Despite a slight reduction in the cost of energy and fertilizer, farmers expect the business situation to remain tense – and in many places they fear for the yields on the fields. “It will definitely not be a good grain harvest,” said Farmer’s President Joachim Rukwied of the German Press Agency before the German Farmers’ Day this Wednesday and Thursday in Münster. The recent rainfall has eased the situation in some places. Elsewhere there is irreparable damage after a long drought. Farms can currently only achieve lower prices for products such as wheat and rapeseed – with milk, this goes down well in the supermarket.
Pre-harvest tension
“We still hope that we will come towards an average harvest nationwide,” said Rukwied. “However, there will be significant lower yields at individual locations.” In many areas there was no rain for a period of four to six weeks between late April and mid-June. “In this respect, there was a significant lack of water in the upper soil layers in many places.” It is important for the grain that there is now widespread rain where little rain has fallen so that the grains can develop. “In particular, autumn crops such as sugar beet, corn, vegetables, fruit and potatoes now need rainfall in summer.”
fluctuating costs
“The higher level of costs is still a burden for us, even though we are no longer at the extreme level we were before,” said Rukwied about the effects of the Ukraine war on fertilizers and energy. “We started with nitrogen fertilizers at around 175 euros per tonne, then it went up to more than 1000 euros, and now we are approaching the 300 euros per tonne mark again.” Fertilizers are available and there are no bottlenecks. For farms, however, it is always a challenge when it is the right time to sell grain and buy fertilizer and energy. It’s just “a certain lottery game”.
Producer prices under pressure
The prices that farmers can achieve have fallen for many products, as Rukwied explained. “With wheat, we had a short peak of more than 350 euros per ton, now prices have collapsed again to around 240 euros per ton.” Even with raps it is now less. “The only exception is the pig sector, which is coming out of a deep crisis,” said the farmer’s president. “It was long overdue for the prices to go up. But that also has to do with the fact that production has fallen massively. We are now slowly having the effect that goods are becoming scarcer on the market.”
Price increase in the supermarket dampened?
In view of the recently weaker increase in consumer prices, Rukwied said: “I assume that current cost increases for most groceries have now been priced in.” The following applies: the higher the degree of processing, the lower the influence of the raw product. “In the case of bread rolls, the proportion of wheat, rye or spelt is marginal, so the other costs were the main price drivers,” said Rukwied with a view to energy, wage and logistics costs. According to the Federal Statistical Office, price inflation had eased to 6.1 percent in May, and food was 14.9 percent more expensive than a year earlier – after 17.2 percent in April.
Reactions and actions in trade
“If milk prices go down, then this must also be felt at the shop counter,” said Rukwied. And at the moment they have fallen, on average to less than 50 cents per kilogram for the dairy farmers. It will be difficult for them because they still have relatively high costs for energy and feed. “I hope we’ve hit rock bottom.” In general, it is a fact that higher quality products should have a higher price. “Otherwise we can’t continue to do business.” This applies to meat as well as vegetable products. And lock prices? “If from time to time the sale is a bit slow or if the desire to buy is awakened at the start of the barbecue season, then we don’t criticize the corresponding offers.”
