The Ukraine war has put pressure on farmers in Europe

Jack Ronan’s farm is one of the 10 largest in Ireland. But as food prices soared due to the war in Ukraine, he began to think about killing his livestock for the first time since his family began farming in County Tipperary three generations ago.

The cost of animal feed, fertilizer and fuel has risen for farmers across Europe as Russia’s invasion of its neighboring country depletes grain supplies and rocks the price of energy and other inputs. The financial problems of the affected farmers have increased and they are also facing problems in getting loans.

Speaking at the “Save Our Bacon” protest outside the Ministry of Agriculture in Dublin last week, Ronan said, “I have never seen such a big cash burn where farmers have called for a € 100 million government loan package to save the Irish pig sector, worth € 1 billion a year in exports.” , From destruction.

“We need a bridge loan,” he said. “The guy who provides my feed can’t give me any more credit. Which bank will finance my losses for the next 18 months? ”

Europe is one of the world’s leading agricultural producers and a net food exporter. The EU gets half of its corn from Ukraine and one-third from Russia, and rising energy prices have increased due to the war. Farmers said they could not immediately pass on such rapid cost increases to customers, resulting in cash flow problems.

“These are the four F’s – feed, fertilizer, fuel and financing. The war in Ukraine has had a huge knock-on effect on farmers, “said Sweethun Steele, a grain trader and advisor to DCX, an online agro-commodities trading platform.

Farmers in Ireland say the average farmer sells 300 pigs a week and loses € 18,000 a week.

Brussels last month put together a package of measures to support EU farmers, including temporarily simplifying state aid rules to allow governments to provide them with financial assistance.

The EU will also push forward annual agricultural subsidies from December to October to help with cash flow, and help pig producers with the cost of preserving carcasses for up to five months in anticipation of market release if prices improve.

But a 500 500 million crisis fund, which allows member states to match up to 200 percent of their funds, requires approval from national governments and the European Parliament, a process that could take weeks.

Fertilizer in a Russian factory
Russia is a leading fertilizer exporter and Moscow’s attack on Ukraine has pushed up prices. Andrei Rudakov / Bloomberg

For pig farmers in Europe, the war began with declining demand from China, the world’s largest pig consumer. European industry helped fill deficits during the 2018 African swine fever outbreak in China, which destroyed livestock. But with China rebuilding its stock, Europe’s pork exports fell by more than half a dollar in 2021 compared to a year earlier, according to the International Trade Center.

“I’m very concerned about the hog sector,” said Joseph Schmidubar, deputy director of markets and trade at the UN Food and Agriculture Organization. “You see negative returns and supply disruptions.”

According to CaixaBank, Spain is the largest producer of pork in Europe at 5 million tons annually. Luis Planas, the country’s agriculture minister, has expressed concern about “serious problems with animal feed”: about 22 percent of corn fed to animals in Spain comes from Ukraine.

Alberto Pasquale, who has 30,000 pigs scattered on six farms in the province of Avila Castile-Leনn, said: “We had five or six months complicated by the high price of grain and the low price of meat, and then came the Ukrainians. Attacks and still high costs.”

PJ Hegarty, sales manager for Irish feed company Southern Milling, said prices of its own raw materials had “gone beyond the Richter scale” since the war began. This has made it difficult for livestock farmers to bankroll. “We can’t give any more credit because we have to pay for our raw materials within 10 days,” he said.

The line chart of CRU Fertilizer Price Index (January 2006 = 100) shows that fertilizer prices are on record.

Rising fertilizer prices, which rose to record levels last month, are another concern for crop growers. Russia is a leading exporter of nitrogen, phosphate and potash fertilizers. Although nutrient prices for some crops have dropped in the past week, commodity consultancy CRU says higher gas prices have affected the EU’s own production of nitrogen fertilizer, which is made from fuel.

In Italy, farmers are preparing for spring sowing of maize, sunflower, soy and tomato, they are receiving 40 percent reduction in fertilizer supply compared to the previous year, according to the Farmers Association Consortium Agrari d’Italia.

Spring is also an important time for fertilizing soft wheat and durum wheat, the CAI said, adding that the overall cultivation cost for crop growers has increased by about 60 per cent per hectare.

“There is a fear that due to these very high costs, productivity of wheat and other agricultural products may be lost,” said Gianluca Leli, chief executive of the association. CAI urges its members to look at alternative solutions, such as using data and monitoring more closely for the application of small amounts of fertilizers.

The cost of fertilizer will also affect beef farmers in Ireland, where most cattle are fed grass, any cuts in crop nutrition reduce the yield of straw and silage. “Fertilizer … prices have tripled since last year,” said Maurice Brady, a beef farmer in County Cavan.

In Germany, Deutsche Bourneverband, a farm association, last week called for a national stockpile of fertilizers, such as gas and LNG.

Headwinds facing farmers are leaving many wondering if they can cope with the storm. “Farmers have to make decisions today but they can’t because they don’t know where they stand,” said Eddie Punch, general secretary of the Irish Cattle and Ship Farmers Association. “Crisis now.”

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