A sharp increase in diesel fuel prices could lead to an average 10% rise in food prices in Ukraine, although no food shortages are expected, ProAgro Group reports.

According to Oleksandr Buiukli, Executive Director of the First Ukrainian Agricultural Cooperative (PUSK), the main factor behind the potential price increase is not a shortage of agricultural products but rising logistics costs caused by higher fuel prices.

“Ukraine is a net exporter of many food products, so we do not expect shortages of raw materials for food production. The main impact on prices will come from higher diesel fuel costs, which increase transportation expenses,” Buiukli said.

According to the expert, diesel prices in central regions previously ranged around 50–53 UAH per liter, but over the past week they have increased to around 70 UAH per liter or higher.

On average, farmers use 50–80 liters of diesel per hectare per season, meaning the price increase could raise production costs by roughly $20–30 per hectare.

Higher prices for mineral fertilizers may also have some impact, although it is expected to be smaller because most medium and large agricultural companies contracted fertilizers earlier in the season at lower prices. Smaller farms that purchase fertilizers shortly before fieldwork may feel the impact more strongly.

Buiukli noted that the agricultural sector has already adapted to difficult wartime conditions, and farmers are likely to manage the new challenges despite rising costs.

Market participants expect that meat and dairy products could rise by around 5%, while vegetable prices may increase by up to 10% in March–April.

Analysts also estimate that rising input costs could add over 1,100 UAH per hectare to farmers’ expenses, reducing the profitability of certain crops, including corn.

Earlier it was reported that the cost of this year’s sowing campaign in Ukraine may increase by about 15% compared to last year, reaching around 700 billion hryvnias.

Source: UNIAN