National Interest

by Adam Blanco

    Both Russia and Ukraine are losing control over the transit of their massive grain flows.

    On July 22, not a single ship entered the ports of Greater Odesa, which handle more than 90 percent of Ukraine’s agricultural exports. Sixteen days earlier, Ukraine’s Unmanned Systems Forces (USF) had launched drone attacks against Russian shipping in the Sea of Azov. By mid-September, Russia’s Rostov region had declared a state of emergency, Novorossiysk’s three grain terminals were still offline and Ukrainian wheat sat in silos behind a Romanian canal that clears two or three ships a day.

    Both countries entered late summer with large crops they cannot ship: Russia with a grain and legume harvest near 141.8 million tonnes, 88 million of it wheat and Ukraine with 84.6 million tonnes of grain and oilseeds. With the ports closed, it is not just wheat that is stranded; corn, barley and oilseeds are backed up behind the same blockade.

    The Kremlin protects its farmers in two ways. The first is economic: it restricts fertilizer exports, bans fuel exports during fieldwork, steers diesel to farms and lends below market through the state-owned Russian Agricultural Bank (Rosselkhozbank). The second is physical: Russia can protect its airspace and ports to ensure safe passage of grain from the field to the ship. Yet, the Kremlin cannot buy this condition with subsidies.

    On the occupied Crimean peninsula, the Kremlin still sets duties, prices and subsidies. However, it cannot control the water supply, secure the airspace, or control routes to market. Ukraine dammed the North Crimean Canal in 2014 and Crimea’s irrigated farmland fell from 130,000 hectares in 2013 to 14,000 by 2017. By early 2026, its reservoirs held about half their capacity and Simferopol restricted water supply to six hours a day. I call Russia’s weakening physical control of its grain flows the Crimea Syndrome.

    Since July, the syndrome has crossed the Sea of Azov onto the Russian mainland. How  Ukrainian drone attacks have cut the shallow-draft feeder traffic that fed the Kerch Strait transfer anchorage and struck the Novorossiysk export terminals directly, creating a pile-up of grain and the farmers and the federal budget are absorbing the cost.

    Ukraine suffers from the same loss of physical control, but over its own sovereign territory and with an economic lever funded by the European Union. Kyiv sets export tariffs and subsidizes farmers, with support from the EU’s €90 billion ($101 billion) Ukraine Support Loan and the Ukraine Facility. However, when the Ukrainian Ministry of Agriculture asked for a €220 million ($246 million) grant to subsidize interest on farm loans, the European Commission pointed it back to existing programs. Now the Kremlin appears to have renewed its interest in cutting Ukraine’s grain exports through Odesa by striking the ports, ships and rail links farmers depend on. I call this the Odesa Syndrome.

    The two syndromes travel in opposite directions. The Crimea Syndrome moves from occupied Crimea into the Russian mainland and the federal budget. The Odesa Syndrome moves from Ukraine’s own coast to the treasury in Kyiv.

    On July 6, 2026, the USF launched Operation MoLoChKa, Ukrainian shorthand for “Moscow Will Fall Through Crimea.” Within 11 days, the USF claimed strikes on 147 Russian-linked vessels—tankers, dry-cargo ships, tugs and grain carriers, a count disputed by Russia. Border guards stopped accepting transit applications through the Kerch Strait, navigation on the Don–Azov Canal halted and the ship-to-ship transfers at the Kavkaz anchorage, which carried 1 million tonnes (1.1 million tons) of Rostov wheat in the first quarter of 2026 against 828,000 tonnes (913,000 tons) a year earlier, ended. On August 12, Ukrainian drones and missiles hit Novorossiysk’s KSK, NZT and NKHP terminals, which can store a combined 26.1 million tonnes (29 million tons) of grain and more than half of Russia’s wheat exports.

    Russia’s campaign against Ukrainian ports ran on the same logistics disruption logic. On July 19, three Russian cruise missiles hit the Turkish-owned bulk carrier Golden Leo as it left Chornomorsk with a cargo of corn, killing nine crew members and a Ukrainian pilot. The ship burned, drifted for a week and sank off Odesa. Shipowners and insurers withdrew from the region and Black Sea war-risk premiums climbed from a 2025 baseline near 0.3 percent of hull value past 1 percent on July 21 and to roughly 2 percent by late July.

    Russian strikes destroyed 60,000 tonnes (66,000 tons) of grain at Chornomorsk and damaged more than 20 vessels and the barrage of September 11–12 hit the Odesa port complex again. Each campaign struck both the terminals and the ships, but the attacks on shipping emptied the sea lanes faster than the damage ashore.

    Both countries then discovered how little their fallback routes carry. Of Russia’s deep-water ports, only Tuapse, the smallest, ran without interruption and the rail operator RusAgroTrans expects September shipments of near 1.75 million tonnes (1.93 million tons), down from 4.9 million tonnes (5.4 million tons) for the same period in 2025.

    Ukraine’s grain is now moving through the Danube ports of Izmail and Reni and over the western rail crossings into Poland, Slovakia, Hungary and Romania, with Baltic-bound cargo running on to Gdańsk. Ukrainian and European rail tracks have different gauge sizes, so every wagon is transloaded at the border, which slows the trains and caps the tonnage. Rail shipments reached the sea through Romania’s Sulina Canal, where 70 to 80 vessels queued by late August and operators put practical throughput at two to three ships a day. The Ukrainian Agribusiness Club (UCAB) puts the combined Danube, rail and road capacity at about 1.4 million tonnes (1.5 million) a month, against the 4.1 to 5 million tonnes (4.5 to 5.5 million tons) a month Greater Odesa moved in the first half of 2026.

    Agrarian Policy Minister Taras Vysotskyi estimates the detour adds $45 to $50 a tonne to the cost of moving a crop. With the sea route closed, Ukraine’s Agriculture Ministry has cut its 2026–27 agricultural export forecast to about 29.6 million tonnes (29.7 million tons), down 54 percent from 64.4 million (80 million tons) and nearly halved wheat exports to 8.3 million tonnes (9.1 million tons).

    In Rostov, Mikhail Bondarev of the People’s Farmer Association said growers had plenty of grain and no way to get it to market. Southern Russian wheat fell 20 to 25 percent at the farm gate and the low-grade feed wheat, used for animal feed, now sells near $58 a tonne against production costs close to $116.

    Ukrainian farms are caught in the same gap between price and cost. Maksym Hopka of UCAB found that second-grade food wheat in central Ukraine fell 31 percent between July 16 and August 6, from $206 to $143 a tonne, while barley fell 27 percent and corn 15 percent. UCAB puts Ukrainian wheat about $15 a tonne below production cost and barley more than $40 below. By November, the Ukrainian Agriculture Ministry expects a storage shortfall of about 11 million tonnes of crops (12 million tons).

    By my estimate, more than $12.4 billion is tied up in unsold stock—about 55 million tonnes (61 million tons) of grain and oilseeds left after the 84.6-million-tonne (93.3 million tons) harvest minus the 29.6 million the ministry expects to export, valued at roughly $225 a tonne. The National Bank of Ukraine separately puts Ukraine’s export-revenue loss for the second half of 2026 at about $2.5 billion.

    Both syndromes have now reached next year’s crop. In Russia, this autumn’s sowing runs about 20 percent more expensive than last year’s and growers are trimming fertilizer and shifting land to sunflower. In Ukraine, the Agriculture Ministry expects reduced plantings for the 2027 harvest, particularly winter wheat and the Ukrainian Agrarian Council (UAC) has told exporters to build their strategies on deep-water ports staying shut until December or January.

    Moscow finances its farmers from revenues it controls and global demand for Russian oil and gas keeps the Kremlin’s treasury full despite Ukrainian drone attacks on refineries and terminals. The Russian Agriculture Ministry subsidizes Rosselkhozbank’s preferential farm loans by covering the gap between market and concessional rates and that gap widens as the cost of money rises. When the central bank’s key rate reached 21 percent in 2025, the subsidized rates rose with it and Sberbank left the program, leaving Rosselkhozbank to carry the lending.

    Kyiv has no comparable commodity that can unconditionally fill the treasury. Foreign treasuries effectively subsidize its farmers. Of the €45 billion ($50 billion) the European Union allotted Ukraine for 2026, €16.7 billion ($18.7 billion) is budget support and €28.3 billion ($31.7 billion) goes to defense. The loan behind it is repayable from war reparations Russia may owe Ukraine.

    An old saying from the criminal underworld makes two port cities its parents: “Rostov the Father, Odessa the Mother.” In the Russian Empire, they were the southern grain gateways and smugglers and thieves followed the money. Today, the grain that made both cities rich has stopped moving. Rostov is under a state of emergency because it cannot ship its harvest and Odesa is under missile attack.

    Russian strikes appear to be an attempt to isolate Odesa. On September 19, the Russian Defense Ministry said it struck a pontoon crossing over the Dniester carrying cargo from Romania and the port of Izmail, one of the few links between the Danube ports and the rest of Ukraine, along with a ship at Chornomorsk and two more on passage to Odesa. Days earlier, a drone hit the Odesa Railway’s computing center.

    Any grain export solution has to reckon with more than the deep-water ports at Greater Odesa and Novorossiysk. The Danube ports and the rail crossings are targets now too and insurers price the risk on all of it. The Crimea and Odesa Syndromes are metastasizing beyond the port cities into the interior of both countries, through the federal budgets and the farmers’ wallets.