Forecasts in connection with the emergency at the Kakhovskaya HPP

Wheat and corn prices rose after the destruction of the Kakhovskaya HPP, Kommersant writes. On Tuesday, June 6, July wheat futures grew by almost 4%, corn at the moment rose by 2%. As Bloomberg notes, bidders fear a shortage of grain supplies. In the short term, damage to granaries in the lower reaches of the Dnieper is also possible. The Ukrainian authorities predict the transformation of coastal territories into a desert next year. According to their data, 94% of irrigation systems in the Kherson region, 74% — in Zaporozhye and about a third — in Dnepropetrovsk remained without a water source at the moment.

The prices of agricultural products on the world market will continue to grow, the general director of the breeding farm "Lazarevskoye" Kristina Romanovskaya is sure. However, according to her, the consequences for Russia will not be so serious:

"This will have the greatest impact on prices, and there may be a risk of a shortage. As for Russia, I think there will definitely not be any critical rise in the cost of grain, because everything is well regulated by state duties. But she will definitely grow up.

At the same time, farmers have already suffered a lot this year, because prices were critically low. This, in principle, affected the agricultural sector in Russia, because those who focused only on crop production went bankrupt. I will say more, it affects the demand for agricultural machinery, fertilizers and plant protection products, and, in principle, the profit of farmers in total fell by 10% last year.

So in 2023, perhaps, due to recent events, we will be able to somehow rectify the situation in Russia in the agricultural sector. At the same time, of course, this is a great tragedy, and prices on the world market will grow strongly."

However, wheat, corn and sunflower, which are grown in the Dnieper basin, do not require irrigation, said Andrey Sizov, director of the Sovecon analytical center. He does not expect a strong impact of the accident on the global agricultural market:

"Irrigation requires, in particular, the production of vegetables and rice in the Crimea. But it's not that the principal volumes, even from the point of view of Russian and Ukrainian production, not to mention the world.

Therefore, we do not see a noticeable short-term direct effect on production and export. It is too early to talk about the long-term perspective, because it is unclear first of all what will happen to the land in the Kherson and Zaporozhye regions. It is unclear how shallow the Kakhovka reservoir will become, it is unclear what is at the bottom there.

Some say that, perhaps, there are some toxic deposits that will be spread over agricultural lands around the Dnieper. But nevertheless, this is still not such a big problem for the world.

To make it clear, the Kherson and Zaporozhye regions each sowed about a little more than 0.5 million hectares. If we talk about the share of production until 2022, when they actively supplied products, then they accounted for about 5-6% of the total Ukrainian sunflower production and 6-7% of wheat."

Both in Kiev and in Moscow they assure that it is impossible to restore the Kakhovskaya HPP. However, as soon as the water level in the Dnieper goes down, it will be possible to begin construction of a dam to fill the Kakhovka reservoir, said Ivan Fedyakov, General director of the Infoline information and analytical agency.

He believes that it is possible to restore the dam within a year, however, in peacetime. Otherwise, the coastal territories really run the risk of running out of water, Mr. Fedyakov noted.:

"This is a fairly wide region, which includes not only the territory of the Zaporozhye and Kherson regions. These fresh waters fed, in particular, the Crimean Canal; this is the territory of irrigation, including Mariupol and Melitopol. Naturally, we can expect shallowing of rivers and lack of water, the normal operation of the hydraulic system will be disrupted. This will lead to negative consequences, to a decrease in yield. Some areas, in principle, may cease to function as an agricultural region.

At the same time, on a global scale, the production of wheat or other agricultural crops, these territories, albeit quite fertile, occupy a fraction of percent. This is a tiny percentage within the statistical margin of error. And, of course, as such, this event should have a negative impact on the global market.

But there are other risks. I am talking about the possible termination of the grain deal, the introduction of restrictions on the export of agricultural products from Russia or, in principle, a complete ban on cooperation with the Russian Federation in this area. After all, if it is decided that the Russian side is guilty of this emergency, then we can expect both political and economic consequences. This, in turn, can seriously affect the imbalance of supply and demand in the agricultural market on a global scale."

At the same time, a pestilence of fish began in the Dnipropetrovsk region due to the shallowing of the reservoir, said the head of the office of the Ukrainian president, Andriy Ermak. The authorities forbid using it for food because of the risks of infection with botulism.

Kiev estimates the total damage from the death of all flora and fauna as a result of the destruction of the hydroelectric power plant at about $ 300 million. In addition, the area downstream from Novaya Kakhovka is at risk of contamination due to the erosion of cemeteries.