# **Micro-Level Impacts of the War on Ukraine’s Agriculture Sector: Distinguishing Local and National Effects over Time**

# **1. Introduction**

The Russian Federation’s invasion of Ukraine in February 2022 started a war that has to date displaced more than 8 million individuals and destroyed the productive capacity and infrastructure of vast stretches of territory. As Ukraine has been a major agricultural producer of grains and oilseeds, it has also given rise to concerns about effects on global commodity prices and food security that are explored by a growing number of studies. Compared to these, war impacts on agricultural production and rural livelihoods in Ukraine have received less attention. This paper aims to help fill this gap. Doing so poses two types of challenges. First, the immediate effects of the conflict, largely in terms of whether specific areas were taken out of cultivation, often occur in places that are inaccessible due to ongoing military action. Second, damages to infrastructure or closure of port facilities due to the war may affect the profitability of all Ukrainian producers through changes in terms of trade or logistics costs.

To address the first issue, we use a 2019–23 panel of remotely sensed data on areas cultivated with winter and summer crops, aggregated to the village council (VC) level for the entire territory of Ukraine, including areas beyond Ukrainian control. This is combined with an indicator of conflict-induced damage to agricultural fields constructed specifically for this purpose, to assess the direct and indirect impacts of the conflict on the area cultivated with agricultural crops. To address the second issue, we draw on public data on prices for outputs and inputs as well as a 2021–23 farm-level panel of data on areas not directly affected by the conflict, which provides information on areas allocated to specific crops, yields, inputs, and profits.

For area under cultivation, economywide conflict effects predominated initially but, consistent with adaptation by farmers outside the immediate conflict area, their relative importance declined over time. Local effects assumed greater relative importance but also persisted and even increased in size over time, possibly because land damaged by fighting was contaminated with landmines, or outmigration reduced economic activity in areas affected by heavy fighting. In the longer term, the impacts of the conflict on cultivated area are thus highly localized and concentrated in areas directly affected by military action.

In contrast, conflict-induced increases in the cost of transport—due to the closure of seaborne export routes or damage to physical infrastructure—have an economically significant effect on agricultural profitability. The implied decline in prices for output and the increase in prices for tradable goods triggered drops in profits of 62% and 50% in 2022 and 2023, respectively, for the producers in our sample. Such swings in relative prices, together with better access to European markets, provide opportunities for diversification into higher value crops that are less sensitive to transport cost. However, we find only small differences in 2