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Agricultural companies are under mounting pressure from Ukrainian farmers’ groups and EU politicians to stop profiting from their businesses in Russia, but they say the world will go hungry if they leave.
Unimpressed by those arguments, Ukraine's President Volodymyr Zelenskyy has said that those continuing ties have left the Russian market "flooded with our blood."
Since the invasion of Ukraine in late February, many companies have scaled back or stopped their businesses in Russia, but that isn't true for big agribusinesses like BASF and Syngenta, which have significant business supplying seeds and chemicals to the country's massive food industry.
In March, the Ukrainian National Agrarian Forum (UNAF) sent BASF Chief Executive Martin Brudermüller a letter — seen by POLITICO — with an “urgent appeal” to stop supplying Russian farmers until Moscow withdraws its troops from Ukraine.
“We are confident that such actions will help Russians to understand [the] consequences of [Russian President Vladimir] Putin’s crimes and will contribute to [the] end of war,” wrote Mariia Didukh, UNAF's director.
At the same time, Ukraine's growers also say it's extremely challenging for them to get hold of supplies amid the war — often relying on the very same companies which they say continue to deliver to Russia without a hitch.
Dmitry Skornyakov, CEO of HarvEast, one of Ukraine’s largest agricultural companies, said: “We had a big contract with Syngenta ... and Syngenta just stopped supplying Ukraine. We had a pre-paid contract, we paid them and they just did not supply.”
“According to my information, they still supply Russians, why [do] they do this? It’s very strange," he said.
A spokesperson for Syngenta said it continues to supply Ukraine, and does so at high risk and without expecting to make a profit. “The goods we ship are no longer insured against losses,” the spokesperson said.
The companies that supply Russian farmers with expensive agricultural equipment, like combine harvesters and pesticides, argue that they are on a humanitarian mission. Russia is the world's top exporter of staples like barley, wheat and sunflower oil — particularly to parts of the Middle East and northern Africa with intense food insecurity — and they argue that millions of people in the world's poorest countries could be tipped into famine if they stop doing business there.
Jon Erik Fyrwald, CEO of Chinese-owned seeds and chemicals giant Syngenta, argued in a post on LinkedIn that supplying farmers in both Russia and Ukraine is “the humanitarian thing to do” because of the threat of worldwide hunger.
Supply Russia, save the world
Ukrainians aren't buying it.
“I understand that business counts money, but you can also count lives,” said Roman Slaston, the general director of the Ukrainian Agribusiness Club, which is campaigning to get other companies to stop operating in Russia. Barring luxuries like vodka and caviar, several rounds of EU sanctions on Russia have mostly avoided touching the food and farming sectors.
German giant BASF said the company has seen “significant declines in our sales” after a March 3 decision not to pursue “new business opportunities” in Russia or Belarus. But that does not include the food production business.
Bayer said its supplies to Russia and Belarus for 2023 were “contingent” on peace in Ukraine, while Corteva, a U.S. company, said it delivered "necessary products" to Russian farmers for the 2022 growing season, but "all further activities in Russia and Belarus have been suspended.”
While continuing to operate in Russia has ensured stable global food supplies, it also benefits Russia's gigantic food industry, whose agricultural machinery sector is "highly dependent on imports," according to U.S. government trade analysis.
President Putin has been on a mission to make Russia more self-sufficient in food, aiming to boost food exports by 70 percent by 2024. To do that, it has to gobble up European farm technology, which companies have so far been happy to provide.
“This is putting us, of course, in a very, very big dilemma,” said Per Brodersen, director of the German Agribusiness Alliance. Members of his alliance — including Syngenta, BASF, Bayer and CLAAS, which manufactures agri machinery in Russia — want to avoid disruptions to global food production, but do not want to provide Russia with agri-technologies "so they can withhold things whenever they like.”
Brodersen was referring to threats by Dmitry Medvedev, the former Russian president turned senior security official, to supply food exports only to "friendly" countries. Medvedev also said Russian food exports were a “weapon” to fight against Western sanctions.
Russia has banned grain exports to former Soviet countries until the end of June, and most sugar exports to its neighboring trade bloc until the end of August.
Still, Brodersen said that to stop supplying technologies to Russia "would have such a big impact to the whole world that this is something that we need to consider very, very carefully.”
But even some EU government officials are skeptical of that argument.
Agribusinesses still working in Russia "are taking huge risks for their reputation in the long term,” Lithuania’s farm chief Kęstutis Navickas told POLITICO. “It’s not a game, they should be more responsible.”
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