Fertilizer use
Average fertilizer use per ha in Ukraine is among the lowest in the world, mostly due to Ukraine’s focus on crops with a lower sensitivity to fertilizer application and the high cost of financing (which decreases the value-to-cost ratio in the application of fertilizers).
If compared by crops, Ukrainian farmers use a similar amount of fertilizers for corn as Argentinian, Brazilian and Russian peers, but twice less than peers in the EU and US. For wheat, a key grain in Ukraine (by share of land), fertilizer application in Ukraine is ~2x below that in Argentina and Brazil, 3x below in the US and 5x below EU levels. The comparison of fertilizer use for barley, which is widely grown in Ukraine, Russia and the EU, is similar to that of wheat.
A comparison of fertilizer use on oilseeds is hardly comparable with Argentina and Brazil, due to the lack of data (the latter are focused on soybeans, while Ukraine is on sunflowers); compared to EU farmers, Ukrainians apply roughly the same amount of fertilizers on sunflower and rapeseed.
Total fertilizer consumption, kg per ha of arable land |
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Fertilizer application by nutrient, kg/ha Wheat |
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Fertilizer application by nutrient, kg/ha Corn |
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Source: FAO |
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Source: FAPRI |
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Source: FAPRI |
Fertilizer application by nutrient, kg/ha Barley |
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Fertilizer application by nutrient, kg/ha Sunflower |
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Fertilizer application by nutrient, kg/ha Rapeseed |
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Source: FAPRI |
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Source: FAPRI |
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Source: FAPRI |
Inputs prices: lease cost is Ukraine’s key cost advantage
Ukrainians’ key cost advantage to Latin American peers is low lease costs: Ukrainian companies pay USD 35-90/ha vs. USD 250-400/ha for LatAm peers. The cost of fertilizers, if urea is taken as a reference, for Ukrainian farmers is similar to those for Latin Americans (even though all of them consume Ukrainian and Russian products): recent industry consolidation in Ukraine allowed its producer, Ostchem, to price locally sold products at a premium to export prices. Fuel costs are similar between Ukraine and Argentina; Brazil farmers pay up to a 50% premium. Labor costs in Ukraine are considerably lower than in its UBRA peers. Russian farmers enjoy up to 20% cheaper fertilizers, the lowest lease costs and 10%-50% cheaper fuel.
Lease costs, USD/ha per annum |
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Fertilizer costs, Urea price, USD/t |
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Source: Concorde Capital estimates |
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Source: ICIS, Allua.biz, Eurochem |
Fuel costs, unleaded gasoline, EUR/l |
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Labor costs, Minimum wage, USD/month |
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Source: Concorde Capital estimates |
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Source: State Statistics Committee of Ukraine, Russian Federation Federal State Statistics Service, Wageindicator, Brazilian president’s official website |
