Ukrainian Farmers Urge Government to Block Rail Freight Rate Hike

Agricultural Associations Appeal to the Cabinet

According to Главком: Ukraine's leading agricultural associations have formally petitioned Prime Minister Yuliia Svyrydenko and Minister of Communities and Territories Development Oleksii Kuleba, demanding they prevent a proposed 30% increase in freight tariffs by the state railway operator, Ukrzaliznytsia. The business community argues that the move is unjustified, warning it would deepen the crisis in the agricultural sector and run counter to Ukraine's European integration commitments. The appeal was prepared by the All-Ukrainian Agrarian Council and participants of the All-Ukrainian Agrarian Forum (UAF).

Ukrzaliznytsia has proposed raising tariffs across all cargo classes by 30% and introducing a single tariff for transporting empty railcars. Agricultural associations caution that this could accelerate a shift of freight from rail to road transport-a trend already observed with fuel shipments.

Economic Fallout of Higher Tariffs

Earlier, Ukrainian industrial and transport associations also voiced their concerns in letters to Prime Minister Svyrydenko and Presidential Office Head Kyrylo Budanov. According to estimates, a 30% tariff increase would result in:

• a loss of UAH 96 billion in annual GDP;
• a reduction of Ukrzaliznytsia's cargo base by 27 million tons;
• a decline in export revenue of $2.4 billion;
• a shortfall of UAH 36 billion in budget revenues.

Business representatives propose differentiating tariffs by transport type and establishing a single base tariff based on actual cost plus a government-approved profit margin. Agricultural associations specifically criticize the practice of cross-subsidization, where profitable cargoes offset losses from transporting other categories.

They also demand reforms to the railway sector in line with European integration, including a shift to a transparent tariff model, separation of the infrastructure operator from the carrier, and the development of market competition. These steps are seen as essential for ensuring the stability and efficiency of domestic freight transport.

The appeal underscores the critical importance of stable rail tariffs for the agricultural sector, which is already grappling with numerous challenges. - Source: All-Ukrainian Agrarian Council

The future course of events will hinge on the government's willingness to address business concerns and find a compromise that averts a crisis in the industry.

As the agricultural sector grapples with potential tariff hikes, the implications for freight transport are becoming increasingly concerning. Recent analyses indicate that a significant loss of cargo-up to 27 million tons-could occur if the proposed rate increases are implemented. To understand the broader economic impact of these changes, including potential revenue shortfalls and shifts in transport dynamics, read more about the looming challenges facing Ukraine's railways in our detailed report on the freight loss crisis.