Faithful to the task again this spring, our farmers will soon have to start the long-awaited seeding stage. However, the conflict between Russia and Ukraine, combined with inflation, will force Quebec agricultural producers to deal with numerous price increases in the coming months. Grain, fertilizers, fuel. How has this war affected prices so far?
Leading the Way with Fertilizers
The fertilizer market is particularly affected by the current war. Essential to promote plant growth and improve soil quality, fertilizers are undergoing a significant increase in cost.
Although in Canada and Quebec we have access to some resources on our own land, we still need to import fertilizers from Russia and Ukraine. Why do we need to import fertilizer from Russia and Ukraine? Because both countries have a better ability to produce nitrogen from natural gas, nitrogen being an ingredient in most fertilizer formulations.
The same is true for potash, a mixture of mineral and chemical products containing potassium, which is a vital crop nutrient and fertilizer ingredient. Because of Russia's role as a global supplier of fertilizer, the withdrawal of Russian product has an impact on global supply.
Ukraine, the Largest Wheat Larder on the Planet
Did you know that Russian and Ukrainian production together accounts for 29% of world output? Several types of grains are also produced in Ukraine, including wheat, which has also seen an increase in price since the beginning of the Russian invasion. Remember that grains are the basis of our food. It is therefore inevitable that the entire agricultural industry will be affected.
A Path Towards a Solution
Ukraine and Russia alone account for a quarter of the world's wheat production and much of the fertilizer production. By comparison, Canada produces about 12% of the world's wheat, which is exported to 70 countries.
On a more positive note, Cereals Canada, which promotes Canadian grain to potential customers internationally, hopes new customers will take advantage of the war in Ukraine to turn to Canada to help the global food chain. According to the president and CEO, our wheat is of better quality than that produced in Ukraine and Russia and therefore more expensive on the market.
To summarize, if we could buy increasingly local, the agricultural industry and our grocery carts would be better off.
Insurance to Support your Operations
Following two difficult years of the pandemic for farmers and the ongoing war in Ukraine, insurance coverage has never been more essential to the smooth operation of businesses in the sector. At Lussier, we know your reality because we have been working with producers, breeders and market gardeners for a long time:
- Civil Liability Insurance;
- Commercial Property Insurance;
- Equipment Failure Insurance;
- Commercial Vehicle Insurance;
- Risk Management Insurance.
Contact us to today to help you cultivate your assets with peace of mind.