EBITDA of Key Agricultural Crops: Analysis and Recommendations for Ukrainian Farmers

In Ukraine, the agricultural sector faced logistical challenges which resulted in grains harvested in 2022 being sold throughout 2023. Normally, the final sale of the previous year's crop would conclude by May.

Agrohub conducted a supplementary study, Agrohub Benchmarking, to summarize the final sales of 2023, taking into account current market prices. This study presents the sales results of the 2022 harvest as of the end of 2023, along with an analysis of their profitability indicators.

Specifically, the EBITDA for the 2022 season for major crops in Ukraine, as of December 2023, after adjusting for price changes and storage costs, was $47 per hectare. In contrast, the forecasted EBITDA value in February 2023 was $206 per hectare, when agricultural producers were hopeful about the stable operation of the grain corridor. Thus, the actual result was over four times lower than expected. The actual ROWC, the return on working capital for crop cultivation, was 4%, compared to the forecasted 19% at the beginning of the year.

The study found that some crops became unprofitable due to low prices and increased logistics costs. For instance, corn (EBITDA of -$227 per hectare, ROWC of -16%), which had a significant share in the previous year's crop rotation, and winter wheat (EBITDA of -$19 per hectare, ROWC of -16%) were among the unprofitable crops. However, oilseed crops remained profitable, with winter rapeseed being the most profitable, showing an EBITDA of $676 per hectare and a ROWC of 61%. Soybeans were second, with $225 per hectare and a ROWC of 27%, and sunflower was third, with $175 per hectare and a ROWC of 20%.

The study also highlighted a significant decrease in product prices. Corn prices dropped the most, by 19% (from $187 per ton at the beginning of 2023 to an average of $152 per ton for the season), followed by sunflower, with an 11% decrease (from $448 per ton to $397 per ton). Prices of rapeseed and soy changed insignificantly, by 2% (from $517 to $505 per ton) and 1% (from $433 to $427 per ton) respectively.

Olesia Martiuk

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