The Role of Cooperatives in Food Security: US and Brazil Case Studies

 

Introduction

The nonpartisan and multinational CSIS Ukraine Economic rehabilitation Commission aims to develop a policy framework that will encourage private sector investment in Ukraine's future economic rehabilitation. CSIS will convene a series of working groups to support the commission, addressing a variety of issue-specific areas critical to the Ukrainian economy's reconstruction and modernization, such as agriculture, energy, transportation and logistics, as well as the impact of corruption on private sector investment.

Russia's invasion of Ukraine was primarily aimed at crippling Ukraine's agriculture industry, and in seven months, Russia successfully targeted Ukraine's farms and fields, warehouses and transportation infrastructure, and agricultural research centers. These attacks have impacted multiple wheat harvests at the same time: wheat planted in 2020 and harvested in 2021, which was being exported in early 2022; wheat planted in 2021, still in the ground at the time of attack and harvested in summer 2022; and future harvests, whose sowing and reaping will be determined by the availability of inputs and the state of infrastructure this year and in years to come.
 Russia's attacks reduce Ukraine's government's income and the well-being of millions of families who rely on agriculture for a living, as well as food security for countries that rely on the Black Sea for wheat imports—along with sunflower oil, maize, canola oil, and barley, Ukraine's other major agricultural exports.
Ukraine's agricultural transportation infrastructure, storage infrastructure, fertilizer industry, and labor force have all suffered varied degrees of damage and destruction since the war began. These sectors, which are equally important to Ukraine's agricultural productivity, demand special attention as part of efforts to rehabilitate the agricultural industry. The proposals below reflect the preliminary conclusions of the CSIS Ukraine Economic Reconstruction Commission's agriculture sector working group, which included government officials, private sector representatives, academics, and civil society activists from the United States and Ukraine.
Transportation
Prior to the conflict, Ukraine exported up to 98 percent of its agricultural products through the Black Sea, with over half passing through the nearby ports of Odessa, Chornomorsk, and Pivdennyi. In 2021, Ukraine's wheat, maize, barley, and sunflower oil exports averaged more than 4 million metric tons per month, with summer and fall shipments reaching 6 million tons. More than 100 ships safely crossed the Black Sea in one month as part of the UN-brokered grain deal, transporting almost 2 million metric tons of agricultural output to worldwide buyers. The agreement is a win for the United Nations and provides a model for wartime transportation, but it does not restore Ukraine's prewar potential for maritime agricultural trade. As Russia continues to threaten Ukraine's ports and Ukraine defends its coast from an amphibious attack, the volume of trade across the Black Sea will be constrained, and the cost of insuring Black Sea-bound ships will remain high. To increase the volume and reduce the cost of Ukraine's agricultural exports, new channels must be identified and fortified.

Export via Romania and export via Adriatic Sea ports are two examples of such opportunities.

 

During the first five months of the conflict, Constanța, Romania, handled over 1.5 million metric tons of Ukrainian grain, which arrived by rail or truck straight from Ukraine, or by barge from Ukraine's Danube River ports of Reni and Izmail. In 2021, Constanța sold more than 25 million metric tons of grains from Romania and other producers, and its ability to handle Ukrainian grain will be determined by the quality of its processing facilities and the state of transportation into Constanța. Comvex, a Romanian port operator, has invested more than $4 million in an additional barge offloading platform, while the Constanța Port Business Association believes that it will require around $344 million to increase grain processing speeds. Constanța's capacity is further constrained by weak railroad infrastructure and low water levels on the Danube River, which hinder ships from transporting full loads.
CMA-CGM, a French container and shipping business, has suggested an Adriatic Land Bridge Solution to transfer Ukrainian grain from Odessa to Trieste, Italy, via Slovakia and Austria, and to Koper, Slovenia, via Hungary, with a transit time of around seven days from Odessa to Trieste or Koper. According to the rail transportation sector, rail-bound exports from Ukraine outnumber imports into Ukraine. Without imports covering the costs of container transit into Ukraine, potential exporters would be forced to cover the price of empty rail cars, raising the overall cost of transportation from Ukraine.
Restoring Ukraine's agricultural transportation infrastructure will necessitate addressing the challenges specific to the Romanian and Adriatic Sea options described here; any solution proposed must address the common challenges of damaged infrastructure, increased freight costs, and insufficient railway infrastructure. For example, Russian missile strikes have repeatedly targeted the Zatoka railway bridge between Odessa and Izmail, as well as other transportation facilities during the war. The rising expense of insurance, in part owing to these attacks, combined with greater fuel and operational costs, has increased the cost of rail transportation by more than 600 percent in some circumstances, from roughly $35 per metric ton per war to up to $230 per metric ton now.

Finally, 

redirecting maritime transit to rails necessitates bringing Ukraine's rail gauges and rail cars up to EU standards, as described in Ukraine's National Recovery Plan project to increase the capacity of freight car rearrangement points, as well as the European Commission's proposal to build EU standard gauge rail lines at heavily trafficked border crossing points into Ukraine. Equally vital is expanding Ukraine's capacity for EU-standard grain hoppers. Ukrainian-sized grain hoppers are too huge for European train platforms, causing challenges outside of Ukraine. Potential solutions to these barriers include subsidizing Ukraine's production or procurement of European-sized grain hoppers, directing European grain hoppers to the Ukrainian border once existing contracts are fulfilled, and retrofitting rail cars designed for other purposes with special liners to allow for grain transport.
Storage
Improving Ukraine's agricultural transportation infrastructure is crucial for recovering the country's agricultural export capabilities and transferring previous harvests off farms to make room for current and future harvests. Until Ukraine's transportation capacity is restored, farmers require increased access to storage, both temporary and permanent.