Ukrainian agribusiness Kernel has suspended operations at all eight of its oilseed processing plants after Russian drone strikes damaged production buildings, equipment, and storage tanks, citing safety concerns from the elevated fire hazard of continuous oil extraction processes.
- Kernel owns eight oil extraction plants with annual capacity to process 3.5 million metric tons of sunflower seed, with two already idle since 2022.
- Russian drones deliberately targeted production sites, damaging buildings, equipment, and storage tanks, prompting the temporary shutdown of all facilities.
- Before Russia's full-scale invasion, Kernel ranked first globally in sunflower oil production with about 9% of world output and 12% of global exports.
- The company remains operationally and financially stable, continues shipping finished products from warehouse inventories, and will restart plants when security allows.
- Sunflower seed prices rose to $290-$310 per metric ton in mid-November as the loss of crushing capacity weakens competition.
Ukrainian agribusiness Kernel has suspended operations at all of its oilseed processing plants and stopped buying seed after Russian drone attacks damaged production buildings, equipment and storage tanks at its facilities.
The company announced the shutdown Nov. 12 in a statement and a regulatory filing that described the move as temporary and tied it to intensified Russian attacks on Ukraine's agricultural sector. Kernel owns eight oil extraction plants with annual capacity to process 3.5 million metric tons of sunflower seed, according to Interfax-Ukraine. Two of those plants, in the Kharkiv region, have been idle since 2022 because of the war.
"Over the past few days, Russian drones have deliberately targeted production sites at Ukrainian processing plants, including Kernel's facilities. As a result of the strikes, production buildings, equipment, and storage tanks were damaged," the company said, as translated by Interfax-Ukraine.
The safety logic is direct. Kernel said oil extraction is a continuous process with an elevated fire hazard, so a strike on running equipment threatens a large-scale fire and workers' lives. Shutdown protocols have been completed at all sites, and employees are safe, the company said.
Kernel said it remains operationally and financially stable, continues to ship finished product from warehouse inventories and is meeting obligations to Ukrainian farmers and partners. The company told agricultural outlet Latifundist.com that plants will restart as soon as the security situation allows.
The loss of crushing capacity is weakening competition for seed. Sunflower seed with 48% oil content was priced at $290 to $310 per metric ton, excluding value-added tax, delivered to plants in mid-November. Before Russia's full-scale invasion, Kernel ranked first in the world in sunflower oil production, with about 9% of global output, and in exports, with about 12%, Interfax-Ukraine reported. The company has not said when its plants will reopen or estimated the damage.
