Kyiv, March 16, 2023 — As the International Rescue Committee (IRC) calls for a twelve month renewal of the Black Sea Grain Initiative to mitigate the devastating impact of the disrupted Ukrainian exports on the countries on the brink of famine, our new report uncovers the destructive effect of the war on virtually all of Ukraine’s business sectors.
- 90% businesses suffer as a result of reduced demand as the purchasing power of Ukrainians has dropped by almost 50%;
- A staggering 71% of surveyed businesses face difficulties due to disruptions in supply chains;
- Farms bordering active hostility zones have reported significant damage - 25% of smallholder farmers have stopped or reduced agricultural production due to the war, export opportunities remain scarce;
- Increases in agricultural production costs are felt across the country: livestock and crop production costs have increased by 64% and 72% respectively, significantly reducing the income of smallholder farmers.
There is no sector in Ukraine which has remained untouched by the war - the analysis emerging from the IRC’s labour market assessment conducted in Zaporizhzhia, Odesa and Dnipro reveals the dire situation of Ukrainian businesses over one year since the conflict escalation. Logistical challenges linked to destruction of the critical infrastructure, limitations linked to exports, loss of human capital, disruptions in supply and demand, as well as continuing instability continue to erode livelihoods across the country. In addition to this, with Ukraine among the world's most mine-contaminated countries, landmines are also posing a deadly threat to farmers.
Josie Scott, Emergency Economic Recovery and Development Coordinator in Ukraine, said:
“It is difficult to speak of rebuilding the Ukrainian economy at a time when the ongoing war is actively damaging infrastructure, forcing people to flee in search of safety, and disrupting everyday life and business operations. As the UN is negotiating a renewal of the Black Sea Grain Initiative, while disrupted exports have a devastating ripple effect on food security globally, Ukrainian farmers are also struggling to get through.
“Farmers in the region are still facing difficulties selling their grain due to disruptions in logistics chains, and blockage of seaports. Some people we spoke to admit that while they are striving to cultivate their lands, storing food in regions like Zaporizhzhia has become extremely difficult due the disruptive impact of the war on the power supply. Limited access, logistical challenges and increased transportation costs have also resulted in crops being thrown away.
“One year on, next to ensuring that people can obtain what they require to go on with their income generating activities - that is land cleared of landmines, cash, fuel or electricity to power equipment, seeds, fertiliser and animal feed - it is vital that we continue to meet humanitarian basic needs, but also protect and restore livelihoods. The renewal of the Grain Deal Initiative is critical to avert impending famine in places like Somalia, but also to help millions of farmers in Ukraine to unlock the production chain impasse and recover.”
Notes to editors
- 78% of businesses had stopped activities when the conflict escalated last year, and by the time the summer rolled around, only 50% have partially recovered.
- Damages and losses to rural smallholder farmers in the first six months of war only were estimated at $2.25 billion, primarily affecting crop and grain production.
- The Labor Market Assessment was conducted from mid-September to early November, 2022, and covered the Zaporizhzhia, Odesa, and Dnipro regions. Qualitative data was collected from primary and secondary sources, starting with a desk review of secondary sources, followed by the facilitation of key informant interviews (KIIs) and focus group discussions (FGDs). The survey covered 125 Individuals and 25 businesses, with 14 interviewed directly.
- In November 2022, the Ministry of Agrarian Policy and Food (MAPF) estimated $6.6 billion of war-related damages to the agriculture sector in Ukraine. Among those: 44% damages to agricultural equipment and machinery, 28% damage to stored products such as 2.8 million tonnes of grain and 1.2 million tonnes of oilseeds which were destroyed or stolen, 16% damage to storage facilities for food and agricultural products, 6% damage to livestock (including 17% of all registered bee families in Ukraine which died), 5% damage to perennial crops and 1% inputs which were damaged or stolen.
- Before war, approx. 7.5 million people worked in agriculture, and FAO’s early estimates anticipated a “deficit of approximately 1.3 million agriculture workers.”