Breaking the Black Sea Blockade: Securing Ukraine’s Agricultural Exports

Since the beginning of Russia’s full-scale invasion, maintaining our agricultural exports has required constant adaptation. When Russia blockaded our ports in 2022, we worked with our partners to establish new routes through the European Union and the Danube. When Russia withdrew from the Black Sea Grain Initiative, we established our own maritime corridor and restored commercial shipping from the ports of Greater Odesa.

Russia is now trying to shut that route down through force. Repeated attacks on civilian shipping and the infrastructure that supports it are intended to make the Black Sea too dangerous and too expensive for commercial operators. The consequences are already being felt by Ukrainian farmers, but they will not stop at our borders. Countries around the world continue to depend on Ukrainian food.

Ukraine has responded quickly. But the volumes involved are too large and the alternative routes too few to address the challenge. If farmers cannot sell this year’s production at sustainable prices, many will have less to invest in the next harvest.

This report comes at an important moment. It considers what Ukraine can do now to keep agricultural goods moving, as well as where our international partners can make the greatest difference. There are practical steps available to us, but they require a willingness from our partners to share some of the cost and risk created by Russia’s actions.

For more than four years, Ukrainian farmers have continued to work under extraordinary conditions. For those operating close to the front, war is part of the reality of producing every harvest. Yet they continue to plant, invest and get food to market.

Keeping Ukrainian farmers farming is an economic and strategic priority for Ukraine. It is also essential if Ukrainian food is to continue reaching the millions of people around the world who depend on it.

Ukraine has always been a guarantor of global food security. We continue to stand ready for peace, and mutual actions to safeguard the free flow of food to the world’s markets.

Oleksii Sobolev, Deputy Head of the Office of the President of Ukraine

Before the full-scale invasion, Ukraine accounted for around 6 per cent of food calories traded internationally and exported enough to feed an estimated 400 million people annually. Russia’s renewed campaign against commercial shipping in the Black Sea puts that role at risk.

The immediate problem is the loss of reliable access to the deep-water ports of Greater Odesa. Ukraine has moved quickly to expand storage and alternative export routes, but neither can replace the volumes carried by sea. The longer the disruption continues, the greater the damage to farm revenues and the higher the risk that producers cut planting and investment for next year’s harvest.

This paper proposes a three-part response: reopening the sea, moving more produce overland and creating a larger domestic market for what cannot be exported. Ukraine and its partners can make Black Sea shipping commercially viable again by reducing the financial risks facing vessels and cargo; moving more grain overland by cutting transport costs and securing transit through neighbouring European Union states; and absorbing part of the remaining surplus by accelerating the development of a domestic biofuels market.

The window for action is narrow. Ukraine is harvesting far more than it can currently export, while available storage can accommodate only a fraction of the emerging surplus. Without new outlets, millions of tonnes of agricultural produce will have nowhere to go. The resulting losses would threaten farm viability and next year’s production, turning disruption in the Black Sea into a much larger problem for Ukraine and global food security.

The Golden Leo, a Guinea-Bissau flagged vessel carrying Ukrainian corn, was struck by three Russian cruise missiles on 19 July as it entered Ukraine’s maritime corridor. Nine of the 17 crew were killed, four Indian and five Syrian, along with the Ukrainian harbour pilot guiding the vessel out of port.^[_] The Golden Leo was not an isolated incident: in July alone Russia struck Ukrainian seaport facilities 67 times, attacked civilian vessels in the ports on 35 occasions and hit a further 22 within the maritime corridor itself.^[_] The significance of the Golden Leo, however, was in the market response. Shipowners and underwriters concluded that the risk of using the corridor – a wartime shipping route established and protected by Ukraine along its own coastline after Russia withdrew from the Black Sea Grain initiative – could no longer be priced on commercially viable terms. On 22 July, for the first time since the corridor opened in September 2023, no vessel entered the ports of Greater Odesa.^[_] The attacks have continued to the present day.

This has precipitated a crisis for Ukrainian agriculture. Harvesting began early this year and yields have been good, but the inability to move produce abroad is potentially catastrophic. Sixty per cent of all Ukrainian exports by value are agricultural products. Failure to transport the harvest to markets will undermine a major revenue stream for the country’s defence. Moreover, Ukrainian food reaches more than 55 countries through the ports of Greater Odesa, meaning the situation is putting global food security at risk.^[_]

Gross harvest of grains and oilseeds is forecast at 81–83 million tonnes,^[_] against a total agricultural-export requirement of 64.39 million tonnes for 2026/27.^[_] Ukraine remains overwhelmingly dependent on the ports of Greater Odesa, which accounted for 42.2 million of the roughly 46 million tonnes of all cargo passing through all of Ukraine’s seaports from January to end July 2026.^[_] Against a monthly agricultural-export requirement of 5.37 million tonnes,^[_] current available capacity without the deep-water ports falls to 1.74 million tonnes.^[_] Even with the full operation of every alternative route (Figure 1), at current capacity it would reach only 2.85 million tonnes.

Transmission to producers has been rapid. Wheat trading at around 10,700 hryvnia ($240) per tonne last autumn had fallen to approximately 8,700 hryvnia ($195) by late July. Against production costs of some 45,000 hryvnia per hectare, this implies a break-even yield of roughly five tonnes, which many farms will not achieve. The National Bank places the export revenue shortfall for the second half of the year at close to $2.5 billion.^[_]

The scale of this crisis could potentially dwarf even the disruption of the early years of the war. Ukraine was still able to export 49 million tonnes of grain and pulses in 2022/23, despite the blockade in place at that time. In contrast, the ministry forecast for all agricultural exports in 2026/27 is just 29.6 million tonnes against the 64.4 million envisaged in the season balance, marking the lowest exports of the war.^[_] During the early years, farm revenues were also boosted by rising global food prices, so producers sold into a stronger market once shipments resumed. That will not necessarily be the case this time. Black Sea risk lifts international quotations while the added cost of reaching a buyer is passed back to the farm.

The consequences of a prolonged Black Sea disruption extend far beyond Ukraine as it threatens the affordability and availability of food across some of the world’s most import-dependent economies. The region accounts for around a third of global wheat trade, yet by late July shipments were more than 40 per cent below their level a year earlier.^[_] The impact is already visible in world wheat prices. In August 2026, wheat prices rose by 2.6 per cent, while the Food and Agriculture Organization’s (FAO) Cereal Price Index reached its highest level since May 2024. FAO attributed the increase partly to continued disruption to Black Sea exports.^[_] By early August, world wheat prices were almost 25 per cent above January levels.^[_]

The disruption also coincides with a tightening global supply outlook. The U.S. Department of Agriculture expects wheat production among the seven largest exporters to fall by 11 per cent in 2026/27.^[_] The closure of the Strait of Hormuz is projected to raise fertiliser prices by around a third, while an emerging El Niño poses additional risks to agricultural production.^[_],[_] Import-dependent countries are particularly exposed. Egypt sourced more than 82 per cent of its wheat imports from the Black Sea region in the first half of 2026, while Algeria, Bangladesh, Jordan, Tunisia and Vietnam also rely heavily on the region.^[_] A prolonged disruption would therefore translate directly into higher food costs and greater food insecurity in the countries most dependent on Black Sea supply.

The Ukrainian government’s response has been prompt and, based on the resources available to it, well designed. Emergency storage was addressed first, through a grain-sleeve programme (providing farmers with large, sealed bags for temporary grain storage) supported by partner governments and international actors such as Minderoo Foundation. This initiative builds on a pilot, supported by Minderoo Foundation and partner governments in 2022–2023, that is credited with conserving approximately 6.1 million tonnes by mid-2023 and addressing more than 25 per cent of Ukraine’s grain-storage deficit that year. The Ministry of Agrarian Policy and Food is considering repurposing other existing international projects – such as the World Bank’s Agriculture Recovery Inclusive Support Emergency (ARISE) project, which provides concessional loans and grants to Ukrainian farmers, including funding for the 5-7-9 per cent lending programme – to provide further crisis relief.

Credit measures followed. The 5-7-9 programme was expanded. The National Bank extended regulatory flexibility for lenders into 2027, easing capital and provisioning requirements so banks can keep lending to the sector through the disruption; and the collateral rate on grain was raised, allowing farmers to borrow more against grain held in storage.^[_] On the logistics side, Ukraine has secured a 50 per cent discount on Moldovan rail-transit tariffs from 10 August until the end of the year, enabling exports via the Ukrainian port of Reni, Moldovan Danube ports and Romanian ports including Constanța.^[_]

Unfortunately, these measures will not on their own be enough to prevent serious economic damage to Ukraine’s agricultural sector. For example, it is estimated that temporary storage requirements could reach 11 million tonnes by November,^[_] whereas confirmed and committed sleeve supply amounts to approximately 1.6 million tonnes.^[_] Additional international support here is urgently needed. Overland corridors cannot compensate for that shortfall.^[_] The trajectory is also unfavourable, since rail volumes contracted in August rather than expanding, and water levels of the Danube – the river used to ship exports to the port of Constanța in Romania – stand at their lowest since 1996. There is a similar shortfall in financing. Additional logistics costs to the sector for the current marketing year are estimated at around €1.1 billion euros, while sector liquidity stands at approximately €0.19 billion.^[_]

As Figure 3 shows, storage secured for the autumn covers only a small portion of what is needed, monthly export capacity falls well short of what the harvest requires, and sector liquidity is insufficient to meet the additional costs imposed by the season. These three factors are connected; grain that cannot be shipped must be stored, and grain that cannot be shipped or stored cannot be sold.

This calls for a threefold response, ordered by priority. The first and most important is to reopen the sea route, which no combination of alternatives can replace. The second is to move more grain overland where the sea route cannot be restored. The third is to increase domestic consumption of what cannot be moved.

Reopen the Sea

The first priority for Ukraine must be to reopen the Black Sea. Alternative routes do not offer enough volume to meet export demands. The low cost associated with maritime export is also what keeps Ukrainian grain competitive on the global market, making this the preferable solution to the crisis. We present two solutions to persuade commercial vessels to re-engage with Ukraine’s southern ports.

1. A Maritime Coalition of the Willing

A Maritime Coalition of the Willing could internationalise the status of vessels and cargoes carrying Ukrainian agricultural exports, raising the political and financial costs of Russian attacks. The concept could build on the existing Coalition of the Willing framework led by France and the UK, and President Volodymyr Zelenskyy’s proposal for foreign vessels to transport agricultural products through the Black Sea.^[_]

Three models merit consideration. The first is reflagging: participating vessels register under the flags of coalition states with greater geopolitical weight than traditional flags of convenience. This would give coalition governments a direct interest in the safety of vessels operating under their jurisdiction and strengthen deterrence against attack.

During the Iran-Iraq War in 1987, amid repeated attacks on Gulf shipping, the United States agreed to place 11 Kuwaiti oil tankers under US registry. The vessels then sailed under the US flag, bringing them under US jurisdiction and turning attacks on Kuwaiti commerce into incidents directly involving the United States.

The second is sovereign cargo ownership: partner governments or international relief organisations purchase agricultural cargo before departure and resell it on arrival. An attack would therefore damage not only privately owned shipping, but property owned by international partners.

The third is an international cargo registry: shipments remain privately owned but are formally designated as part of a coalition-backed food security corridor, with members committing in advance to coordinated diplomatic, legal and economic measures following an attack.

These three models offer different levels of deterrence and political commitment. Reflagging would send the strongest sovereign signal, but participating states would need to accept the associated risks. Government ownership of cargo would create a direct financial and legal interest in individual shipments, although it would expose governments to commercial liabilities. A cargo registry would be easier to establish, but its credibility would depend on clear pre-agreed consequences. None of these models provides physical security. Their value lies in changing Russia’s cost calculus by turning an attack on Ukrainian shipping into an incident engaging a wider coalition of states, while giving shipowners and insurers greater confidence that Black Sea traffic remains commercially viable.

2. Build a war-risk layer for cargo

If Ukraine cannot reduce strikes on vessels, it must find a way to insure them. The withdrawal of commercial shipping reflects a profound problem of pricing. Hull war cover has risen sharply, and a growing number of owners have withdrawn tonnage from the trade rather than paying it. The more consequential gap, however, extends beyond the hull market. Ukraine operates three war-risk instruments, each addressing a distinct exposure: vessels, inland cargo and damaged property. The grain itself falls outside all three. Compensation for damaged port assets is capped far below the replacement cost of a single ship loader, and domestic insurers withdraw entirely within 50 to 100 kilometres of the front line.^[_]

The most direct remedy is a state-backed cargo war-risk layer, modelled on the existing Unity insurance structure:^[_] a fixed government first-loss guarantee with commercial cover above it. The guarantee and pricing should reflect aggregate exposure across ports and storage sites, including concentrations of multiple shipments in individual or nearby elevators. Payouts could be triggered automatically by a verified strike within a defined perimeter, avoiding conventional loss adjustment. Two measures would address the residual exposures. Firstly, differentiating Ukraine’s Export Credit Agency ceilings by asset class, so that port and grain-storage infrastructure is not capped at a level appropriate to smaller assets. Second, extending trigger-based cover to frontline storage and the final marine approach, where domestic insurers currently withdraw entirely. There is precedent for trigger-based cover, as a satellite soil-moisture drought product already operates across five oblasts.^[_]

Move More Cargo Overland

Export by sea remains the cheapest and therefore preferable route to international markets. However, with disruption to the southern ports likely to continue, Ukraine must also scale up overland exports. Already, the EU–Ukraine Solidarity Lanes have moved 95 million tonnes of grain and oilseeds since May 2022, but cost and politics are preventing them from absorbing more.^[_]

Overland export costs between €36 and €60 more per tonne than maritime export. Ukraine has added to that bill at the worst possible moment: Ukrainian Railways’ domestic rail tariffs recently rose 30 per cent, while empty wagon charges, which fall hardest on grain because it rarely carries return freight, increased by 60 per cent.^[_] The currency-repatriation deadline creates further barriers; it penalises exporters if they fail to repatriate foreign currency earnings quickly enough – which is an issue for the longer overland export route.

Meanwhile, Poland, Slovakia and Hungary have restricted Ukrainian agricultural goods amid claims that grain earmarked for onward transit has leaked into their domestic markets, depressing prices and bringing farmers onto the streets. Romania, which has played a significant role in facilitating Ukrainian exports through the port of Constanța, has seen farmer protests of its own as a bumper harvest strains logistical capacity.^[_]

Both problems must be tackled in tandem for overland exports to meaningfully offset disruption at sea. This requires two packages of temporary measures, both designed to be kept in place until deep-water throughput at Ukraine’s southern ports reaches at least two-thirds of pre-blockade capacity:

1. Provide export cost relief

The government should instruct Ukrainian Railways to defer the increase in rail tariffs for agricultural goods and suspend the empty-wagon coefficient. The lost budgeted revenue would be somewhat offset by the increased volume of freight tonnage that this would incentivise at the margin, and is more than justified by the economic imperative to get grain moving. The government has already extended the currency-repatriation deadline from 120 to 150 days,^[_] but this should be extended further to 180 days, as was the case before the full-scale invasion, to give exporters the breathing room they need.

2. Provide grain-transit guarantees

The Government of Ukraine should seek an agreement with the European Commission and frontline member states to increase grain transit to third countries under the Common Transit Convention, without the grain entering EU free circulation. This would not expand access to the EU market or alter existing EU quotas on Ukrainian agricultural imports. Increased verification measures should be introduced to make this attractive to member states: tamper-evident seals and GPS tracking, refundable bonds forfeited on diversion, and pre-approved non-EU contracts as a condition of transit. Funding for the additional border and transit infrastructure required should be pursued from the Ukraine Facility, Connecting Europe Facility and EIB Global, and this should be framed as a commercial opportunity in the bordering member states.

Create More Domestic Demand

Not all of Ukraine’s harvest can be exported, even if every available route is pushed harder. Storage can postpone the problem, but eventually the grain will need a buyer. Biofuels offer one of the few domestic markets capable of absorbing agricultural output at meaningful scale. Much of the industrial base is already there. The immediate constraint is whether producers can sell, blend and store what they produce.

Ukraine already requires 7 per cent ethanol blending in its gasoline, but that does not guarantee demand for Ukrainian bioethanol.^[_] Fuel companies can import gasoline blended abroad, while domestic producers face legacy restrictions designed to control the spirits trade including a requirement for bank-guaranteed tax promissory notes, on-site tax posts and cumbersome rules on moving ethanol through the supply chain. Producers report that it can be easier to move Ukrainian bioethanol abroad for storage than between two facilities inside Ukraine. Meanwhile, Ukraine’s EU ethanol tariff quota limits the amount that can be sold to the EU each year. With the quota expected to be reached this month, facilities are expected to halt production in the absence of markets to sell bioethanol into.

The government should increase demand for biofuels. For diesel, it should announce a phased biodiesel obligation to ensure that all diesel has at least 2 per cent biodiesel in it (B2), as a starting point, moving towards B5 with the ambition to go further. For gasoline, it should set out a roadmap to reach 15 per cent ethanol blending (E15) and ultimately E20, plus an excise advantage for blends with higher biofuel content. Brazil and India demonstrate the success of this type of phased approach.^[_] Ukraine may also be able to leverage the Black Sea crisis to persuade the European Commission to temporarily suspend or increase the ethanol quota while exports remain disrupted. If that proves politically difficult, a narrower reciprocity mechanism offers an alternative: Ukrainian ethanol sent to Europe for blending and subsequently re-imported in finished gasoline should not count against the export quota.

To make it easier for producers to respond to increased demand, the tax promissory note requirement should be removed for certified fuel ethanol, physical tax posts should be replaced with digital metering and risk-based inspection, transfers between excise warehouses (where goods are subject to excise duties) simplified and licences for fuel blenders fast-tracked.

Finally, unused storage capacity – railway tanks, fuel depots and suitable industrial facilities – can be leveraged to allow plants to keep operating when final fuel demand temporarily lags production. Ethanol should be allowed to move between certified sites while excise remains suspended, mirroring the EU’s duty-suspension system.

None of this replaces the Black Sea. Biofuels can absorb only part of the stranded crop. But they can turn part of an export surplus into domestic industrial demand now, while leaving behind a larger market for Ukrainian agricultural production once the immediate crisis passes.

Strong maritime guarantees, resilient overland transit and a stimulated domestic biofuels market. These solutions can make a meaningful difference in plugging the exports gap, but the window for action is small.

Ukraine’s winter crops – winter wheat, barley, rye and rapeseed – go into the ground in September and October. The decisions farmers make now will show up in next year’s harvest.

If farmers are forced to sell this year’s crop below production cost, with receipts stuck in transit and storage filling up behind them, some will choose not to plant at all. Others will be forced to compromise on fertiliser, seed quality, machinery and crop mix, all of which will affect yields next summer. The Ukrainian Agri Council has warned of a wave of bankruptcies, concentrated among the small and medium producers in frontline oblasts (administrative divisions) whose reserves have already been depleted by four years of war.^[_]

The consequences will not be limited to Ukraine. In a severe disruption scenario impacting all Black Sea commercial activity, the Ukrainian Agri Council estimates that international wheat prices could potentially rise by 90–140 per cent in the first year. That could translate into an estimated 2 to 6 percentage-point increase in food inflation across vulnerable import-dependent markets including Egypt, Turkey, Lebanon, Libya and Tunisia, and heightened risks of severe food insecurity in Yemen, Sudan and Somalia.^[_]

While the solutions we offer all require Ukrainian government action, there is a serious role for international partners to play in helping end this crisis and prevent wider ramifications. Most urgently, financing is needed to plug the storage gap, underwrite war-risk insurance and invest in overland border infrastructure. But political action is equally important, whether in the form of reflagging commercial vessels, helping to broker increased grain transit through Ukraine’s neighbouring member states or advocating for adjustments to EU biofuel import quotas.

Ukrainians have shown extraordinary resilience in continuing to farm in the face of Russian aggression. It is now incumbent on their government and the international community to make sure they can send what they grow to market.