War in Ukraine drives inflation, already stirred by coronavirus pandemic – Lancaster Eagle Gazette

PLEASANTVILLE Kevin Horn and his brother Tim havebeen farming since the 1980s, experiencing one of the biggest, most recent farming market crashes.

Even though the market can be unpredeictable, Horn said he's worried a crash is inevitable as the logistical challenges, fertilizer price hikes and the conflict in Ukraine have all exacerbated the state of affairs that have been growing since the start of the coronavirus pandemic.

Horn and his family farm aren't alone: Marshall Grain Co in Amanda has experienced shortages with supplies while helping farmers get their grains to market.

USA Today reported inflation began in 2021, largely because of the coronavirus pandemic. Prices spiked this year after Russia invaded Ukraine, due to oil production disruption, as well as disruptions in the agriculture production and supply chain.

Russia and Ukraine are among the top 10 wheat suppliers in the world: Russia exported 19.6% of the global supply of wheat in 2020, with Ukraine providing 9.1%. The war would prevent Ukrainian farmers from planting, and destroyed ports and railroad terminals would make exporting near impossible.

The Food and Agricultural Organization, a United Nations food agency, reported food prices were the highest since 2011, with the cost traced to the COVID-19 pandemic.

For both suppliers and producers, the market does not care, and as Horn said, you have to do what you can to get by.

Horn said policy choices made by the Secretary of Agriculture Earl Butz in the 1970s hurt farmers, and that it's important to know what you have "in the market."

"I remember we were selling corn for $1.64 a bushel in the 1980s, you have to do what you need to to pay the bills. We were lucky, we didn't have a lot of debt at the time. But history can repeat itself, and we're heading towards a recession if we can't get things under control," he said.

Horn said the price per bushel for corn and beans hasgrown exponentially since last year. He said he's seen wheat bushel prices climb from $2.25 last year to around $10. But even with higher prices of grain at the market, farmers aren't likely to see an increase in profits.

Barry Marshall, the owner of Marshall Grain Co., explained high market prices don't always reflect high profits for farmers. He and his daughter, Mallory Mathias, run the supply store, which also provides storage services, and produces livestock feed.

"It goes back to the cost of input, what it takes to get the product in the first place. For instance, nitrogen, which is extremely important for corn production, climbed from $350 a ton in 2020 to about $920 in 2022. That triple input cost is huge, so farmers are looking at alternatives, like potash," Marshall said.

But there's a higher demand for potash, as well, and fewer producers in the United States than there were previously to keep up with demand on a global scale or even nationally.

"There are more people to feed globally, so that means more farming needs to happen. Everyone is trying to source the chemicals and fertilizers they need for production, but there are hold ups everywhere, and some sources are just not exporting at the moment," Marshall said. "But there's also a logistics issue when it comes to transporting goods. Whether it's finding the train cars to haul grain, to finding people to unload those cargo ships, or even finding truckers willing to transport, there's just an issue of getting products moved."

He explained, like other markets, the grain and agriculture market is demand-driven: if the prices per bushel are high, farmers are likely to push to sell.

The challenge comes from finding ways to get stored grain to the buyer. Farmers also need to be wary of flooding the market: too much supply makes demand drop.

"Farming is really a bigger gamble than the stock market sometimes. You need to make sure you can get to the market, and that you'll get the most for what you offer. Some farmers can contract some of their harvest, to lock in prices, but they could miss out on higher prices," Marshall said. "Farmers have to be smart with what they've got, but they'll get through this, like they always have."

He said shortages and demand problems started during the pandemic and were aggravated by Russia's invasion. There isn't an easy fix to any of the problems, he said, but it will take time to get more people to address shipping and transport problems, which could help inflation drop.

"On a local scale, especially when supplies are scarce, we see when people will try to buy up as much of one product as we can. We have an advantage, as a smaller supplier, to ask them nicely to not buy a lot and hoard it. It's like when people were scooping up lots of toilet paper at the start of the pandemic: it created false scarcity," Mathias said. "Sometimes, we also have to look at alternate feed sources for some of our local buyers, because we could be waiting on a shipment. Or we may not get enough: I could order 40 cases and they might drop off 12 one week."

"It will get better, but it will just take time."

Her dad agreed, adding that farmers are resourceful: if they don't know what they're doing, they won't stay farming for long.

"It's what we saw in the 1980s, too. A lot of farms folded because interest rates were too high, so farmers became tradesmen," Marshall said. "This is the only industry without control of the input or market costs."

Kevin Horn and his family usually take their harvested grains to Circleville, using their farm's trucks. He said before selling stored grain, he studies the market to determine how much to take.

"We usually take about 900 bushels per truck, and really just try to take enough to make a profit for the month. We aren't running to the market every time we see a big jump, we know we may need to go through some lean months," Horn said. "Plus, my parents lived through the Great Depression, and they beat it into our heads that once the price for something goes up, it doesn't seem to come back down."

"If it keeps up, soon consumers won't be able to keep up with that, but the market doesn't care whether you survive it or not. Sometimes you have to just live within your means."

Despite the uncertainties of farming and market fluctuations, Horn said he's stuck with farming since he was in high school because he loves the challenge.

"Every day is different. You have to be good at it to stick around this long, and I think we've done a fair job with what we were given by our parents and grandparents. We also want to make sure we can help our children and grandchildren succeed, so we're working to help them," Horn said. "Do I know what the market is going to do next week? If I did, I wouldn't be farming. You just have to take it a little at a time."

Barrett Lawlis is a reporter with the Lancaster Eagle-Gazette, part of the USA Today Network. You can share story ideas or comments with him at 740-681-4342 or send an e-mail toblawlis@gannett.com. Follow him on Twitter@BarrettLawlis

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War in Ukraine drives inflation, already stirred by coronavirus pandemic - Lancaster Eagle Gazette