War in Ukraine jeopardizes wheat, but farmers in no rush to pivot | Business

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DUBAI, United Arab Emirates — Russia’s war in Ukraine could mean changes for Ed Kessel’s farm in a quiet part of western North Dakota.

Around the world, farmers like Kessel are wondering if they should change their planting patterns and grow more wheat this spring, as war has stifled or challenged grain supplies in a region known as “breadbasket of the world”.

Ukraine and Russia account for a third of global wheat and barley exports, which countries in the Middle East, Asia and Africa rely on to feed millions who subsist on subsidized bread and cheap noodles. They are also major exporters of other grains and sunflower seed oil used for cooking and food processing.

Kessel said he could plant more wheat and take advantage of the tide of high prices which have risen by a third since the invasion, helping to offset losses from drought and rising fuel costs, but not much more.

“Honestly, it will probably help us plant a few more acres of wheat. We’ll put a few more acres into wheat and a few more into sunflowers,” said Kessel, also first vice president of the North Dakota Grain Growers Association.

Major grain producers like the United States, Canada, France, Australia and Argentina are being watched closely to see if they can quickly ramp up production to fill gaps in lost Ukrainian and Russian supplies. But farmers face the prospect of another year of drought, rising fuel and fertilizer costs and supply chain disruptions from the COVID-19 pandemic. Major producers are also crippled by factors such as legal limits on exports and agricultural models.

This means uncertainty for countries like Egypt, Lebanon, Pakistan, Iran, Ethiopia and others that cannot produce enough wheat, barley, corn or other cereals to meet their needs. The war has raised the specter of food shortages and political instability in countries that depend on affordable grain imports.

Any additional grain exports from anywhere in the world “will likely only partially offset lower Black Sea shipments over the remainder of the current season,” the International Grains Council said in its March report.

About half of the grain the World Food Program buys to feed 125 million people around the world comes from Ukraine. The double whammy of rising food prices and falling wheat exports from the war is a recipe for “catastrophe not only in Ukraine, but potentially in the world”, the agency’s chief warned. United Nations food aid.

“This will impact millions and millions of people, especially in the world’s poorest countries,” WFP Executive Director David Beasley told The Associated Press in the city of Lviv, New York. western Ukraine last week as he visited a refugee center where food aid was being distributed.

There remain unanswered questions about how Western sanctions on Russia, the world’s largest wheat exporter, could affect its grain exports and distribution networks. Russia is also the biggest fertilizer exporter, while Ukraine ships huge amounts of corn, rye, oats and millet. The Black Sea region is one of the main producers of cereals used to feed livestock all over the world.

Australia and India have responded by increasing their grain exports, but there is little room for others to do the same immediately. This is mainly due to the recurring drought, said Arnaud Petit, executive director of the International Grains Council.

The United States produced about 44 million tons of wheat for the 2021-2022 season. Just two or three years ago it was over 50 million tonnes. Petit pointed to the drought and the shift of farmers to more profitable crops.

Canada, Argentina and Australia could try to boost wheat production for the upcoming season that ends in mid-2023, but it’s too early to tell if farmers change their planting patterns to cope. focus more on grains like wheat.

Doug Martin said it was too late for his family farm in Manitoba, Canada to make any significant changes to what is currently planted. Plus, growing a range of crops spreads the risk.

“Most growers have a clear idea of ​​what they’re seeding and will likely stick with it,” Martin said.

Although higher wheat prices generate income for farmers, it is not enough incentive to increase production, as prices also rise for crops like oats, canola and barley.

“There are other crops that are going to get good yields,” Martin added.

Any increase in production comes up against soaring supply costs. Fuel prices soared and the cost of fertilizers was already high due to a keenly felt shortage of natural gas in Europe.

“With cheaper fertilizers, it would have been possible to get out of a global food security problem – maybe – but nutrients are anything but affordable or even accessible right now,” said distribution professor Sylvain Charlebois. and food policy at Dalhousie. University in Canada.

Philippe Dutertre grows wheat in Chemiré-le-Gaudin, in the agricultural region of Sarthe about 210 km south-west of Paris. He hasn’t decided whether to expand his wheat field given soaring energy and electricity costs.

“Perhaps we could do a little on crop rotation, but today France produces wheat, corn, oil rapeseed and other cereals,” he said. “We no longer have the certainty of saying that we will be able to guarantee food security in France and Europe tomorrow.”

Australian farmers have had a bountiful wheat season. Still, the Department of Agriculture says Australia will not be able to respond immediately to dwindling supplies from Ukraine because it has already sold its exports through September.

The situation is similar in Argentina, another major grain exporter. A whopping 95% of his current wheat crop has already been sold.

Jorge Josifovich owns farmland in Pergamino, one of the richest agricultural regions in Argentina, where he grows wheat, corn and soybeans. Despite rising wheat prices, he said Argentine farmers may not be motivated to plant more due to high fertilizer and fuel costs, coupled with “strict government-imposed price controls that are unfavorable to farmers.” producers who sell their production to exporters”.

The calculation leaves the world’s biggest wheat importers vulnerable, including Indonesia, Egypt, Pakistan and Bangladesh, as well as war-torn Yemen and cash-strapped Lebanon. These are countries with huge poor populations, which depend on affordable wheat for their food.

According to the Gro Drought Index, drought in the Middle East is at its highest level in at least 20 years, hampering any effort to increase domestic wheat production.

There is potential for unrest if prices continue to rise, especially in countries without sufficient wheat stocks. They may have to wait to buy it in the market, switch to rice or dip into their wheat reserves.

In Egypt, the world’s largest wheat importer, the government recently announced price caps for unsubsidized bread and fines for violators in response to soaring prices.

The world has 278 million tonnes of wheat stocks to help cushion Ukraine’s shortages, said Petit of the International Grains Council. Half of that stock, however, is in China, which has more than a year’s supply to ensure food security for its 1.4 billion people.

Meanwhile, farmers halfway around the world are making their own tough decisions. Tom Bernhardt, who operates a fifth-generation crop and cattle ranch near Linton, North Dakota, said no-till farmers like him won’t deviate too much from their normal rotation and plant more wheat, as this can lead to soil health issues and weeds.

Moreover, there is no guarantee that wheat prices will remain high.

“I’ve never planted extra acres just to chase a prize,” the 61-year-old American farmer said.

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