Farmers' opinion on the predicted increase

Farmers were unpleasantly surprised by the statements of some Latvian economists about the impact of the Ukrainian war on the agricultural sector. It is rather strange to draw hasty conclusions that, for example, the grain sector is on the rise. It is unwise to generalize the price swings of a few months to the impact of the year.

Maira Dzelzkalēja-Burmistre, Deputy Chairwoman of the Board of the Association “Farmers' Council”: "What kind of growth can there be right now if this year's harvest, sown in the fall, is currently waking up from winter sleep, and has only received its first top dressing with nitrogen mineral fertilizers that are at least three times more expensive in places? We will be able to talk about growth only when the harvest grows, it can be harvested (that is, large amounts of fuel will be available at the relevant time), dried (natural gas will be physically and financially available), delivered to ports or grain processing companies (railway wagons will have returned to Latvia to deliver the harvest to the port) and payment has been received. Farmers, of course, hope that the weather conditions will turn out to be super favorable this year, and we will harvest record harvests. Then everyone will be able to enjoy the growth (perhaps it would be more correct to say - profit) - including those many farmers who have not been able to afford to buy all the fertilizer necessary for a good harvest. As a reminder - every ton of grain or potatoes that we grow also requires their own food – nitrogen, phosphorus and potassium. If we don’t feed them – plants take from the soil as much as they can find there, usually around 2-3 tons for grain production. But plant food has become very expensive, and it became so before the war in Ukraine – at the end of last year. The war made it even more expensive a couple of times.

For the high selling price – yes, the grain can be sold before it has grown, the exchange price can be fixed. Farmers do it, albeit gradually: while the winter crops are still under the snow – no more than 30-40 % of the potential harvest, in the spring, if they have overwintered well (i.e. at the end of April), another 10-30 %. The rest can be sold only when everything has grown and the harvest has been harvested, because in the climatic conditions of Latvia, the farmer plans one, but the weather conditions introduce a correction of up to 50 %.

Anyway, bank representatives, if they work with farmers, should have known these market peculiarities. Just as banks have not really accepted such an investment until now, requesting working capital loans within the season, rather than building up stocks throughout the year.

On the growth of dairy farmers…. In order to produce milk, cows must be fed appropriately, and the price of concentrated feed has increased several times. This season's own produced roughage – hay and silage – will be very expensive, because it will be fertilized with expensive fertilizer and prepared by pouring expensive diesel fuel into tractors. In order to milk this milk, which is sold at a “high” price, you have to pay for expensive electricity. All production costs have increased, and this process cannot be stopped – therefore, judging at the beginning of the year which sectors will be selected, for which even half-year results cannot be predicted, may indicate a careless attitude towards agriculture in general.”