While its unlikely large amounts of grain from Indiana will be exported, farmers and agribusinesses are still impacted.
(FILE: Brock Turner, WTIU News)
As farmers push to get their crops in the ground, many are reminded about a conflict thousands of miles away.
As America and other countries attempt to push Russia’s incentives away from more death and destruction, some of the impacts of those sanctions are felt across the Atlantic by farmers.
John Carnahan is eagerly awaiting a string of dry days to get his crop in the ground. His inputs cost more this year in part because of inflation and broader economic factors, but also because of the war in Ukraine.
Things like fuel, fertilizers and herbicides are some of the costliest investments year to year in agriculture. A report last month from the U.S. Department of Agriculture estimates margins will be tighter this year. That’s something Carnahan knows well.
“Total farm income will be reduced over what it was last year,” he said. “So the margins just a lot tighter.”
After a string of good years, 2022 appears different. One of the single largest line items for Caranhan and other farmers is nitrogen—which is critical for corn.
“We purchased that back in the fall,” he said. “So we actually increased our corn acres here on our farm.”
That’s a unique perspective among Hoosier farmers.
“Some people thought that the price was too high for some of those inputs,” Carnahan said. “So they may have chosen to switch to soybeans, which require less inputs.”
That’s not just anecdotal evidence. According to planting intention reports, Caranahan is an anomaly among Hoosier farmers.
“It looks like Indiana from the intentions that came out the first of March, we're going to plant about 300,000 less corn acres and 300,000 more soybean acres,” Mike Silver, the manager of grain originations and risk serves for Kokomo Grain Company said. Silver serves as a middle man between farmers and businesses that require large amounts of grain.
There’s a clear reason for the switch, according to Silver and other experts.
“We're seeing historic fertilizer prices [for] N, P and K—nitrogen, potassium, [and] phosphorus. Some of them at all-time highs.”
The war’s impact on these areas might be obscure, but it takes significant amounts of fuel to produce those fertilizers. Bob White, director of national government relations at the Indiana Farm Bureau, says tighter global supply as much of Europe shuns Russian oil imports, paired with increased demand, has pushed the price of LP gas higher.
That’s having a significant impact on the fertilizers farmers rely on.
“Depending on where you're at in the Midwest, anhydrous ammonia prices have gone up 300 to 500%. So, right there's a huge increase in the nitrogen,” White said.
Caranahan and many other farmers pre-purchase their inputs before the growing season begins. That’s what allowed him to plant more corn this year, but White worries if the conflict drags on, problems could persist.
“Looking out a year from now, or in the into late, let's say December, early next year, where are those fertilizer prices going to be?” White asked. “Are we going to have plenty of it?”
But if the destruction from Russia continues, other countries could have problems securing grain and other commodities from Ukraine. Grain exports from there are expected to plumet this year.
“A lot of the export infrastructure is receiving heavy damage along the ocean shipping ports,” Mindy Mallory, an associate professor of agricultural economics and endowed chair of food & agriculture marketing. “It takes time to rebuild that kind of infrastructure. So that will certainly be impacting Ukraine's ability to export going forward. Even if this conflict were resolved today.”
Experts: U.S. food shortage unlikely
While experts say the U.S. does not depend on large quantities of grain from the Ukraine, other countries aren’t as fortunate. That said, it is unlikely you’ll see grain from Indiana on barges heading there.
“We do export some corn to the global market, but Indiana's share of the global export market is pretty small.” Silver said. “Same is true soybeans, Indiana's soybean crop is used primarily here in Indiana.”
Experts say because of that, the food supply here at home is secure—assuming there aren’t significant weather events. But, that’s a different story from what farmers face in Ukraine.
“The farmers [in Ukraine], they're wearing ballistic, bulletproof vests, and ballistic helmets, as they're on their tractors trying to get their spring wheat crop and corn crop planted,” he said. “Dodging bullets, missiles, [and] aerial attacks.”
Reports say Russia has pillaged tractor dealerships, grain storage facilities, and has plans to destroy Ukrainian crops.
“You don't have this choice or that choice, that's a lot different than, are there bombs going off in the backyard or missiles landing,” Carnahan said. “So that kind of puts it in perspective.”
Everyone interviewed agrees higher prices and limited supplies are a small, and worthwhile, price to pay a world away from the devastating loss of life occurring in the Ukraine.
