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Ukraine war piles pressure on Europe’s farmers

Jack Ronen’s Farm is one of the top 10 in Ireland. But with the war in Ukraine raising food prices, he began to consider abolishing his herd for the first time since his family started farming in the Tifri district three generations ago.

The cost of animal feed, fertilizer and fuel has skyrocketed for farmers across Europe, with Russia’s invasion of its neighbor squeezing grain supply and increasing the price of energy and other inputs. Even battered farmers have difficulty accessing credit as their financial problems increase.

“I have never seen a big burn in cash,” Ronen said in a speech at the “Save Our Bacon” demonstration outside the Department of Agriculture in Dublin last week, where farmers called for a € 100 million government loan package to save the Irish pig sector, worth € 1 billion a year in exports , Crappy.

“We need a bridging loan,” he said. “The guy who provides my feed can not afford to give me more credit. Which bank is going to finance my losses in the next 18 months?”

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

“It’s the four Fs – feed, fertilizer, fuel and financing. The war in Ukraine has had a huge impact on farmers,” said Sutton Steele, a grain trader and consultant for DCX, an online trading platform for agricultural goods.

The average farmer who sells 300 pigs a week faces weekly losses of 18,000 euros, farmers in Ireland said.

Brussels last month put together a package of measures to support EU farmers, including a temporary easing of state aid rules to allow governments to give them financial support.

The EU will also promote annual subsidy payments from December to October to help with cash flow and help pig producers with carcass storage for up to five months, in anticipation of the meat being released to the market when prices improve.

But a € 500 million crisis fund, which also allows member states to equalize their share of funds by up to 200 per cent, needs the approval of national governments and the European Parliament, a process that could take several weeks.

Fertilizer in a Russian factory
Russia is a leading exporter of fertilizers and Moscow’s invasion of Ukraine caused prices to skyrocket © Andrey Rudakov / Bloomberg

For pig breeders in Europe, war broke out with declining demand from China, the world’s largest pig consumer. European industry helped fill the shortage during the 2018 African swine fever outbreak in China, which destroyed herds. But when China rebuilt its shares, Europe’s pork exports to the country fell by more than half in 2021 to $ 3.2 billion, compared to a year earlier, according to the International Trade Center.

“I am very concerned about pigs,” said Joseph Schmidhober, deputy director of markets and trade at the United Nations Food and Agriculture Organization. “You see negative returns and destruction of supplies.”

Spain is the largest pork producer in Europe with an annual amount of 5 million tons per year, according to CaixaBank. Luis Planes, the country’s agriculture minister, has expressed concern over the “serious problem with animal feed”: about 22% of the corn fed to animals in Spain comes from Ukraine.

Alberto PascualHaving 30,000 pigs spread across six farms in Avila’s Castile-Leon province, he said: “We had five, six complicated months with the high price of cereals and the low price of meat, and then came the Ukrainian invasion. Costs are still higher.”

PJ Hegarty, sales manager at Irish feed company Southern Milling, said the cost of its raw materials had “dropped from the Richter scale” since the start of the war. This makes it difficult to manage the finances of animal farmers. “We can not afford to give more credit because we have to pay for our raw materials within 10 days,” he said.

Line chart of the CRU Fertilizer Price Index (January 2006 = 100) showing the prices of fertilizers at the peak

Rising fertilizer prices, which peaked last month, are another concern for crop growers. Russia is a leading exporter of nitrogen, phosphate and potash fertilizers. Although the prices of some of the crops’ nutrients fell last week, commodity consulting firm CRU said high gas prices had affected the EU’s self-production of nitrogen fertilizer, which is produced from fuel.

In Italy, farmers preparing for spring sowing of corn, sunflower, soybeans and tomatoes are experiencing a 40% drop in fertilizer supply compared to previous years, according to the Agricultural Association Consorzi Agrari d’Italia.

Spring is also a crucial period for fertilizing soft wheat and durum wheat, CAI said, adding that the overall growing costs of crop growers have risen by 60% per hectare.

“There is concern that because of these very high costs, the output of wheat and other agricultural products may be lost,” said Gianluca Leli, the association’s CEO. More of fertilizers in lower amounts.

Fertilizer costs will also affect beef farmers in Ireland, where most cattle are fed on grass, with any crop cuts of the crop reducing hay and pickle yields. “Fertilizer… Has tripled in price since last year,” said Morris Brady, a cattle farmer in Kavanagh province.

In Germany, the agricultural association Deutscher Bauernverband last week called for the creation of a national reservoir of fertilizers similar to those of gas and LNG.

The opposing winds facing farmers have left many wondering if they can withstand the storm. “Farmers have to make decisions today but they can not because they do not know where they stand,” said Eddie Punch, secretary general of the Irish Cattle and Sheep Farmers’ Association. “The crisis is now.”

Ukraine war piles pressure on Europe’s farmers Source link Ukraine war piles pressure on Europe’s farmers

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