© Reuters. FILE PHOTO: Grain farmer Oleksandr Klepach points at trenches in his field, amid Russia’s invasion of Ukraine, in Snihurivka, southeast Ukraine, February 20, 2023. REUTERS/Lisi Niesner
By Rod Nickel and Pavel Polityuk
KYIV (Reuters) – Facing fields full of mines and short of cash, many Ukrainian farmers are likely to sow a smaller area this spring than they did following Russia’s invasion, in what could be a further blow to global food supplies after disruptions last year.
Ukraine is a major supplier of wheat and corn to world markets and production and exports slumped last year due to the war, sending prices for key commodities sharply higher before stabilising.
With farmers hurting from soaring costs including fertiliser, Ukraine’s export capacity severely limited because of Russia’s occupation of some areas and unexploded ordnance near former frontlines, supply could be squeezed further.
The farmers, who began planting the country’s spring crop last week, also earn less than before as buyers factor in the war’s higher logistic costs and risks, giving them little incentive to maximize output. Ukraine can ship from just three Black Sea ports running at half capacity under an international shipping deal.
“Almost all crops are making a loss at the moment,” said Dmitry Skornyakov, CEO of HarvEast, a large agricultural producer.
Agricultural companies, which plant most of Ukraine’s fields, are short 40 billion hryvnia ($1.08 billion) to carry out spring work, the Agrarian Council said. The country’s spring-planted crops mostly include corn, oilseeds and vegetables.
Denys Marchuk, deputy chair of the Ukrainian Agrarian Council, the biggest farmer organization, expects plantings of corn, a fertilizer-intensive crop, to plummet 20% from last year, which itself saw a 27% decrease in harvested area.
Overall, the government expects spring plantings to fall only 5% from last year, underlining a more sanguine official assessment of potential losses.
The smaller spring crop would come as Ukraine’s harvest of wheat grown over winter is expected to fall sharply, although not enough to spur export curbs.
“Of course it’s not paradise. The situation is still challenging,” Ukraine’s first deputy farm minister, Taras Vysotskiy, told Reuters.
Farmers are likely to prioritize cheaper-to-grow sunflower, said Mike Lee, director of Green Square Agro Consulting. Grains have traditionally dominated Ukraine’s fields, but lower-cost and higher-priced oilseeds are gaining popularity during war.
Ukraine was the world’s fourth-largest corn exporter before Russia’s full-scale invasion in 2022 and the biggest sunflower oil exporter.
Farmers in top exporter United States plan to boost corn plantings, possibly cushioning the blow of lower Ukrainian production.
Ukrainians will also likely plant less potato, a Ukrainian diet staple, due to poor profit potential, said Mykola Hordiichuk, managing director of Agrico Ukraine, a farming operation. That may result in a shortage of retail-quality potatoes, increasing prices for Ukrainian consumers later in the year, he added.
One optimistic sign: Ukraine agricultural scientists said soil moisture reserves looked ample, helpful for germinating crops.
DANGER IN FIELDS
Mines are a growing occupational hazard. On Monday, two farm workers died in separate mine explosions working fields in the southern Kherson and Mykolaiv regions, authorities said.
Vasyl Shtendera, 49, who farms in a Kherson area recaptured by Ukraine last year, doubts he will plant crops this spring.
His fields are mined, some equipment was destroyed and fertilizer is too expensive, he said.
“I have no moral right to send workers to fields as it is dangerous for life,” he said, adding that there is no demining work happening there.
Companies lacking demining certification are charging farmers up to $3,000 per hectare to clear fields, Ukrainian media reported on Tuesday.
Some Ukrainian officials estimate that all land in areas of hostility is mined, totalling some 10 million hectares (24.7 million acres) or nearly one-third of arable land. Vysotskiy, however estimated that the mined arable area may be just 2.5 million hectares, with only 500,000 hectares that will be impossible to use this spring.
The ministry is aiming to clear up to 800,000 hectares of farmland in time for planting, Vysotskiy said.
Michael Tirre, Europe program manager for the U.S. State Department’s Office of Weapons Removal, which funds Ukrainian demining, said he is seeing impatient farmers trying to clear their own mines, something that gives him “goosebumps”.
“It is a sad reality because there just aren’t enough demining teams to go around.”
Farmer Oleksandr Klepach has cleared dozens of shells around his Mykolaiv region farm himself, taking advice from demining experts and Internet videos.
Coming up with a money-making plan is equally challenging. Fertiliser and transportation costs have doubled, but he intends to sow sunflower and peas on land that turned to weeds during occupation.
“I think it will be problematic to make a profit,” he said.
($1 = 36.9070 hryvnias)
French climate investments to drive up national debt burden – think-tank
© Reuters. FILE PHOTO: French President Emmanuel Macron visits Institut Curie laboratory ahead of announcements on biomedical research in Saint-Cloud, France, May 16, 2023. REUTERS/Benoit Tessier/Pool
PARIS (Reuters) – Investments that France needs to finance its transition to a low-carbon economy are set to add 25 percentage points to its debt burden by 2040, a report from the government-funded France Strategie think-tank said on Monday.
France will need to make additional annual investments of about 67 billion euros ($74 billion) – more than 2% of economic output – by 2030 to meet its objectives for reducing its dependence on fossil fuels, France Strategie calculated.
The think-tank, which is part of the prime minister’s office, said the financial effort would weigh heavily on public finances partly because the investments imply lower potential growth, which would cut tax revenues.
As a result, the debt burden would rise by 10 percentage points by 2030 and 25 percentage points by 2040, which France Strategie suggested might need to be financed in part by a temporary tax on wealthy households.
President Emmanuel Macron’s government has hoped to chip away in the coming years at France’s national debt, which currently stands at slightly more that 111% of gross domestic product after surging during the COVID crisis.
The report said the financial burden of investing in Europe’s energy transition also posed a risk in terms of international economic competition, as other major economies such as the United States and China were less concerned about budgetary constraints.
About 100 experts in French and European research groups as well as public French institutions participated in the report, which was led by economist Jean Pisani-Ferry, who previously helped Macron draft his economic programme.
($1 = 0.9084 euros)
Crude oil largely flat; Caution ahead of debt ceiling meeting
Investing.com — Oil prices traded largely unchanged Monday, with traders cautious ahead of the resumption of U.S. debt ceiling negotiations while supply concerns add support.
By 09:30 ET (13:30 GMT), futures traded 0.1% lower at $71.59 a barrel, while the contract fell 0.1% to $75.52 a barrel.
U.S. President Joe Biden and Republican House Speaker Kevin McCarthy are set to meet later this session to try and agree on a deal to raise the more than $31 trillion debt ceiling.
Concerns that a failure to come up with an acceptable compromise have weighed heavily on the market over the recent weeks, as this would result in the U.S. defaulting on its debt obligations, likely plunging the global economy into recession.
The U.S. Treasury has warned that the government could run out of money to pay its bills as soon as June 1.
That said, both crude benchmarks managed to post gains last week, ending four straight weeks of heavy declines, helped by the U.S. starting to refill its Strategic Petroleum Reserve as well as the supply disruptions in Canada, due to early wildfires in the crude-rich Alberta province.
Additionally, the latest data from showed the U.S. oil rig count fell by 11 over the last week, to its lowest count since June 2022.
“A slowdown in U.S. drilling activity is a concern for the oil market, which is expected to see a sizable deficit over the second half of the year,” said analysts at ING, in a note.
“Producers appear to be responding to the weaker price environment, rather than expectations for a tighter market later in the year.”
This brings the Organization of Petroleum Exporting Countries and allies, known as OPEC+, firmly into focus, with its next meeting in early July.
The cartel surprised the market with an output cut at the last meeting, which came into effect at the start of this month. However, this has done little to support crude prices, implying the members may be looking at a further reduction in production.
The fact U.S. producers are not increasing in number will be good news for OPEC+, ING added, “as it suggests that they will be able to continue supporting prices without the risk of losing market share to U.S. producers.”
California grid operator signs off on $7.3 billion of power lines
© Reuters. FILE PHOTO: A woman jogs by power lines, as California’s grid operator urged the state’s 40 million people to ratchet down the use of electricity in homes and businesses as a wave of extreme heat settled over much of the state, in Mountain View, Californi
(Reuters) – California’s electric grid operator has approved a plan expected to cost $7.3 billion for 45 new power transmission projects over the next decade and made it easier for new power plants in high-priority areas to connect to the grid.
The projects will support the development of more than 40 gigawatts (GW) of new generation resources, the California Independent System Operator (CAISO) said on Thursday.
“With electrification increasing in other sectors of the economy, most notably transportation and the building industry, even more new power will be required in the years ahead,” the CAISO said.
The vast majority of the transmission projects will be built in California, with some in neighboring Arizona, it said.
The power lines recommended by CAISO’s 2022-2023 Transmission Plan will allow the state’s grid to add more than 17 GW of solar resources, 8 GW of wind generation, 1 GW of geothermal development, and battery storage projects.
CAISO will prioritize connecting power plants to the grid in specific geographical zones identified by its plan where developing new power lines and plants “make the most economic and operational sense.”
The grid operator also approved proposed reforms to account for “increasing levels of net load forecast uncertainty between day-ahead and real-time markets … as the generation fleet evolves towards a cleaner, but more variable, resource mix.”
It projected that its transmission plan next year could include the need to add 70 GW of new power to the grid by 2033, rising to 120 GW as the state seeks to meet its goal of a carbon-free power system by 2045.
Power supply in the U.S. West is vulnerable to extreme heat as it relies on regional energy transfers to meet demand at peak or when solar output is diminished, the North American Electric Reliability Corp (NERC) said in its summer outlook on Wednesday.
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