UA Outlook 2024-2033 Report

Ukraine is the second largest country in Europe after the Russian Federation, with about 42.2 million ha of agricultural land comprising 70% of the country’s total area. The agricultural sector plays a major role in the Ukrainian economy, and Ukraine has become an important player on several agricultural markets, aided by its huge agricultural potential and a favourable geographical position, with access to the Black Sea and direct access to key markets in the EU, the Middle East and North Africa. The full-scale Russian invasion, which started in February 2022, has caused an extensive shock on the Ukrainian economy, and agricultural sector in particular. Direct damages from occupation, artillery shells and airstrikes, disruption of logistics routes, increased costs for production inputs and decreased prices for agricultural commodities on the domestic market have put Ukrainian farmers in a difficult situation. Market situation has somewhat stabilized in 2023, but a long road to recovery is just beginning. The study aims at providing an overview of the current situation of the agri-food sector in Ukraine and a market outlook until 2033. It explores potential future trends in the Ukrainian agri-food markets amid war and post-war recovery scenarios, and identifies the driving forces behind these trends. For the outlook, the AGMEMOD model for Ukraine has been updated, further developed, and applied. AGMEMOD is a complex system of partial equilibrium, medium-term, multiproduct and multi-country econometric models. It includes all EU Member States, Ukraine, some EU neighbouring and African countries, and other nations, while taking into account their respective domestic agricultural, trade and environmental policies. In previous years, three agricultural market Outlooks for Ukraine have been developed based on AGMEMOD (Nykolyuk et al., 2021; Bogonos and Stepaniuk, 2017; van Leeuwen et al., 2012). Building upon the previous model developments, the current work provides results based on more recent data and new assumptions, taking into consideration impacts of the war. Specifically, the following updates and improvements have been done for this study: (i) the database of the Ukraine country model in AGMEMOD was updated to 2023, (ii) the assumptions about production costs have been updated based on the producer interviews and macroeconomic projections of MDTU, (iii) assumptions about changes in agricultrual land area during the war were introduced into the model, and (iv) an endogenous sunflower oil price function was implemented in the model, based on the study of Ukrainian market power on global markets of main Ukrainian agricultural commodities. The report consists of five sections. Section 2 reviews recent events and sector developments, which impacted Ukrainian agriculture in mid-late 2023. Section 3 describes Ukraine model of AGMEMOD and the updates that have been made. The projections for the Ukrainian agricultural markets until 2033 are presented in section 4. Section 5 provides summary and final conclusions of the report. For complete detailed projections, see UA.