News From Ukraine: All things grain, from harvest to heartbreak
We want to take the time to check in on farmers in Ukraine. This week we have an update on all things grain: the prices, the harvest, and the heartbreak.
Latifundist Media has partnered with us to provide boots-on-the-ground coverage:
Hi there. We continue our report with Ukraine’s agricultural sector amid the war. In Ukraine, agricultural producers are harvesting crops. At the same time, they are getting ready for planting winter crops in the Fall. The Ministry of Agriculture projects this season’s wheat harvest in Ukraine at 700 million bushels, which is 40 percent less than last season. Most likely, next year’s harvest will be even smaller. This fall, farmers will plant much less acreage of winter wheat and barley. With record low prices for grain, the area for planting these crops will be reduced to a minimum. Today, less than $100 per 37 bushels of wheat is offered, and even that price is uncommon. Usually, wheat is not purchased. After all, most warehouses are filled with last year’s crop, which has severely limited options to reach the international market. We talked to a farmer running a business outside Ukraine’s capital, Kyiv.
Olexandr Fischun says, “It was occupied for a while. Now that these farmers are trying to resume operations in the region. The price of wheat is now $100 for 37 bushels, this includes production costs. Wheat yielded at 30 percent lower than last year. My calculations suggest a loss of $250 per acre. At the moment, the important question is whether to plant winter wheat in the Fall. This is a strategic crop in Ukraine, no one wants to lose money. If I were to plant winter wheat, then I will not plant much, just to settle accounts with landowners and to have something for myself. God willing when this war ends and ports are unblocked, we will be planting for spring. I wish it happened sooner.”
Actually, agricultural producers are already developing a new crop rotation system. They consider replacing wheat and barley with rye, because of their high price, up to $300 per 37 bushels. Experts also encourage producers to switch to crops with lower yields, such as sunflower, soybeans, rapeseed, and niche crops. In addition to winter crops, the situation with corn is also complicated.
“Corn is the queen of the fields. About 50 percent of Ukraine’s farmland is planted with this crop; it is the major export crop and it has to be dried. This process either requires natural gas, which is now in short supply, or diesel fuel, which has become too expensive - more than three times actually. Corn has lost half its price - $100 per 37 bushels. People say it is better to harvest wheat and spend the money on drying corn, but what do we get as a result? We have no wheat, we do not harvest all of the corn. Of the 75 million tons that Ukraine produces, 25 million will be spent on drying corn. Is it really worth it?”
Given the logistical challenges, grain has become currency in Ukraine. Agricultural producers use it to pay landowners as well as bartering it to buy machinery and fertilizer. There is no chance of selling the crops to cover these costs.