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Traders says proposed tariffs jump to cut Ukraine 2024 sowing areas

Plans by Ukraine’s national railways to raise transport tariffs will lead to increased losses for farmers, a new reduction in planted areas and lower exports, Ukrainian traders union UGA said on Monday.

Ukrainian producers earlier reported on Ukrzaliznytsia’s plans to increase freight tariffs by 20% from January. The state railways last raised freight tariffs in June 2022, increasing them by 70%.

Ukrzaliznytsia has said the tariff increase is necessary for the company to break even.

As a result of Russia’s invasion in February 2022, Ukraine lost up to 30% of its planted areas, and the blockade of major Black Sea ports has increased logistics costs and made growing almost all crops unprofitable.

“The increase in railway tariffs for freight transportation and the rise in the cost of using wagons will lead farmers to even greater losses and they will reduce the sown areas for the 2024 harvest,” UGA said in a statement.

“At a time when exports of grains and oilseeds are one of the main sources of foreign exchange earnings for the country, a reduction in the area under these crops automatically means a drop in exports and foreign exchange earnings,” it added.

UGA said losses in agriculture due to reduced production, the blockade of ports and higher prices for inputs were estimated at more than exceed $25 billion.

Financial and logistical difficulties have already reduced the sowing area of key winter wheat for export and domestic consumption winter wheat to around 4 million hectares from 4.5 million in 2022.

The government said the 2024 harvest is already expected to be reduced to 18-20 million metric tons from more than 22 million tons in 2023.

Producers unions also said farmers could cut the area sown to corn and barley in 2024.
Source: Reuters (Reporting by Pavel Polityuk, Editing by Louise Heavens)

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