Expert: The transit of Ukrainian grain benefits Moldova but poses risks for farmers

The transit of Ukrainian grain through Moldova could generate significant revenue for the Moldova Railways. However, without clear terms, it could create problems for Moldovan exporters. This was stated by economist Iurie Rija. According to the economist, the interests of Moldova and Ukraine overlap but do not fully coincide. Ukraine needs an alternative route to Romanian ports, while “Moldova Railways” is interested in additional freight volumes that will generate revenue for the company and improve its financial position. At the same time, Ukrainian grain may compete with Moldovan produce for locomotives, tracks, personnel, railcars, and train schedules, especially during the harvest season, according to bani.md. Rija considers transit to be one of the few opportunities for commercial use of the existing railway infrastructure. The company generates revenue from infrastructure access, traction, switching operations, train formation, and border operations. When there is spare capacity, each additional train can generate revenue that exceeds the cost of operating it. According to the economist, historical data shows a direct correlation between freight volumes and the company’s financial results. From 2005 to 2012, the company was largely profitable, reaching 205 million lei in 2007. After 2013, the company entered a period of predominantly unprofitable operations. At the same time, Rija considers a potential blockage of Moldovan exports to be the main risk. The season for exporting grains and oilseeds from Moldova coincides with peak transit volumes in Ukraine. Wheat, barley, and rapeseed are exported in July and August; sunflower seed exports begin in September; and starting in October, the volume of traffic increases due to corn. If locomotives and stations are occupied by Ukrainian transit traffic, Moldovan farmers could suffer losses due to lower purchase prices. The economist also draws attention to the 50 percent discount granted to Ukrainian carriers. In his view, this discount should be granted only if a minimum volume of shipments is guaranteed – at least 50,000 metric tons per month. If Ukraine fails to meet its obligations, the discount should be recalculated or canceled, including under the “ship or pay” principle.