Russia’s move on Ukraine could affect US farmers, Nebraska experts say | Omaha State and Regional News

Nebraska agricultural experts are closely monitoring the situation in Ukraine and its possible effects on commodity prices and production.

A Russian invasion and blockade of Ukraine could jeopardize the latter country’s wheat exports, which account for 12% of the world total, according to the US Department of Agriculture.

To avoid supply chain issues, US Agriculture Secretary Tom Vilsack recently told The Associated Press that US farmers would increase wheat production in case a full Russian invasion of Ukraine stifled agricultural exports from the world’s grain powerhouse.

“If something happens (in Ukraine) … it’s going to create uncertainty and volatility,” said Nebraska Farm Bureau senior economist Jay Reppe.

With Ukraine also being a major corn exporter, one of the possible impacts of a Russian invasion would be soaring prices for the two commodities. Reppe acknowledged that this could benefit Nebraska farmers who grow these crops.

He added that this could give the United States more opportunities to strengthen its trade relationship with China and the Middle East – two regions that are already major importers of American corn and wheat.

With 70% of its arable land, Ukraine is an agricultural powerhouse, among the world’s largest producers of sunflower oil, corn, wheat, barley, canola oil and soybeans.

Minnesota-based Cargill has a sizable footprint in Ukraine, including a major port operation on the Black Sea, several grain silos and oil processing plants dotted around a country nearly as big as Texas.

The company’s easternmost office and facility is in Braginovka, less than 30 miles from the Donetsk region currently held by Russian-backed separatist leaders.

Partly in response to the crisis, the wheat and corn futures market reflected price increases. On Wednesday afternoon, the price of a bushel of corn was $6.82 and a bushel of wheat was trading at $8.75. Those prices, Reppe said, were up 27 cents and 80 cents, respectively, from Friday’s prices.

Cargill has previously dealt with geopolitical conflicts in the region. In 2014, the company handed over control of a sunflower crushing plant in Donetsk to a group of armed rebels.

With Nebraska winter wheat already rooted, farmers can look to maximize their yields with supplemental fertilizer applications, assuming it emerges from dormancy in good condition, said Cory Walters, associate professor in the department of agricultural economics from the University of Nebraska-Lincoln.

“It may alleviate (the) production issues a bit,” Walters said.

Although U.S. farmers may benefit from higher wheat and corn prices, they could be forced to pay more for fertilizer. Reppe noted that Russia is a major fertilizer exporter. While Russian fertilizer buyers are mainly European countries, the United States also imports it.

On Tuesday, President Joe Biden ordered sanctions against Russian banks and oligarchs, joining 27 European Union members who agreed to impose their own initial round of sanctions against Russian officials. Russia could react in such a way as to drive up fertilizer prices.

“There’s kind of a trade-off (with) some opportunities in the corn and wheat markets, but also higher costs on the fertilizer side,” Reppe said.

Any short-term gains for the United States from the Ukraine crisis could be offset by long-term effects that could be detrimental domestically and globally.

In an email, Brad Lubben, an associate professor in UNL’s agricultural economics department, noted that energy markets could be affected. In response to the crisis, Germany announced it was suspending the certification process for the Nord Stream 2 gas pipeline from Russia – a lucrative deal long sought by Moscow but criticized by the United States for increasing dependence on the Europe to Russian energy.

“While we may see gains from near-term supply constraints that could support global price levels and U.S. export prospects,” Lubben wrote, “the state of conflict and uncertainty continues also create losses for the market and the global economy as a whole over the longer term.”

This report includes material from The Associated Press and the Minneapolis Star Tribune.