Costs rise for farmers after several years being affected by climate change
Such cost rises are unprecedented for farmers. The price of nitrogen has gone up by more than 300%, while all costs (tractors, fuel, manual labour and more) have risen sharply. This situation is unfolding against a backdrop of sharp price rises for cereals, corn, rapeseed, soy beans and more, which means it can be tolerated by farmers.
It’s no surprise, then, that vegetable prices had to follow to keep our farmers interested and motivated. Contract negotiations with farmers on raw materials are currently being finalised. As a result, we are seeing unprecedented price rises this year.
The situation in the fields
In southern Europe, winter production of broccoli was severely affected by flooding in the Ebro valley. At the same time, Portugal and southern Spain have seen very little rainfall for the last three months, and the dry season is just around the corner. As a result, farmers have to start irrigation now, leading to extremely high electricity costs,
and the underground water table is lower than normal. Several regions, such as Andalusia, already have strict restrictions in place regarding the water volumes available for irrigation. Farmers are therefore having to adapt their crop rotation and grow less sweetcorn or other vegetable crops as they require too much irrigation water.
However, the dry weather conditions were good for sowing peas and broad beans in southern Spain and Portugal. In south-west France too, peas started to be sown in good conditions around mid-February.
Northern Europe has seen little frost, and winter crops (such as carrots, Brussels sprouts and leeks) have seen a good harvest in terms of both quality and yield. The winter spinach sown in September and October looks promising and should be ready for harvesting in April.
The effects of the Covid-19 pandemic are clearly being felt and are resulting in volatile supply and demand. Successive lockdowns and restrictions, for example, have caused sales to our Hospitality customers to fluctuate wildly.
The effects of the current situation in Ukraine, a major producer and exporter of grain, wheat and maize, are already being felt and are putting further pressure on agricultural products. Grain prices – already at historically high levels – have risen again by 50%, and the situation remains extremely volatile.
Russia, Europe's leading supplier of fertiliser, is applying pressure on the availability of fertiliser and its affordability. Nitrogen prices, which had roughly tripled in price compared to normal before the crisis, will certainly follow the same trend. Farmers, however, are often unable to obtain advantageous prices at this time, with most crops due to be sown in the coming weeks.
In addition, the climatic conditions are affecting certain key harvests and resulting in cost increases for irrigation, heat-resistant seed varieties and fertilisers. Furthermore, the agricultural and food industry is facing additional challenges - ranging from restrictions in transport and supply of raw materials to higher costs throughout the entire value chain.
Through our Mimosa+ programme (Minimum Impact, Maximum Output, Sustainable Agriculture), we are continuing to make every effort to minimise our impact on the environment and strive to make our crops increasingly resilient to the challenges posed by climate change.
In light of this exceptional combination of events, Ardo is doing everything it can to maintain the status quo with its customers.