And why do I care so much about agricultural shipments? I mean, Ukraine only has one waterfrontage, it’s got to pull into the Northwest and Romania to the southwest. Why can’t it ship stuff by land? Well, agricultural products really doesn’t matter what it is, have a very high weight and bulk to value ratio. So transport really is important from a cost point of view. And on average, as you know, for me, plus blah, blah, blah in forever, it costs about 12 times as much to ship anything by truck as it does by water. And so Odessa and KEARSON are the big blue water ports in the area has always been easier in the Russian and Ukrainian spaces to get the stuff on water wherever you can, and send it out. In this case, others another problem. There are real connections that go into the countries to Ukraine’s West, and some grain has gone there. But two problems number one, there’s not nearly enough of them and capacity is limited. So you’re talking about maybe one sis of Ukraine’s pre war grain could have made it out through the Western zones by rail. But problem number two, the rail gauge is different. So once these carriages get to the border, they either need to be on a special kind of carriage where you can adjust the rail gauge car by car at the border, or you need to switch the cargo to a new carriage in order to go into Europe. And I guess there’s a third problem to what has happened for the first year is in order to maximize that 20% They’d be going into Romania or Poland or Hungary, and then they dump their cargo and then the rail cars would come back empty to get loaded up again. That is what allows Ukraine to hit that 20% Number. The problem is Romania and Hungary and especially Poland are all green producers and exporters. And all this Ukrainian green getting dumped on the local market was pushing down the costs of local grain and forcing the poles the Hungarians and Romanians to then increase their shipments out. Well, that meant they had to pay the transport costs now as well. And it was starting to drive some local farmers out of business. So what we’ve seen in the last three months is most governments on the entire swath of European countries, that border or near Ukraine have stopped accepting Ukrainian cargo as an end destination, you can still trans ship, get it through, you can still get to a port no problem. But that means that the carriers it used to be able to do short back and forth now has to go all the way through these countries to get to another country or to get to the coast and then it takes up port space. And so that’s taking that 20% And probably cut it at least by a third, maybe as much as half. And the only solution to this that isn’t waterborne is to lay twice as many tracks or get a lot more rail cars. That’s not something you do in a few months. And so we are now looking at an environment where maybe 10% of Ukraine’s grain can out get out this year. And once the Russians actually start going after the infrastructure, especially in places like Odessa, those venues close off completely. So last year was probably the last year that Ukraine is going to be a significant producer of foodstuffs for the world. Next question.
Related
Peter Zeihan
Geopolitical Strategist
View Video LibraryCommentary
Our commentary partners will help you reach your own conclusions on complex topics.
Russia unveils drone-resistant ‘turtle tanks’
Friday
Peter Zeihan
Gen Z debates capitalism vs. socialism, meritocracy vs. equality
Thursday
Dr. Frank Luntz
Texas heat challenges a strained energy grid
Wednesday
Peter Zeihan
Japan’s navy gets an upgrade
Monday
Peter Zeihan
Why I’m concerned about Ukraine’s agriculture industry
May 18, 2023
By Straight Arrow News
The EU has announced a Ukraine grain deal after five member countries banned Ukrainian imports following protests from local farmers. The deal allows Ukraine to transit agricultural produce through EU countries but not to sell there.
Although Russia has just extended the Black Sea grain deal for two months, allowing Ukraine’s grain exports to be transported by water, Straight Arrow News contributor Peter Zeihan explains why he thinks there are more hurdles ahead for Ukraine’s agriculture industry.
Excerpted from Peter’s May 18 “Zeihan on Geopolitics” newsletter:
The fourth question of the Q&A series is…why am I so worried about agriculture exports coming out of Ukraine?
Ukraine’s preferred route for its bulk wheat and maize exports has always been water — specifically via the Black Sea. Now you’re probably thinking, “Even with seaborne export routes being blocked by Russia, can’t Ukraine just send stuff by rail to neighboring countries?” Theoretically, yes, but there are a few problems.
There are two sizeable hurdles to overland transit. The first is limited rail capacity and differing infrastructure. Ukraine’s Soviet past means its rail lines are of a different gauge than most of Europe, forcing it to rely on aging legacy connectivity in Romania and Poland. And now there is a new issue on the horizon. As Ukraine started dumping more and more grain into its neighboring EU countries, the local economies took a hit, resulting in many of these countries refusing Ukrainian grain in support of their local farmers. It can still pass through, but it can’t stop there.
As Ukraine’s exports now need to go further, new infrastructure is required, and profits will get even lower. There isn’t a quick fix for this. To add insult to injury, Russia will soon target Ukrainian agricultural infrastructure — meaning last year was likely the last time Ukraine would be a significant producer of foodstuffs for the world.
And why do I care so much about agricultural shipments? I mean, Ukraine only has one waterfrontage, it’s got to pull into the Northwest and Romania to the southwest. Why can’t it ship stuff by land? Well, agricultural products really doesn’t matter what it is, have a very high weight and bulk to value ratio. So transport really is important from a cost point of view. And on average, as you know, for me, plus blah, blah, blah in forever, it costs about 12 times as much to ship anything by truck as it does by water. And so Odessa and KEARSON are the big blue water ports in the area has always been easier in the Russian and Ukrainian spaces to get the stuff on water wherever you can, and send it out. In this case, others another problem. There are real connections that go into the countries to Ukraine’s West, and some grain has gone there. But two problems number one, there’s not nearly enough of them and capacity is limited. So you’re talking about maybe one sis of Ukraine’s pre war grain could have made it out through the Western zones by rail. But problem number two, the rail gauge is different. So once these carriages get to the border, they either need to be on a special kind of carriage where you can adjust the rail gauge car by car at the border, or you need to switch the cargo to a new carriage in order to go into Europe. And I guess there’s a third problem to what has happened for the first year is in order to maximize that 20% They’d be going into Romania or Poland or Hungary, and then they dump their cargo and then the rail cars would come back empty to get loaded up again. That is what allows Ukraine to hit that 20% Number. The problem is Romania and Hungary and especially Poland are all green producers and exporters. And all this Ukrainian green getting dumped on the local market was pushing down the costs of local grain and forcing the poles the Hungarians and Romanians to then increase their shipments out. Well, that meant they had to pay the transport costs now as well. And it was starting to drive some local farmers out of business. So what we’ve seen in the last three months is most governments on the entire swath of European countries, that border or near Ukraine have stopped accepting Ukrainian cargo as an end destination, you can still trans ship, get it through, you can still get to a port no problem. But that means that the carriers it used to be able to do short back and forth now has to go all the way through these countries to get to another country or to get to the coast and then it takes up port space. And so that’s taking that 20% And probably cut it at least by a third, maybe as much as half. And the only solution to this that isn’t waterborne is to lay twice as many tracks or get a lot more rail cars. That’s not something you do in a few months. And so we are now looking at an environment where maybe 10% of Ukraine’s grain can out get out this year. And once the Russians actually start going after the infrastructure, especially in places like Odessa, those venues close off completely. So last year was probably the last year that Ukraine is going to be a significant producer of foodstuffs for the world. Next question.
Related
Russia unveils drone-resistant ‘turtle tanks’
The Russian military has unveiled a new drone-resistant tank, which has gained the nickname “turtle tank” due to its heavy shell-like armor and low mobility. While heavy artillery can stop the advance of these turtle tanks, Ukrainian forces have run desperately low on artillery and heavy munitions. Straight Arrow News contributor Peter Zeihan dives into…
Friday
Texas heat challenges a strained energy grid
As May begins, much of the country is experiencing the gradual onset of warmer weather. Texas is already feeling the full force of it, with temperatures in many areas reaching the 80s and 90s. During this time of the year in Texas, power grids can become strained due to increased demand spurred on by early…
Wednesday
Japan’s navy gets an upgrade
Following their defeat in World War II, the people of Japan pursued a largely pacifist foreign policy. Today, following Russia’s invasion of Ukraine and with near-daily news regarding China’s threatening activities throughout the greater Pacific, the Japanese are reinvesting in military defense and reaffirming their alliances with Pacific partners like Australia and the United States.…
Monday
How could RFK Jr. impact 2024 election?
Many Americans speculated about how a potential RFK, Jr. campaign might impact the 2024 elections. While RFK is neither a Democrat nor a Republican, many of his positions favor Donald Trump’s base over Joe Biden’s, particularly his various conspiracy theories on a wide range of subjects. Straight Arrow News contributor Peter Zeihan says that GOP…
Apr 26
Global warming won’t impact Russian-Chinese shipping
The seas above Russia’s northern coastline are too frozen for shipping, but some have wondered whether global warming might change that in the decades to come. If those seas were to become navigable for commercial shipping, new direct routes between Russia and China could theoretically open up. Straight Arrow News contributor Peter Zeihan throws more…
Apr 25
Underreported stories from each side
House Republicans Ask NPR CEO To Appear At Hearing After Bias Allegations
6 sources | 0% from the left
Getty Images
Former Trump aide Hope Hicks testifies ‘Access Hollywood’ tape roiled campaign
65 sources | 6% from the right
Getty Images
Latest Stories
EPA says San Francisco dumped billions of gallons of wastewater into ocean
Watch 2:09
Yesterday
Bill would have immigrants reported to ICE if they illegally try to buy guns
Watch 1:35
Yesterday
A US county is seeing success with 32-hour workweeks
Watch 2:50
Yesterday
VP hopeful Kristi Noem faces further backlash for memoir yet to be released
Watch 2:01
Yesterday
New EV tax credit exemption will benefit US consumers, but also China
Watch 1:44
Yesterday
Popular Opinions
In addition to the facts, we believe it’s vital to hear perspectives from all sides of the political spectrum.
Today’s college protesters are tomorrow’s world leaders
Friday
Dr. Rashad Richey
Left-leaning politicians too lenient with pro-Palestinian protesters
Friday
Star Parker
Careful Left, campus protests will end up benefiting Trump
Thursday
Jordan Reid
US elections have become much more secure since 2000
Thursday
John Fortier