UZA asks to cancel the decision to increase railway tariffs by 70%
The association notes that the increase in the railway tariff for grain cargoes will have catastrophic consequences for the agricultural industry.
The Ukrainian Grain Association asks the government of Ukraine to introduce a moratorium on the increase in tariffs for cargo transportation during the war
state and 3-6 months after its completion, says UZA's appeal to the Prime Minister of Ukraine regarding the cancellation of the decision to increase railway fares by 70%.
"Zernovyki understand the damages and losses of the railway, the decrease in turnover and additional costs for the transportation of military and humanitarian goods, because they are also in a similar situation. The agricultural industry suffered catastrophic losses and losses as a result of the military aggression of the Russian Federation and like no one else feels and understands the situation , in which the economy of Ukraine found itself. Therefore, compensation for the losses incurred by JSC "Ukrzaliznytsia" as a result of hostilities and infrastructure restoration costs cannot be entrusted only to the business, which also suffered significant losses as a result of military operations and needs financial support," the statement says.
It is noted that the increase in the railway tariff for grain cargoes will have catastrophic consequences for the agricultural industry, which will further worsen the disappointing situation. According to UZA, such an increase in the cost of railway logistics for grain cargoes causedleads to additional costs of farmers, which are estimated at 120 million dollars per year.
UZA also emphasizes that with the beginning of the blockade of the ports, the cost of logistics in the structure of exports has increased significantly (by at least 5-7 times) and has reached $180 per ton of grain. Given this cost of logistics, grain producers are forced to sell goods below cost. According to average calculations, the cost of a ton of wheat in the field has been forced down to 90 dollars per ton, with a production cost of at least 160 dollars per ton.
"In this case, the increase in railway tariffs may cause not only a decrease in the transportation of UZ grain, but may also lead to the loss of such a type of cargo as grain by rail. According to various experts' estimates, by the end of 2022, bankruptcy of 50% of grain producers should be expected, and by another 40% in April 2023. That is why UZA also emphasizes the importance of state support for farmers and partial compensation of logistics costs," the association added.
Before the beginning of the large-scale invasion of the Russian army on February 24, 2022, 95-98% of grain exports were carried out through sea ports, and all agricultural exports provided more than 40% of all foreign exchange earnings. Today, the extremely limited export of grain cargoes still remains one of the main sources of replenishing the state's foreign exchange reserves and financing the work of commodity producers.
"So, in connection with the Russian blockade of the sea ports of the Azov and Black Seas, grain producers are forced to export grain and oil crops through land and river routes of communication with European countries, with subsequent overloading in European ports of the Baltic and Black Seas. Capacity of land and river crossings is significantly limited. In particular, Ukraine used to be able to export 6-7 million tons of grain every month through sea ports, but at the moment we have reached the rate of export through all road, railway and river routes of only 1.5 million tons in May 2022," UZA noted .
We would like to remind that the tariffs for railway freight transportation in Ukraine will be increased already on June 29. As already reported, the Ministry of Infrastructure of Ukraine agreed with the proposal of "Ukrzaliznytsia" to increase tariffs for cargo transportation by 70%.