Ukraine farm union warns oilseed export priority would hit grain farmers

By Pavel Polityuk

KYIV, Sept 30 (Reuters) - Ukraine's largest farming union, UAC, warned on Wednesday that plans to give export preference to oilseeds and processed products could leave farmers with excessive grain stocks and sharply lower incomes.

Ukraine's agriculture minister said this month the ministry had backed a proposal from some farming groups to prioritise transport capacity for higher-value goods when export routes are constrained.

With its seaports effectively blocked by the war with Russia, Ukraine can currently export little more than half of its potential volumes via lower-capacity Danube ports and rail links through Eastern Europe.

"Oilseeds already have an export advantage without additional preferences, as their higher value makes it easier to absorb substantial logistics costs," UAC said in a statement.

"For grains, logistics account for a much larger share of the final product price. Therefore, it is unacceptable under current conditions to grant oilseeds additional preferences," it said.

Agriculture ministry data show grain exports have fallen by more than 60% so far in September, while shipments of oilseeds and vegetable oils have declined by about one-third.

UAC said farmers would bear the brunt of the proposed policy change, with grain filling storage facilities, marketing opportunities shrinking and purchase prices falling further.

The ministry has said prices paid to producers for third-grade milling wheat have fallen nearly 30% in the past two months.

Ukrainian grain stocks have already increased by 10 million metric tons from a year earlier to 24.6 million tons as of September 1.

Consultancy APK-Inform said this month that the sharp drop in exports would push carryover stocks to a record 24 million tons, up from 11.6 million tons a season earlier.

As of September 1, stocks already exceed last year's level by 10 million tons.

The consultancy said wheat carryover stocks could rise to a record 11.7 million tons at the start of the 2027/28 season, up from 1.6 million tons a year earlier.

Corn stocks could jump to 9.2 million tons from 5.7 million.

(Reporting by Pavel Polityuk. Editing by Mark Potter)