Last year, just as farmer David Isermann was coming out of years of chaos created by the coronavirus pandemic, he was heading into the fields to plant his crops when the war in Ukraine started, throwing even more uncertainty into his annual farm management plan.
“It totally disrupted the whole system,” Isermann told VOA from his farm outside Streator, Illinois. “Prices went up in anticipation.”
The biggest price hikes were for a farmer’s “inputs” like fertilizer. “The problem is that Russia and their ally, Belarus, are major suppliers of the three things we use, nitrogen, phosphorus and potassium,” Isermann said. “So, that interrupted our supply line of that. When you take out two of the world’s major suppliers, it affects things.”
But as the war in Ukraine grinds on in its second year, Isermann is in the middle of a new growing season at a time when the impact on global supply chains have eased. “Things have kind of worked themselves out a little bit,” he said. “Prices are dropping. Grain prices are down, so people are not as aggressive on fertilizer purchases, so that kind of helps demand a little bit.”
Joe Camp with Comstock Investments, an agriculture risk management firm, said the overall price for grains, including corn and soybeans, and wheat in particular, stabilized after Russia and Ukraine agreed to the Black Sea Grain Initiative brokered by the United Nations and Turkey in 2022.
“Since then, we’ve not seen a material increase in demand, but we know that that can change going forward,” particularly if the grain deal, which was only recently extended by two months, falls apart as the war rages on. “It’s actually taken prices lower as we compete with cheap wheat, continue to do that, the same thing with corn,” Camp said. “It keeps prices generally lower than they otherwise would be if we had that demand flowing back from Russia and Ukraine.”
The U.S. Agriculture Department reports that millions of tons of grain travels through the Black Sea each year, making the region a major supplier of commodities globally, particularly to Africa. Any change in the ability to move those grains through the international waters of the Black Sea can impact the global price of commodities.
Camp said the Black Sea grain deal also affects a U.S. farmer’s input prices, despite international sanctions against Russia. “Even the grain export deal allows for Russia to keep sending out fertilizer, so relative to what we feared, we’re well stocked and benefiting from low prices heading into the new season,” he told VOA.
But while the prices for what Isermann needs to grow his crops are lower this year, the rising cost of everything else – including loans – because of soaring inflation is cutting into his profits. “It affects everyone we touch,” he said.
Low unemployment in the United States also affects Isermann, who admits it’s hard to find people to do some of the work he and his family must outsource on the farm. “You try to find somebody to haul grain for you. If you don’t have your own truck, it’s very difficult. That problem is there. We just don’t have the people to drive the trucks anymore.”
While Isermann is slowly incorporating automation into his farming equipment, the one thing he can depend on is the manpower to plant and harvest the crops he grows this year, because either he or a member of his own family is the one driving the tractors.
US Farmers Buffeted by War in Ukraine, High Interest Rates