High input prices imperil 2023 crops in Ukraine

Ukrainian farmers may reduce plantings of wheat and other crops for harvest in 2023 because warfare has cut their income at the same time they face high fuel and fertilizer costs, said two IFPRI analysts during a briefing on Tuesday. A small crop in Ukraine, usually a leading wheat and sunflower oil exporter, could prolong tight global supplies that have driven up grain prices worldwide.

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“That’s the real concern … that next year’s crop will be affected too,” said IFPRI senior research fellow Joe Glauber. Much of the 2020 and 2021 crops are bottled up in Ukraine, despite the recent agreement to allow shipments from three Black Sea ports near Odesa. Some grain is moving by truck and rail at a higher transport cost.

“That means much lower prices within Ukraine,” said Glauber. “That could potentially have adverse effects on plantings come this fall when farmers typically would be planning next year’s (winter) wheat crop.” The Ukrainian agriculture minister said early this month that wheat sowings in 2023 could fall by at least 20%.

Ukraine will harvest 20.5 million tonnes of wheat this year and export 11 million tonnes of it, forecast the USDA on Monday. In the year before the Russian invasion, Ukraine grew 25.4 million tonnes of wheat and exported 16.85 million tonnes.

“Fertilizer prices are high for all farmers of the world and we are not seeing any major decline,” said IFPRI senior research fellow David Laborde. The high prices reduce crop profitability and discourage farmers from “the major supply response that we are aiming for,” of larger grain production to offset the loss of Ukrainian grain, especially in countries that rely heavily on imported grain.