Grain Exports From Primorye to China: The Resilient Shift of Kernel Amidst Global Changes
Kernel, one of Ukraine's largest agricultural holdings, is adapting to significant shifts within the global grain market as it faces the loss of its once-robust trade relationship with China. For the marketing year 2023/24 (from July 2023 to June 2024), Kernel has reported exporting 6 million tons of grain, down from 8 million tons prior to the conflict. Alongside, it exported 1.4 million tons of oil, maintaining slightly above pre-war levels. According to Ekaterina Spivakova, Director of Government Relations at Kernel, the company has experienced major geographic shifts due to this market loss.
“Geographically, there have definitely been serious changes. They are primarily related to the loss of the Chinese market, which traditionally was very significant for us because it imported non-GMO corn, which Ukraine could produce only in such volumes,” Spivakova explained during the "Agro Sector 2025: Challenges and Opportunities in New Realities" conference organized by the We Build Ukraine analytical center.
Corn currently makes up 60% of Kernel's exports, followed by wheat at 20%, with the remaining portion consisting of other grains. Spivakova noted the dramatic shift: “Previously, 27% of our grain exports went to Europe. Now it stands at 52%, effectively doubling. Similarly, for oil, what was 15% to Europe before the war has grown to 30%.” Countries like Spain, Germany, Italy, and the Netherlands have emerged as significant partners for Kernel.
Despite facing challenges, Spivakova dispelled stereotypes held by European farmers about Ukrainian agribusinesses, emphasizing Kernel's commitment to collaborating with small and medium-sized farmers. "We are very interested in developing small and medium enterprises because only 10% of what we export, we grow ourselves; the other 90% is sourced from the market. We work with about 800 farms and are genuinely invested in their growth," she stated, highlighting the company’s OpenAgribusiness program, which includes roughly 100 participants.
Her comments come at a time when Ukraine is striving to align with EU standards, ensuring the country remains competitive on the European market as well as adapting its agricultural production to meet new demands.
Kernel Holdings is recognized globally as the largest exporter of sunflower oil and ranks among the top producers and sellers of bottled oil within Ukraine. Despite its challenges, the company reported a net profit of $299 million for the fiscal year 2023, showcasing remarkable recovery after posting a loss of $41 million the previous year. Its total revenue fell 35% to $3.455 billion; nevertheless, its EBITDA experienced impressive growth, surging 2.5 times to reach $544 million.
For the first nine months of the 2024 fiscal year, Kernel reported a net profit of $204 million, reflecting a 53% decrease, with revenues declining by 4% to $2.595 billion. Net income is down, yet the company is making strides by maintaining its export levels and collaborating extensively within the European market.
Kernel's adaptability amid changing global market dynamics highlights the resilience of Ukrainian agriculture, especially as the nation seeks to bolster its standing as a key player on the European stage. The company's continued focus on procurement from local farmers is not just beneficial for Kernel but also for the broader rural economy, fostering sustainable agricultural practices.
Overall, the future for Kernel and Ukrainian grain exports seems cautiously optimistic as they navigate the new normal, re-engineering their supply chains and ensuring quality, compliance, and customer satisfaction within the ever-competitive agricultural marketplace.