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Ukraine ag production could drop 80%, fertilizer prices to cut food supply long term, UK expert says

Claxton said agricultural production could be down between 20% and 80%, and the longer the war drags on the, the closer that will be to 80%.

Ukraine fertilizer winter wheat
A worker drives a tractor spreading fertilizer to a field of winter wheat near the village of Husachivka in Kiev region of Ukraine in April 2020. The Russian invasion of Ukraine is expected to have a deep impact on ag production in 2022 and rising fertilizer prices could affect grain supplies long term.
Valentyn Ogirenko / Reuters

Ukrainian farmers are not working into the night during spring planting because they fear they might be attacked by drones.

That was one example of the effect that the Russian invasion of Ukraine is having on agriculture cited by Rupert Claxton, livestock and meat director for Gira, an ag research and consulting firm,

Claxton, who is based in the United Kingdom, was part of a webinar on Wednesday, March 30, on the war in Ukraine and its effects on the meat industry. It was hosted by America’s Pork Producers and the Pork Checkoff.

Claxton said agricultural production could be down between 20% and 80%, and the longer the war drags on the, the closer that will be to 80%

“That’s significant,” Claxton said, fueling speculation on global grain supplies.

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Claxton said the Ukraine has banned exports on wheat and some other more minor crops, along with meat products.

“Because they’re really concerned about food security at home,” Claxton said. “We’ve seen the Russians attacking food depots, freezer centers. They’ve got to keep what food they have in the country.”

Ukraine’s ports are effectively shut down, he said.

“They’re struggling to get tractors in the fields,” Claxton said, citing the threat of drone attacks, the need for diesel fuel for the Ukraine military, and farm workers that have joined the fight against the Russians.

Claxton said the entire world is suddenly more acutely aware of food supply issues.

He noted that commodity prices were going up before the war.

“Now we're really concerned about supply on the world market,” Claxton said.

Much of that concern is related to fertilizer prices.

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Russia and China are major fertilizer suppliers and both have restricted exports. Supply issues and energy prices, also driven up by the war, means fertilizer prices have skyrocketed.

“Russia is trying to restrict the amount of fertilizer that goes out on the world market, in part to protect its own prices but also it’s worried about the influence it has,” Claxton said.

While farmers have secured affordable fertilizer for this growing season, looking ahead to next year has them rethinking their methods.

“It means farms are going to buy less,” Claxton said. “They’re not convinced the grain price will hold up and farmers are naturally conservative.

“So what we’re seeing is lower application rates, we’re seeing a change in the way fertilizers are used. What it means is we’re going to be seeing lower yields going into the year ahead so there’s going to be less grain … and therefore high grain prices going into 2023.”

On the home front for U.S. producers, Joe Kerns with Partners for Production Agriculture out of Ames, Iowa, said the market volatility presents an opportunity for farmers — specifically pork producers who have seen prices rise — to lock in some protection on the futures market.

“It’s not all about what could be, it’s about what is,” Kerns said. “Since the Ukrainian invasion, it’s actually been a net positive for pork producers.”

Kerns said it’s not OK to do nothing.

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“This is not a time for hope, it’s a time for action,” he said.

Reach Jeff Beach at jbeach@agweek.com or call 701-451-5651 (work) or 859-420-1177.
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