated problematic issues connected with the logistics of grain and agricultural goods at a meeting of the Verkhovna Rada Committee on Agrarian Policy and Land Relations, with the participation of the Prime Minister, the Minister of Infrastructure, representatives of Ukrainian railways, river transport, freight trucking companies, and farmers.

Ivan Miroshnichenko
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