IFPRI: Continuing problems in Ukraine raise concerns about next year’s crop | TheFencePost.com

IFPRI: Continuing problems in Ukraine raise concerns about next year’s crop

Two senior economists at the International Food Policy Research Institute said Tuesday that six months after Russia’s invasion of Ukraine, the continuing uncertainties in the Black Sea region lead to questions about next year’s crop sizes.

While grain – mainly wheat, barley and corn – is being shipped from Ukraine, the size of the shipments is only about 30% of prewar levels, Joe Glauber, a senior research fellow in the IFPRI Markets Trade and Institutions Division, said. That has led to storage problems while the higher cost of shipping has led to lower grain prices in Ukraine, which raises the question of how much farmers will be able to afford to plant this fall for harvest next year, he added.

The Black Sea agreement among Russia, Turkey and the United Nations that allows grain to leave Ukraine “has always been tenuous,” Glauber said, and it is still “fraught with tension” because Russia has been critical of it.

Russia has said that a lot of the Ukrainian grain has ended up in western Europe rather than the developing countries, but Glauber said that’s partly because grain that was scheduled to go to European countries and China before the law is leaving late.

The world availability of wheat is better than last year, he said, because Canada and South America have had “excellent” crops and the higher prices have led Brazil to export more than usual.

But he added that stocks are not being rebuilt. “That’s why we continue to have higher prices,” Glauber said.

David LaBorde, also a senior research fellow in the IFPRI Markets Trade and Institutions Division, said that there is a theory in agricultural economics that the remedy for high prices is high prices because they lead farmers to plant more. But in the current situation, input costs have gone up, so the real question is profitability.

LaBorde also noted that in some places such as Southern Africa grain prices are local and have not gone up with world markets, while the cost of imported inputs continues to rise.

LaBorde said European policymakers should be aware that their Farm to Fork program which emphasizes organic agriculture could lead to lower production and pressure on Latin America and Africa to supply the meat and other products that European consumers will continue to demand.

Glauber said that humanitarian organizations such as the United Nations World Food Program are able to find food to distribute, but their costs are much higher. It is important for donor countries to increase their contributions to WFP under these circumstances, he said.

The issue may be further complicated by some countries’ unwillingness to provide money to humanitarian organizations if they are going to buy grain from Russia, Glauber said.

Indonesia appears to have ceased export restrictions on palm oil, but there are concerns about Indian restrictions on wheat flour, broken rice and rice export taxes, Glauber said.


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