Michigan Wheat Farmers can’t make up for Crops Lost in Ukraine

Mar 28, 2022

By Hope O’Dell

Michigan farmers can’t plant more wheat this year to make up for Ukrainian and Russian production that’s been lost to the ongoing war.

Combined, Russia and Ukraine account for 30% of the world’s wheat production, said Scott Swinton, an agricultural economist at Michigan State University.

According to Bloomberg News, Russian exports are at near-normal pace, but that could change as sanctions get tougher.

“A third of the world’s supply comes from an area that’s now offline,” he said.

Michigan farmers can’t make up for that loss, Swinton said, because Michigan, Ukraine and Russia produce soft winter wheat. It was planted last fall and will be harvested in the summer.

A fixed supply and consistent demand for wheat leaves one thing open to change: price. Michigan farmers are seeing higher prices for their crops amid the unpredictable war and increased production costs.

According to the U.S. Department of Agriculture, Michigan produced $281.2 million worth of wheat in 2021.

In the same year, Ukraine exported $5.1 billion worth of wheat, according to the American Farm Bureau.

That left a big hole to fill when Russia invaded Ukraine, and Michigan farmers felt the bump, Swinton said.

“When Michigan farmers planted their winter wheat last fall, prices were around $7.20 a bushel,” Swinton said. “A week or two after the Ukraine war started, they spiked to $13 a bushel.”

Theresa Sisung, an industry specialist with the Michigan Farm Bureau, said wheat prices have stabilized since their peak in the beginning of March.

Even so, “they are still quite a bit higher than what would be considered a more normal price,” she said.

The current price is about $11 a bushel if farmers sell their crop in May, according to the Farm Bureau’s table of futures prices.

Many farmers contract to sell their crop before it’s harvested to lock in the current predicted price, or the futures price, Sisung said.

For example, if a farmer contracts to sell in May for $11 a bushel, the grain elevator must buy the agreed-on number of bushels, with $11 as the starting price, although elevators have some control over the final price.

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Video: Wheat Yields in USA and China Threatened by Heat Waves Breaking Enzymes

A new peer reviewed study looks at the generally unrecognized risk of heat waves surpassing the threshold for enzyme damage in wheat.

Most studies that look at crop failure in the main food growing regions (breadbaskets of the planet) look at temperatures and droughts in the historical records to assess present day risk. Since the climate system has changed, these historical based risk analysis studies underestimate the present-day risks.

What this new research study does is generate an ensemble of plausible scenarios for the present climate in terms of temperatures and precipitation, and looks at how many of these plausible scenarios exceed the enzyme-breaking temperature of 32.8 C for wheat, and exceed the high stress yield reducing temperature of 27.8 C for wheat. Also, the study considers the possibility of a compounded failure with heat waves in both regions simultaneously, this greatly reducing global wheat supply and causing severe shortages.

Results show that the likelihood (risk) of wheat crop failure with a one-in-hundred likelihood in 1981 has in today’s climate become increased by 16x in the USA winter wheat crop (to one-in-six) and by 6x in northeast China (to one-in-sixteen).

The risks determined in this new paper are much greater than that obtained in previous work that determines risk by analyzing historical climate patterns.

Clearly, since the climate system is rapidly changing, we cannot assume stationarity and calculate risk probabilities like we did traditionally before.

We are essentially on a new planet, with a new climate regime, and have to understand that everything is different now.