War in Ukraine Creates Risks and Rewards for American Farmers

The good news for Benjamin Rice is that the price of the corn and soybeans he grows on his farm in Philo, Illinois, is up this year – a positive at a time of uncertainty and upheaval compounded by war for agricultural producers around the world. in Ukraine.

“This year versus two years [ago]we are in that 50% range [of higher prices]he told VOA during a break from working in the fields during harvest.

But market forces working in Rice’s favor will only benefit him if he can sell his crop yield in time. “We see fluctuations every day of easily 10, maybe 15 cents of corn and 30 to 70 cents of beans. So if you can sell 70 cents more one day for what tomorrow will be, those are no longer small swings,” he said.

Some factors that farmers cannot control contribute to price fluctuations, such as weather and drought conditions that lower water levels on the Mississippi River, making it difficult for crop-hauling barges to navigate the important waterway leading to international seaports.

While high crop prices are good news for farmers, this year they come with a downside. The cost of doing business is also on the rise.

The price of diesel fuel that powers farm equipment is near an all-time high. So is the cost of nitrogen-rich anhydrous ammonia fertilizers, made from natural gas, that farmers rely on to increase crop yields.

“That’s 40% above last year’s cost,” Rice said. “And that’s over 100% of the cost as it was two years ago for the exact same product.”

The U.S. Department of Agriculture reports that fertilizer prices account for a large share of agricultural cash costs — nearly one-fifth. The proportion is even greater for the production of wheat and maize.

While his farm is far from the battle lines in Eastern Europe, the effects of the war in Ukraine – and the resulting disruption of natural gas and other supplies – ripple through Rice’s fields in the Midwest. the United States.

“The combined exports of Ukraine and Russia – I think that’s between 30% and 40% of global anhydrous ammonia use, and I know they’re a big player in that market as well. natural gas,” Rice said. “And as soon as that [war] started, the numbers exploded on our input costs. »

These costs have not decreased since.

“They’re already looking at next year’s prices, where they’re seeing triple predictions,” DeAnne Bloomberg of the Illinois Farm Bureau (IFB) said, speaking to VOA from the group’s headquarters in Bloomington.

Even higher prices

Bloomberg pointed out that there is no easy way to reduce fertilizer costs. “You can’t just increase fertilizer production,” she said. “It takes years for that.

So high input prices could go even higher — concerns the IFB is relaying to federal and state lawmakers, urging action where possible.

“Gasoline prices and the ability to open up and make the supply chain available is something we can look at because it’s highly regulated,” Bloomberg said. “So any of those things that regulate those inputs is where the government can come in.”

What farmers aren’t asking for — right now, Bloomberg added — is a return to direct government payments to offset rising costs.

“They also want to work in free markets and let the markets move there,” she told VOA. “I don’t see that being on their radar.”

As the war in Ukraine drags on, food prices continue to rise and inflation weighs on economies around the world.

The economic headwinds come at a time when farmer Benjamin Rice is making tough decisions about fertilizer applications ahead of next year’s planting season.

“I want to cut back and be responsible about it, but not so much that it ends up hurting next year’s crop,” he said. Acknowledging a tricky balancing act he may have to deal with for years to come, Rice added, “It’s been a roller coaster for sure.”