War in Ukraine creates uncertainty for Ontario grain farmers

Ask Ontario grain farmers what the war in Ukraine means for the spring planting season and one word keeps coming up - uncertainty.

The rising cost of fuel, fertilizer, nutrients and chemicals - collectively known as inputs - has farmers wondering what they can confidently plant this year, even as the war threatens the wheat harvest in a region known as the breadbasket of Europe."

We are dealing with ramifications over here of a global conflict," said Grain Farmers of Ontario board chair Brendan Byrne, who grows a mix of corn, soybeans and wheat on 1,100 acres near Essex.

The cost of some inputs has more than doubled in a matter of months, which has left farmers scrambling. Even prepaying for fertilizer, as Waterford-area grain farmer Scott Persall did, is no guarantee it will arrive.

Russia is among the world's top producers of nitrogen fertilizers, but economic sanctions and tariffs levelled after the invasion of Ukraine have stifled exports. Russia is also a leading source of urea, ammonia, potash and other nutrients critical to grain farming that could end up languishing on cargo ships.

We certainly understand the ramifications of what's happening in Europe now," said Persall, who farms just over 400 acres of corn, soybeans and wheat.

But we only have a few weeks remaining (before planting) and it's pretty tough to find those inputs from a different source with such little time."

There are workarounds" should Russian chemicals not make it to Ontario, said Norfolk County sweet corn farmer Charles Welsh. But even nutrients sourced in North America have gone up in price.

Crops will get planted. I don't think there'll be a shortage," Welsh said. But the input costs are substantial. Everything I ordered is up 20 per cent."

The price of fertilizer has been on the rise for the past year, but the outbreak of war and resultant rise in oil prices spurred another major spike.

We were in the $700-a-ton range and now that's over $1,000. And there's rumours of some of it not landing here," Welsh said.

The other big thing is the fuel cost. We went from diesel that was under a dollar to now pushing two dollars, and who knows what diesel's going to be come June and July."

Tough decisions

That uncertainty gives farmers pause, particularly when it comes to planting corn.

A good corn crop needs to be fertilized when planted and again about a month later to encourage full growth, Byrne explained. Farmers who do not have all their fertilizer on hand before planting are taking a risk.

There needs to be certainty around that," Byrne said. Otherwise you're not going to get a corn crop that's going to be much of anything. It's a tough decision without knowing if you're going to have enough."

Byrne and Persall are debating whether to swap out some of their usual corn acreage for a safer bet like soybeans, which does not need a second round of fertilizer.

From what I've been hearing, nitrogen supply in early June will be very tight," said Persall, who is committed to growing at least enough corn to feed his 18,000 laying hens.

Consumer demand for sweet corn leaves Welsh and his family little choice but to plant their usual 500 acres in mid-April and hope for the best.

Some of the fertilizer for the spring is up in the air, and we don't know if it's going to be here or not," Welsh said.

But we're going to have to pay for what we need to."

All bets are off'

Global demand for wheat is booming, and corn and soybeans prices are approaching highs not seen in years, said farmer and grain price expert Philip Shaw in his latest market trends report for the Grain Farmers of Ontario.

All bets are off," Shaw wrote. The market wants more of everything."

But surging prices are of little help to farmers who already sold most of last year's harvest.

A lot of farmers sold in the fall. They sold early this year," Byrne said. So there's not necessarily a lot on the farm that will be able to capture that higher price."

Instead, farmers are forced to spend big on inputs and hope the high prices will hold.

If we have lots of corns or soybeans, then the price will probably adjust lower. And that's our concern," Persall said.

Then we'll be faced with really high input costs and a really small commodity price, which would really put a cash squeeze on farmers."

With profit margins already tight for grain crops - as little as one penny per cob of Ontario corn - there is not much more to squeeze.

And those input costs, once a retailer gets to a certain level, they don't tend to come back down quickly," Byrne said.

Customers may not notice higher prices for sweet corn this year if farmers grow enough to meet the demand. But Welsh said higher input costs will be borne by the consumer eventually.

If they don't get passed on this season, there will be less supply the following season," he said.

Global repercussions

The rising cost of wheat could drive food prices even higher and threaten food security in the developing world, according to experts from the Ontario Agricultural College at the University of Guelph.

Higher wheat prices will translate into higher food prices for all," said Alfons Weersink in an article published on the university's website earlier this month.

The only way to ultimately reduce the impact is to stop the conflict in Ukraine and get wheat flowing again."

The United States Department of Agriculture predicts Ukraine will cut wheat exports by four million tons and corn by six million tons this year, with Russian wheat sales expected to shrink by three million tons.

Canada is ready to help fill that shortfall, said Byrne, who has his fingers crossed for a bumper crop.

The hope for me is that there's other areas - hopefully Ontario - that can push out some high yields, maybe record yields, that can then help to balance out that overall equation of how much food is available," he said.

Feeding the world

Shaw said Ontario grain farmers are in for a wild season marked by an unstable supply chain and volatile prices.

In the next few weeks, we should have a pretty good idea of how much Ontario wheat will make the light of day in 2022," he wrote.

However, from a global perspective and how that might affect our prices, the fog of war has clouded everything over."

As pressing as local concerns about input costs and supply chains may be, Byrne said they pale in comparison to the grim reality faced by farmers in Ukraine because of the reprehensible actions of Russia."

We are standing firmly with the people of Ukraine," he said.

Farmers over there are in the same stage as we are, trying to get their crops planted, with a war happening on their soil. They're shutting down tractors at night because they are targets for drone strikes."

I'm worried about inputs, they're worried about dying driving their tractor," added Persall.

Certainly puts it in a different light, doesn't it?"

J.P. Antonacci's reporting on Haldimand and Norfolk is funded by the Canadian government through its Local Journalism Initiative. jpantonacci@thespec.com