Unyielding Farmers, Unsustainable Burdens: Ukraine’s Rail Discount Cancellation Sparks Outcry

A controversial move by Ukrzaliznytsia (UZ) to revoke a 30% discount on rail freight for agricultural products from frontline regions has triggered backlash across Ukraine’s farming sector. Farmers, traders, and regional logistics operators warn the decision could collapse already fragile agribusinesses operating under wartime conditions.

As reported by Elevatorist, the All-Ukrainian Agrarian Council (VAR) is demanding the immediate reinstatement of the discount, calling the move by Ukraine’s national railway unjustified and detrimental to already vulnerable regions. The cancellation took effect on 20 March 2025, following a new directive from the Ministry for Communities and Territories Development (Order No. 376, dated 28 February 2025), which updated the list of combat zones. Ukrzaliznytsia cited the expiration of a previous order as the legal reason to cease the discount.

Аграрії просять уряд відновити пільгові тарифи на залізничні перевезення з прифронтових територій//t.co/sI48aLcCAW pic.twitter.com/YIAt3EFUVn

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Legal Uncertainty and Sector Pushback

However, VAR argues that the cancellation is legally unfounded. According to Elevatorist, Cabinet resolutions No. 129 (dated 9 February 2024) and No. 380-r (dated 30 April 2024), which provide compensation mechanisms to Ukrzaliznytsia for the discount, remain in force and binding. "Since none of these government acts has been repealed, they are mandatory for all subjects throughout Ukraine," VAR stated in an official address, adding that the new order should not override the standing legislation supporting the discount.

Experts in the agricultural sector described the move as a blow to already strained farmers. As noted by Logist.FM, the cancellation came without prior notice, catching many exporters mid-shipment and mid-contract. Dmytro Dobroshtan, director of the Kharkiv-based agroholding APK NOVAAGRO, expressed frustration: "We had wagons loading grain and signed contracts. Then suddenly we learn the discount is gone." Without the discount, transport costs have surged by UAH 200 per tonne — an increase of USD 3–4 per tonne, according to traders. This is a critical burden for farmers in frontline regions like Kharkiv, where logistical and human resource challenges already inflate production costs. "This discount wasn’t a handout," said Dobroshtan. "It resulted from long negotiations and was a vital form of support. Cancelling it is a step backward."

Financial and Contractual Repercussions

Financial experts warn of a cascading economic impact. "In the short term, traders are hit hardest," said Svitlana Omelchenko, CFO of Agromino. "But in the medium term, the entire burden shifts to farmers in the east, who will face insolvency or forced price hikes." Ukrzaliznytsia, for its part, insists the decision was procedural and financially necessary. Valerii Tkachov, Deputy Director of Commercial Operations, acknowledged that 1.6 million tonnes of agroproducts were shipped under the discount scheme, involving 23,000 wagons and costing the railway UAH 350–400 million. "Our regulator cancelled the list of eligible communities," said Tkachov. "That list defined who qualified for the 30% discount. With it gone, the discount no longer applies."

He added that grain reserves in eastern Ukraine are now minimal, and that the economic benefit of extending the discount would be negligible. "There’s no catastrophe," he claimed. "Most grain has already been moved." Yet farmers say the rationale is flawed. As detailed in Latifundist, VAR emphasises that the legislative basis for the discount was not tied to a specific ministerial order, but to the existence of an official list, which continues to be updated. Therefore, the policy should remain in effect. "The lack of advance warning is unacceptable," Omelchenko stressed. "Had we known, we could have adjusted our contracts."

Regional Imbalance and Economic Pressure

The broader implications are alarming. According to Latifundist, companies now must either renegotiate or absorb higher transport costs, which could lead to bankruptcies among producers already stretched by the Russian war. Dobroshtan predicts that all new contracts will reflect the increased logistical costs, and fears that older contracts will generate losses. In the frontline regions, farmers already struggle with elevated production costs, lack of workforce availability, and restricted access to credit, as banks often deem these zones too risky. Dobroshtan describes the situation as untenable: "Maintenance services don’t come, prices go up, and our economy works differently."

Local grain silos stand half-empty, as farmers rush to move crops out of risk zones, preferring to store them closer to ports or in safer regions. The loss of the rail discount has made storage uneconomical, putting grain elevators at risk of closure. "Revoking the discount just before the sowing season is a tragedy," said Omelchenko. "Everyone says frontline farmers are resilient. But even resilient people have limits."

VAR has called on the Ukrainian government and relevant ministries to act immediately to reinstate the discount. Without targeted support, the economic viability of agriculture in eastern Ukraine may unravel, with serious implications for national food security and post-war recovery.

Sources: Elevatorist; Logist.FM; Latifundist