Ukraine invasion puts pressure on Canada's farmers
High-risk, high-reward possibilities as wheat in global short supply during war
The effects of the war between Russia and Ukraine are having a global impact, and Canadian farmers are facing increased pressure to grow larger crops to counter potential food shortages brought on by the fight between two of the world's largest wheat exporters.
The Russian invasion of Ukraine has affected Canadian producers in many ways, said Cornie Thiessen, general manager of ADAMA Canada, a global crop protection company.
World crop prices have risen since the war began because of the inability to have grains exported from Ukraine and countries not wanting to purchase crops from Russia as part of trade embargoes and sanctions.
“The removal of a portion of Russian and Ukraine supplies really exasperates an existing tightness in global stocks for grains, primarily wheat,” Thiessen said.
The Canadian Press reported Russia's invasion of Ukraine has sparked major disruptions around the world. A large number of countries in Asia and the Middle East import wheat from Russia and Ukraine. Ukraine is one of the world's major wheat exporters and since Russia's attack, global wheat prices have risen to levels not seen since 2008.
Canadian farmers are feeling these effects through higher prices for wheat and canola in the country.
It is positive to see the price of crops rise, Thiessen said, but on the downside, this has also affected the availability and cost of the inputs farmers need to grow a crop.
These issues have been compounded by available fertilizer materials. Russia is an important producer of fertilizers and the inability to access these materials is creating tightness in the global fertilizer supply, leading to a sharp increase in fertilizer prices.
Crop protection products, including herbicides, insecticides and fungicides, are rising in price and availability.
Producers also are feeling the pinch of surging energy and fuel costs.
“Farmers need a lot of fuel to run tractors across the field and run grain dryers, and fuel prices, as we've all seen at the gas pump, have risen sharply. Part of that again is a reaction to the loss of Russian supplies to portions to the world market,” Thiessen said.
“The lack of raw materials is driving prices up for crop protection products, but also hampering their availability.”
It will take careful planning to meet global demands over the 2022 summer season in an industry rife with unpredictability. He said it will be equally important to be able to adapt and change plans quickly as new realities emerge over the season.
“It's a bit of a high-wire act for farmers because obviously, the world needs Canadian farmers to grow a really big crop so we can avoid the worst of the food security concerns that are starting to build,” Thiessen said.
“At the same time, they're going to probably plant their most expensive crop ever.”
Farmers will reap the rewards of their efforts if they see a positive yield due to high crop prices, he said, but there is also a significant risk because of the size of the investment needed to grow products.
Producers face additional challenges in the Prairies as farmers are coming off the 2021 season that saw extreme drought that hampered crop production.
The large level of snow accumulated over the winter and spring will help replenish soil moisture but remains a concern because it can typically take a couple of years to return to trend line yields since soil moisture needs time to rebuild. He hopes for more moisture to get back to or above the trend line in 2022.
Farmers must factor in the potential
moisture levels when deciding on how to invest in crop production.
“We've got some of the most knowledgeable and resourceful and resilient farmers in the world, and that's been shown over and over again,” Thiessen said. “I'm pretty optimistic that farmers will be able to do whatever they can.”
If these low temperatures persist for an extended length of time, it could become another barrier to growing as big of a crop as needed, Thiessen said, but he expects producers will be able to adapt to later seeding days and grow a successful crop.
“I don't think we're at the point of concern yet, but it is certainly another variable that farmers have to deal with.”
Looking at the number of countries that have the capability to produce exportable crops, it is a small number. Canada is dominant on the list in terms of the quantity of excess and exportable crops produced, he said, but also the diversity of crops, including cereal, canola, and pulses and the quality and reliability of the country in serving the global market.
The Observatory of Economic Complexity, a data visualization site for international trade data, reported Canada exported $7.13 billion in wheat, making it the second-largest exporter of wheat in the world in 2020.
That same year, wheat was the eighth-most exported product in Canada.
“There isn't a whole lot of countries that have the capability to help in these kinds of situations other than countries like Canada,” Thiessen said.