Ukraine’s harvest is under threat amid fears of Russian invasion. Can Australia fill the gap?

With the Russian military at the Ukrainian border, harvest in “Europe’s bread basket” is under threat and Australian farmers could be left to fill the gap in the world’s grain supply.

Ukraine is among the world’s most fertile farming countries and last year exported a record 84 million tonnes of grain.

It is forecast to supply 12 per cent of the world’s wheat and 16 per cent of its corn this year, but with harvest still months away, a large chunk of Ukraine’s fertile black farmland lies in the firing line of a brewing conflict.

“There’s speculation that the Russians are interested in territory east of the Dnieper River which is [forecast to harvest] over 12 million tonnes of wheat — around 47 per cent of Ukraine’s production,” Mecardo senior agricultural analyst Adrian Ladaniwskyj said.

“Military occupation of the Black Sea ports could see a significant amount of grain blocked out of the international markets, including Russia and Kazakhstan.”

Much of Ukraine’s harvest goes to South-East Asia, predominantly Indonesia, Malaysia and Bangladesh.

“That’s a region where people wake up in the morning worrying where their food is going to come from,” Victorian farmer and chair of industry body Grain Growers Limited Brett Hosking said.

He believes that after a record national harvest Australia is well positioned to deliver grain to those countries.

“That’s the role of Australia, I think — making sure the world remains fed,” Mr Hosking said.

Tense months ahead

In 2014, Russia invaded and annexed the Crimean peninsula from Ukraine.

The conflict put that year’s harvest in jeopardy and global wheat prices spiked 20 per cent.

“In terms of global [wheat] exports, Ukraine is close to double what it was back then,” Mr Ladaniwskyj said.

But if the military stand-off does not escalate before the end of the European winter, the threat of large-scale conflict should subside.

“Currently they have frozen ground, which allows military machines to move over the fertile Ukrainian plains,” Mr Ladaniwskyj said.

“But as soon as the thaw occurs, the fertility of Ukraine will actually work against any conflict — anything heavy will sink in the field.”

The Ukrainian wheat harvest takes place in the summer between June and July and its corn harvest in autumn between October and September.

“If anything is going to occur, it will occur in the next few months,” Mr Ladaniwskyj said.

Australia’s role

For his own and other Australian farmers’ sake, Mr Hosking wants grain prices to rise.

He can see the writing on the wall — conflict in Eastern Europe would likely mean a significant windfall for Australian farmers.

“Australia is sitting on a very large volume of grain at the moment,” Mr Hosking said.

It’s stretching our ability to export it.

“If conflict occurs, you’re effectively putting the world’s biggest wheat exporters at war with each other and, without a doubt, some of [the price premium] will flow back to Australian growers.”

The situation puts Mr Hosking’s financial interest in favour of a conflict which could threaten millions of Ukrainians’ lives.

But he maintained it was the nature of global farming that one country’s misfortune would benefit others.

“Those periods of drought in Australia, there were a lot of other countries taking advantages of premiums Australia couldn’t fill,” Mr Hosking said.

“But we do feel the pain of fellow farmers.

Despite the positive implications for grain prices if conflict escalates, Mr Hosking says the instability that could follow might easily backfire.

“Markets thrive on certainty,” he said.

“They don’t like it when things are uncertain, and long term the best outcome would be a peaceful outcome.”

ABC

Tags: Australia, Ukraine, Russia, Kazakhstan, prices, wheat