What the War in Ukraine Means for US Agriculture
Russia is a major player in the fertilizer market, and Ukraine is one of the world’s largest wheat exporters. The ongoing situation in Ukraine is likely to affect food systems across the world.
This article is republished from The Midwest Center for Investigative Reporting. Read the original article.
As Ukraine continues to fight against Russian forces, experts warned of potential fallout for the US agriculture industry.
On Feb. 24, Russian President Vladimir Putin announced a “special military operation” in Ukraine, and Russian troops stormed into the country. Reportedly, tens of thousands have died, and about half a million people have fled their homes, according to the New York Times.
The same day as Putin’s announcement, Ukraine’s military halted all commercial activities at its ports in the Black Sea. Also that day, a missile struck a ship chartered by Cargill, according to Reuters.
Multinational agricultural corporations stopped operations in Ukraine as farmers expect the Russian invasion of the country—and the subsequent economic sanctions—to drive up already high prices for fertilizer, a key input for US growers, according to interviews and company statements.
“That region of the world is a pretty significant producer of key fertilizers or key components to fertilizer, so that is definitely on the minds of farmers,” said Garrett Hawkins, the Missouri Farm Bureau president.
Experts and US Secretary of Agriculture Tom Vilsack said it was too early to predict the potential fallout on fertilizer prices. But Vilsack gave a warning last week.
“I sincerely hope that no company out there—whether it’s fertilizer or any other supply that may be impacted by this—will take unfair advantage of the circumstances of this situation, making sure that they don’t use this situation as an excuse for doing something which isn’t necessarily justified by supply and demand,” Vilsack said, according to Successful Farming.
Russia is a big player in the fertilizer market. The country is the world’s top exporter of natural gas, which is used to make nitrogen fertilizer, and a top producer of potash, a key component of many fertilizers. Together, Russia and Belarus (which is Russia’s closest ally and also faces international sanctions) make up more than 40 percent of the global potash market, according to the Fertilizer Institute.
Fertilizer prices have skyrocketed in the past year and reached record levels in recent days. Since January 2021, many fertilizer types have tripled or quadrupled in price. This has been attributed to weather, supply chain disruptions and technical difficulties at plants.
The increasing prices have resulted in some farmers transitioning to soybeans and other crops that rely less on fertilizer, Reuters reported.
Last week, Iowa Attorney General Tom Miller launched an investigation into the high prices.
[RELATED: Farmers Struggle to Keep Up With the Rising Costs of Fertilizer]
With the conflict just beginning, it’s tough to tell what the impacts will be, said Jason Troendle, director of market intelligence and research at the Fertilizer Institute, a lobbying institute that calls itself the voice of the fertilizer industry.
“Some of it has just got to work its way out,” he said. “There’s just a lot of uncertainty in the market.”
He said that the market is “incredibly global.”
For example, while the US gets 86 percent of its potash from Canada, there will still likely be global disruptions. However, the extent of those disruptions is yet to be determined, as the US won’t be importing products from Russia.
Troendle said it’s hard to know how much certain actions will impact US growers and food prices. He said the significant price changes in recent years have already made the market unpredictable, and this is yet another confounding factor in predicting how fertilizer prices may fluctuate.
Ag multinationals’ footprint in Ukraine
Several major agriculture companies based in the US have operations in Ukraine.
Archer Daniel Midland employs more than 600 people in the country, according to its website. It has a grain terminal, six silos and a trading office in the capital, Kiev.
It also has a plant for crushing oilseed, which is Ukraine’s second-largest export to the US, according to the USDA. (Vegetable oil, which can be made by processing oilseeds, is the largest.)
Late last week, the company said it was “actively monitoring the situation in Ukraine” and employee safety was a top priority.
“Our facilities in Ukraine are not operating, following security protocols and government guidelines,” a company spokesperson said last week. “ADM will use the full breadth of our global and integrated supply chain to support the needs of our customers around the world as we manage through this difficult situation.”
Bunge, another major food production company, has more than a thousand employees in the country. It has an office in Kiev, two grain elevators and a port terminal from which it exports grain, according to a company statement. It also has an oil packaging facility in the country, according to its website.
Also last week, it said it “temporarily suspended” operations at its processing facilities and closed offices in the country.
“We remain in constant contact with our teams and we will continue to follow developments and take all appropriate actions to protect our employees and our business in the country,” it said in a statement last week. “Taking advantage of Bunge’s global network and footprint, the company will work to minimize any impact on our supply chain.”
Cargill, a private company that provides wheat for use in bread and cereal and also owns meatpacking plants in the US, has about 500 employees in Ukraine, according to the Minneapolis StarTribune.
It did not reply to requests for comment last week and this week. In a statement on its website, it said, “The events unfolding in Ukraine are heartbreaking. It’s hard to comprehend the challenges our employees, customers and their families in the region face in the days and weeks ahead.”
The USDA also has an office in Ukraine. Many US diplomats have returned to Washington D.C., according to Government Executive. The USDA did not return a request for comment about how it was handling operations out of its office in Ukraine.
Global wheat prices rise
Ukraine is a major wheat-producing country, responsible for exporting around 15 percent of the world’s hard wheat supply in 2021, said Kim Anderson, an agricultural economics professor at Oklahoma State University.
Before fighting broke out in Ukraine, prices for hard red winter wheat—the most common wheat variety grown in the US—were already near record highs. But since Feb. 18, the day President Joe Biden announced he expected Russia to invade Ukraine in the following days, prices have risen another 18 percent.
Most American farmers aren’t in a position to take advantage of the current high prices because more than 80 percent of the season’s wheat has already been sold, Anderson said. He predicts that prices will remain high, but a lot depends on how exactly the war in Ukraine pans out.
“It’s a matter of, ‘How long will the conflict last?'” he said. “And what’s the damage done? How much will it disrupt the planting of the summer crops? Will they get the spring wheat planted?”
Reduced wheat production in Ukraine would mean higher prices for the commodity worldwide, he said.
Farmers’ concerns
Even if farmers could take advantage of the high wheat prices, the situation’s effect on fertilizer could cancel it out, experts and farm bureau representatives said.
“Our inputs were already on the rise,” said Hawkins, the Missouri farm bureau president.
Bob White, director of national government relations for Indiana Farm Bureau, said the conflict will likely cause a ripple effect in food prices that could eventually affect consumers.
“We import 80 percent of the fertilizer we use from outside the US so the situation in eastern Europe will affect those supply chain issues around the world,” White said in a statement.
Pam Dempsey and Sky Chadde contributed to this story.
Follow us
Republish!
Republish our articles for free, online or in print, under a Creative Commons license.
Republish this article
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Want to republish a Modern Farmer story?
We are happy for Modern Farmer stories to be shared, and encourage you to republish our articles for your audience. When doing so, we ask that you follow these guidelines:
Please credit us and our writers
For the author byline, please use “Author Name, Modern Farmer.” At the top of our stories, if on the web, please include this text and link: “This story was originally published by Modern Farmer.”
Please make sure to include a link back to either our home page or the article URL.
At the bottom of the story, please include the following text:
“Modern Farmer is a nonprofit initiative dedicated to raising awareness and catalyzing action at the intersection of food, agriculture, and society. Read more at <link>Modern Farmer</link>.”
Use our widget
We’d like to be able to track our stories, so we ask that if you republish our content, you do so using our widget (located on the left hand side of the article). The HTML code has a built-in tracker that tells us the data and domain where the story was published, as well as view counts.
Check the image requirements
It’s your responsibility to confirm you're licensed to republish images in our articles. Some images, such as those from commercial providers, don't allow their images to be republished without permission or payment. Copyright terms are generally listed in the image caption and attribution. You are welcome to omit our images or substitute with your own. Charts and interactive graphics follow the same rules.
Don’t change too much. Or, ask us first.
Articles must be republished in their entirety. It’s okay to change references to time (“today” to “yesterday”) or location (“Iowa City, IA” to “here”). But please keep everything else the same.
If you feel strongly that a more material edit needs to be made, get in touch with us at [email protected]. We’re happy to discuss it with the original author, but we must have prior approval for changes before publication.
Special cases
-
Extracts. You may run the first few lines or paragraphs of the article and then say: “Read the full article at Modern Farmer” with a link back to the original article.
-
Quotes. You may quote authors provided you include a link back to the article URL.
-
Translations. These require writer approval. To inquire about translation of a Modern Farmer article, contact us at [email protected]
-
Signed consent / copyright release forms. These are not required, provided you are following these guidelines.
-
Print. Articles can be republished in print under these same rules, with the exception that you do not need to include the links.
Tag us
When sharing the story on social media, please tag us using the following: - Twitter (@ModFarm) - Facebook (@ModernFarmerMedia) - Instagram (@modfarm)
Use our content respectfully
Modern Farmer is a nonprofit and as such we share our content for free and in good faith in order to reach new audiences. Respectfully,
-
No selling ads against our stories. It’s okay to put our stories on pages with ads.
-
Don’t republish our material wholesale, or automatically; you need to select stories to be republished individually.
-
You have no rights to sell, license, syndicate, or otherwise represent yourself as the authorized owner of our material to any third parties. This means that you cannot actively publish or submit our work for syndication to third party platforms or apps like Apple News or Google News. We understand that publishers cannot fully control when certain third parties automatically summarize or crawl content from publishers’ own sites.
Keep in touch
We want to hear from you if you love Modern Farmer content, have a collaboration idea, or anything else to share. As a nonprofit outlet, we work in service of our community and are always open to comments, feedback, and ideas. Contact us at [email protected].What the War in Ukraine Means for US Agriculture
by Johnathan Hettinger, Madison McVan and Amanda Perez Pintado, Modern Farmer
March 5, 2022
Modern Farmer Weekly
Solutions Hub
Innovations, ideas and inspiration. Actionable solutions for a resilient food system.
ExploreShare With Us
We want to hear from Modern Farmer readers who have thoughtful commentary, actionable solutions, or helpful ideas to share.
Submit
Ukraine is one of the major grain producing countries, including wheat, barley and corn. If the war causes disruptions in Ukrainian production and exports, there could be an impact on the global grain market, including the US agricultural market.
Your careful study and attention to detail were clear, and they gave your arguments a lot of weight
He predicts that prices will remain high, but a lot depends on how exactly the war in Ukraine pans out.
The blog post on the impact of the Ukraine war on US agriculture is quite enlightening. It highlights significant concerns about disruptions in the global fertilizer market and wheat supply, areas where Ukraine and Russia are key players. The potential rise in fertilizer prices and the uncertainty in wheat prices globally could indeed pose challenges for US farmers. The shift towards less fertilizer-dependent crops and the scrutiny of fertilizer pricing are particularly interesting responses. This situation underscores the interconnectedness of global agriculture and the far-reaching effects of geopolitical events.