Food Security: EU to Aid Farmers, Free Up Fallow Land- U.S. Farm Groups Request CRP Flexibility

Bloomberg News reported yesterday that, “The European Union is proposing a 1.5 billion-euro ($1.65 billion) funding package for farmers, plus freeing up fallow land for crops as it seeks to shore up food security after Russia’s invasion of Ukraine.

“Food prices have soared as the war cuts off most shipments from Ukraine, a major grain and chicken exporter. In the first ever release of agricultural crisis funds, the bloc plans to provide 500 million euros of funding for member states to distribute to farmers most impacted by high energy and fertilizer prices, officials said. EU nations could then top up those funds with their own resources to reach the 1.5 billion-euro total.”

The Bloomberg article noted that, “Other measures will free up almost 4 million hectares of fallow land for crops in 2022, officials said. While it won’t be the most productive land, it will give farmers more flexibility, they said.”

And Reuters writers Philip Blenkinsop and Gabriela Baczynska reported yesterday that, “The European Union will distribute 500 million euros ($550 million) to help farmers and allow them to grow crops on fallow land to mitigate food price spikes and potential shortages resulting from Russia’s war in Ukraine.

“Published on Wednesday, the proposals by the EU’s executive European Commission also include assistance to Ukraine to help its farmers sow corn and sunflower seeds and tend to wheat.”

Meanwhile, Reuters writers Leah Douglas, Christopher Walljasper and Karl Plume reported yesterday that, “Farm groups are urging the U.S. Agriculture Department to allow farmers the ability to plant on acres set aside for conservation, to help fill the absence of Ukrainian corn, wheat and sunflower oil amid Russia’s invasion of the country.

In a letter to U.S. Secretary of Agriculture Tom Vilsack on Wednesday, seven agriculture lobbying organizations representing U.S. farmers, feed producers, grain exporters, millers, bakers and oilseed processors asked the USDA to provide flexibility to farmers to plant crops on more than 4 million acres of ‘prime farmland’ currently enrolled in the Farm Service Agency’s Conservation Reserve Program (CRP) without penalty.

The Reuters article stated that, “The letter, signed by the American Farm Bureau Federation, the National Grain and Feed Association and others, echoes a March 8 request by U.S. Senator John Boozman of Arkansas, as well as calls from agriculture economists.

“‘This is an emergency, wartime situation,’ said University of Illinois agricultural economist Scott Irwin. ‘It’s very clear to me that the world needs acres of corn and wheat this spring, and where are we going to find them?'”

Wall Street Journal writers Saeed Shah, Nazih Osseiran, and Nicholas Bariyo reported on the front page of Wednesday’s paper that, “Russia’s invasion of Ukraine has spread pain across the developing world. It has spurred the biggest price shock in decades and choked imports of basic commodities, triggering shortages especially tough for poorer nations that were already far behind in their economic recovery from the pandemic.

“In Kenya, bread prices recently jumped by 40% in some areas. In Indonesia, the government has imposed price controls on cooking oil…[and]…in Turkey, a sharp increase in the price of sunflower oil sparked panic buying. People climbed supermarket shelves and clambered over other shoppers to grab what remained. Street protesters in Iraq, angry over rising food prices, called themselves the ‘revolution of the starving.'”

Neil MacFarquhar, writing on the front page of Wednesday’s New York Times, reported that, “[President Volodymyr Zelensky of Ukraine] continuing to address parliaments around the world via video link, warned Italy’s Parliament that famine would strike parts of the world if farmers in Ukraine, a major wheat producer, were unable to work. ‘Famine was approaching for several countries’ that depended on Ukrainian corn, oil and wheat, he said, including North African states just across the Mediterranean Sea from Italy.”

With respect to ongoing fertilizer issues, Reuters writers Tom Polansek and Ana Mano reported yesterday that, “Sky-high fertilizer prices have farmers worldwide scaling back its use and reducing the amount of land they’re planting, fallout from the Ukraine-Russia conflict that has some agricultural industry veterans warning of food shortages.”

Polansek and Mano noted that, “Reuters spoke with 34 people on six continents, including grain producers, agriculture analysts, traders and farm groups. All expressed concern about the cost and availability of fertilizer.

“In the United States alone, fertilizer bills are expected to jump 12% this year, after rising 17% in 2021, according to American Farm Bureau Federation and U.S. Department of Agriculture (USDA) data.”

#Iowa Production Cost Summary- March 22nd, https://t.co/cUnmmImTFk

* #fertilizer, #Diesel pic.twitter.com/LBbmqsxtDf

— Farm Policy (@FarmPolicy) March 23, 2022

DTN writer Russ Quinn reported yesterday that, “Strength is returning to the retail fertilizer market, according to prices tracked by DTN for the third week of March 2022.”

In part, Quinn noted that, “DAP was up 11% compared to last month with an average price of $970/ton.

“Both MAP and urea were 7% more expensive. Urea was $954/ton, an all-time high in DTN’s price records, while MAP had an average price of $1,001/ton. The last time MAP was above the $1,000/ton level was the third week of November 2008 when the price was $1,039/ton. The all-time high price for MAP in the DTN dataset is $1,079/ton the first week of November 2008.

“In addition, 10-34-0 is up 5% from last month. Starter fertilizer’s average price was $876/ton.

“The remaining four fertilizers were slightly higher compared to last month. Potash had an average price of $843/ton, anhydrous $1,520/ton (all-time high price), UAN28 $610/ton (all-time high price) and UAN32 $706/ton (all-time high price).”

In production related news, Reuters writer Alexander Schummer reported yesterday that, “Canada’s farmers may face another drought this year, just as the world counts on the breadbasket nation to grow bigger wheat and canola crops to ease food inflation fuelled by the Russia-Ukraine war.

“Dry conditions shrank last year’s Canadian harvest, and wheat crops in the United States and China are now struggling. In 2020, prior to the drought, Canada’s wheat exports accounted for 13% of globally traded wheat, according to the U.S. Department of Agriculture.”

Meanwhile, in an opinion column today, Bloomberg’s Javier Blas pointed out that, “The world is once again facing a critical juncture in food prices. Russia’s invasion of Ukraine has upended one of the world’s most important breadbaskets, pushing the cost of wheat to an all-time high. Vegetable oil and corn prices are also surging.

“Food-importing nations are understandably worried. Thankfully, there’s enough rice this time around for prices to remain subdued.”

Blas explained that, “Rice matters because it’s the staple diet for half the world’s population, including about a billion undernourished people living in Asia and West Africa. The worst food riots during the 2007-08 crisis weren’t about the price of bread, but the cost of a bowl of rice. Right now, rice is all that’s standing between us and a full-blown food crisis.”

Blas added that, “If major rice exporters, above all India and Vietnam, were to restrict rice exports this year, that could trigger a panic. New Delhi and Hanoi should avoid the temptation. There’s a lot at stake.”