The same day in mid-April as Prime Minister Denys Shmyhal announced that Ukraine’s 2022 spring seeding campaign was under way, a 42-year old farmer from Nova Basan, Chernihiv Region, was killed when his farm equipment clipped a Russian landmine hidden in a field.

Like other sectors in Ukraine, the war is turning spring field work into a dangerous front line. There are serious implications for the export of Ukraine’s most strategic crop – wheat. According to the US Department of Agriculture (USDA), Ukraine customarily grows winter wheat, which is produced mostly in those south-eastern regions under occupation or near active battle zones.

According to the United Nations, Ukraine ranks seventh in global wheat production and fifth in wheat exports. In 2021 Ukraine exported $5.1 billion worth of wheat, which is 10% of the global export market. Any threat to Ukraine’s wheat crop could hit the world’s poorest economies hard. Around 25 African countries rely on wheat imports from Ukraine and Russia, which faces export sanctions, according to an early March United Nations Conference on Trade and Development report.

May is crunch time for Ukrainian producers to finish planting their crops. The Ukrainian government is promising to do what it can to help farmers get their crops in the ground, such as extending up to Hr3.5 billion in financing.

“We’re doing everything that we can so that the seeding and field work does not stop anywhere,” Shmyhal said. Still, the US estimates that Ukrainian crop production could fall by 20% this year.

The war has created big obstacles for Ukraine’s seeding campaign. For a start, landmines pose a physical danger for Ukrainian farmers and fuel and spare parts are hard to obtain. There are fewer farmers with some joining the army or territorial defence, some fleeing occupation, and others losing their lives. Many areas won’t see a crop this year.

A tractor driver in Makovyshche rode over an anti-tank mine during field work. (Photo Credit: Facebook Seeds.org.ua)

“Unfortunately, I have to confirm that there will be no seeding campaign this year because farms are either destroyed or plundered by the occupiers and the fields are filled with mines and shrapnel,” stated Vycheslav Zadorenko, council head in Derhachiv, Kharkiv Region, formerly under Russian occupation. And there are many more villages experiencing similar stories that are going unreported.

Then there are supply chain issues. Russian missile strikes have damaged infrastructure like rail lines, storage facilities, farm equipment and inputs factories. Ukraine’s exports are severely limited after it had to close sea ports in Kherson, Mariupol, Berdyansk and Skadovsk, according to Ukraine’s Ministry of Agrarian Policy and Food.

Compounding these issues are plundering and theft by the Russian occupiers. About 400,000 tonnes of grain, a third of Ukraine’s grain stores in four occupied regions, have already been stolen by the Russians, reported First Deputy Minister of Agrarian Policy and Food Taras Vysotskiy. Some is taken in trucks to Russia, some is taken by sea from ports that are now Russian-controlled.

“If this continues and they do not take reserves but food stores set aside in the regions in advance of the new harvest, there could be a threat of famine,” Vysotskiy added.

According to the USDA, Ukraine’s most important exports are agricultural commodities, totalling $27.8 billion in 2021 and making up 41% of Ukraine’s total exports. Ukraine ranked fourth in the world in agricultural exports last year. The country desperately needs to export agricultural products to help finance defence efforts, but in late April Ukraine suspended exports citing it needed to meet domestic needs first.

Most grain exports go to the Middle East and Africa as well as underdeveloped countries that rely heavily on food imports, according to US-based crop consultant Sarah Taber speaking to the National Post. For example, Eritrea imported all of its wheat in 2021 from Ukraine and Russia, according to the Food and Agricultural Organization of the United Nations. Egypt, Indonesia, Turkey, Pakistan and Bangladesh are Ukraine’s top wheat markets.

Other global wheat producing countries could now fill these supply gaps. India had aspirations to increase its wheat exports, but its harvest is expected to drop by 25% due to the current heatwave, India’s Agriculture Department reports. Canada produces wheat mostly in Western Canada. In 2021 Saskatchewan exported $3.2 billion in wheat, Alberta $2.1 billion and Manitoba $1.1 billion.

The premiers of these Prairie Provinces were practically salivating at the potential export opportunities for their economies following the Russian invasion of Ukraine. The war in Ukraine was barely a week old, when Saskatchewan Premier Scott Moe told a press conference that his province could fill global commodity gaps in oil and agricultural products. The premier even made a late April tour of Europe to talk commodity trade and sell  Saskatchewan grain crops.

But for all its resources, Canada won’t be able to make up any global supply shortfalls in wheat or any other grain crop. According to Agriculture Canada, Canada is projected to increase its seeded wheat acreage for 2022-23 by only 5%. This volume will hardly make a dent in the global supply gap.

While the Western Canadian provincial premiers dream large, Canadian farmers cannot just start producing more wheat this year in volumes anywhere near global food needs. Spring seeding decisions are planned months ahead considering crop rotation needs, moisture conditions, projected prices, and inputs costs. For example, Canadian farm fuel prices have skyrocketed as a result of the war and an April hike in domestic carbon pricing on fuel.

Manitoba farmer Doug Martin told CBC news that it’s too late now to change his spring crop plans. “I set my crop rotations [for the next year] when I sit on the combine … and kind of decide which crops we should grow.”

Moreover, planting season has only just begun following a series of late April snow storms in Alberta and Saskatchewan and record flooding in southern Manitoba. Saskatchewan’s Crop Report for the week of April 26 reports only one per cent of the 2022 crop is in the ground – far behind the five-year average.

Another consideration is that seeded acreage does not necessarily translate into greater crop yields in the fall. The Prairie Provinces experienced a severe drought in 2021 resulting in poor soil conditions that can affect 2022 crop quality and volume, Dean Dias, CEO of Cereals Canada, explained. At the end of 2021, Canada had about 15 million tonnes of wheat in reserves, down 38% on 2020, due to poor yields after the drought in summer 2021.

“So, there’s a limit to how much Canadian farmers can ramp up their production,” he added.

Furthermore, Canadian wheat is unlikely to replace Ukrainian wheat globally because Canada has different export markets than Ukraine. According to Agriculture Canada, Canada mainly exports wheat to China, Indonesia, Japan, Italy and the US. High protein Canadian wheat also sells at higher prices unaffordable for developing economies where Ukraine markets. In the first week after the invasion, wheat futures on the Chicago Board of Trade jumped 40% to trade around $11 per bushel, the highest since 2008.

“We have enough supply to supply high-quality end users,” Dias told CBC news, but not enough “to fill every wheat requirement around the world.”

Transport issues are another major reason that Canada cannot fill the supply gap. High volume commodity shipping out of Western Canada remains problematic. Agricultural commodities must compete with energy supplies for rail space. Truck transport is out of the question with high fuel prices and the inability to move the required large volumes.

The global wheat markets are unlikely to see much impact this spring because, according to the USDA, Ukraine has shipped around 90% of its projected wheat exports for the 2022 marketing year as of early March. In fact, Ukraine increased its grain exports by 28% in the last nine months compared to the previous year thanks to a record harvest in 2021. This has provided Ukraine with larger domestic grain stores along with the ability to export more grain.

Supply shortfalls will be felt first in Ukraine. A domestic food crisis looms as Russian occupiers take wheat meant for Ukraine’s food supply chain. And developing countries dependent on Ukrainian wheat might experience food emergencies as well.

The Ministry of Agrarian Policy and Food gave the green light to use agricultural drones 33P for pesticide application for 130 formerly occupied hectares in Kyiv Region. (Photo Credit: Facebook Agro KMR)

Canada’s marginal increase in seeded wheat won’t hit the market for another six months. However, Canadian political leaders might package statements about replacing Ukrainian grain production, Canadian wheat growers will try to capitalize on the war in Ukraine.

Canadian producers are not farming for mere altruism to fill food gaps in some of the poorest countries of the world. They will be seeking markets willing to pay the highest prices.

The Western Canadian Provinces are hoping to refill their coffers with higher agricultural commodities exports after taking a serious hit in tax revenues during the Covid-19 pandemic.

Statements like Premier Moe’s to replace production – and thereby make a profit – are simply ill-worded and offensive in light of Ukrainian land, infrastructure and resources that are being destroyed on a daily basis by Russian missiles and fatalities among Ukrainian farmers, like the one in Nova Basan.

So thanks anyway, Canada….

 

The views expressed in this article are the author’s and not necessarily those of the Kyiv Post.