A sharp rise in the cost of rail transportation of grain, which has happened in Ukraine leads to the increase of agricultural production unprofitability and will become one of the factors in the further decrease of cultivated areas.

Ukrzaliznytsia sharply increased the initial bid at auctions for the use of hopper grain trucks from UAH 2,817 to UAH 4,300. It increases the minimum cost of delivering agricultural products to the port by 53%.

UAC opposes this approach of grain transportation and proposes some measures that will contribute to reducing the transportation cost.

This was discussed during the meeting of the Coordinating Council for Logistics in Agriculture chaired by the Minister of Agrarian Policy and Food of Ukraine Mykola Solsky. Among the participants were representatives of the Ukrainian Agri Council (UAC), the Ukrainian Agribusiness Club (UCAB) and Ukrzaliznytsia.

JSC "Ukrzaliznytsia" sharply raised the bid at auctions for the use of grain hoppers by 53%. This will lead to an increase in the cost of renting wagons both in "UZ" and private fleets. "UZ" acts as a certain indicator of cost in the segment of grain trucks. UAC believes that such changes are unacceptable. Any reasonable increase of the transportation cost must be planned," says Dmytro Kokhan, deputy head of the UAC.

UAC believes that it is necessary to increase the supply of grain wagons and to extend the duration of auctions for grain hoppers use, as well as to announce the auctions in advance.

 "It is necessary to increase the supply of wagons from JSC "Ukrzaliznytsia" to evenly cover the demand, then the price will be the average. If "UZ" will present grain wagons not for the next 10 days, as it is done today, but for the next 2 months, then there will be no hyped demand, and prices will stabilize, " Dmytro Kokhan believes.

If "UZ" does not change its approach to grain transportation, the losses of farmers will deepen, which will further lead to a drop in production in the industry.

"The radical increase of the logistics cost, including UZ tariffs, will be one of the factors in the significant decrease of cultivated areas this year. Any changes of the logistics cost only worsen the situation of the agricultural sector and do not contribute to its recovery and increase in production volumes, at least to last year's indicators. Yes, transportation cannot be cheap, but during the war, "UZ" should not receive excess profits on grain transportation. A dialogue and a compromise are needed , "summarized the deputy head of the UAC