Turmoil in the world’s breadbasket adversely affecting farmers

Published 5:16 pm Tuesday, March 29, 2022

Russia’s invasion of Ukraine is impacting global grain exports and production, oilseeds, fertilizer and petroleum, and is creating volatility for Virginia farmers.

“Ukraine is a country that’s sensitive to shipping and sensitive to agricultural production,” noted Robert Harper, Virginia Farm Bureau Federation grain manager. “Ukraine is one of the top five corn producers in the world.”

Harper said that over 1 billion bushels of corn are exported from Ukraine, but because of the conflict, that crop will not be planted this year.

“This is creating extreme volatility in the futures markets,” he explained.

Qu Dongyu, director general of the Food and Agriculture Organization of the United Nations, wrote in a Morning Ag Clips op-ed that Russia is the world’s largest exporter of wheat, and Ukraine is the fifth largest. Together, they supply 19% of the world’s barley, 14% of wheat and 4% of corn, making up more than one-third of global cereal exports.

Since more than 30% of the world’s wheat comes from the Black Sea nations like Russia and Ukraine, “traders see that as 30% of the world’s wheat disappearing,” Harper said. “And the world is trying to figure out what we’ll do if we lose 30% of our wheat.”

Compounding this is the inability of commercial vessels to travel freely through the Black Sea, where Ukrainian ports have shuttered. That affects grains, crude oil and fertilizer, Harper noted. “Producers in Virginia will be dealing with the consequences of that.”

Dr. Mark Alley, professor emeritus of crop and soil environmental sciences at Virginia Tech, told a gathering of cotton growers March 10 that the components of major fertilizers used in Virginia agriculture also are affected.

“Belarus and Russia are significant exporters of potash and nitrogen, and these are now off the world market,” Alley said. Fertilizer prices in the U.S. have increased as much as 200% from this time last year.

Lewis Everett, a cotton, peanut and small grains farmer in Southampton County, said the rise in fertilizer prices is negatively affecting his farm.

He said even though prices for cotton are decent, inflation, supply issues and extremely high fertilizer costs mean that he’ll operate in a deficit. “Even though we’re looking at a high commodity price, our cost of production is going to offset the margin difference in accelerated or inflated cotton price.”

Everett added that he’s concerned about the availability of supplies as well as the increasing costs of fertilizer and fuel. “And at what level of the ratio between the commodity price and the cost of production does it fall out at a net margin?”

He said the cost of nitrogen has more than doubled, and he typically applies it to the cotton throughout the growing season. “So that’s just one fertilizer product … that will definitely sting a little bit as we move into the ’22 production year.”

Amelia County beef cattle, small grains and produce farmer Kenney Barnard said he’s noticed fertilizer prices increasing for a while now. Last fall when he fertilized his small grains, it cost $150 per acre. “Within six weeks it had gone up $30 an acre,” Barnard said.

Even though that was before the Russia-Ukraine conflict, he’s concerned now. Increased input costs for fertilizer and fuel “are the highest I’ve ever seen,” exclaimed Barnard, who’s been farming since 1968.