Profitable crop production in Russia, Ukraine and Argentina will boost output and exports; European producers ahead of serious changes in their cropping systems

Main destinations of German wheat exports

Participants Cash Crop Conference 2017

From June 12th to 15th more than 50 international agricultural economists met in Berlin for the annual Cash Crop Conference; this year´s conference was managed by the agri benchmark headquarter team at the Thünen Institute, Braunschweig, Germany.

During this conference, economic results for 2016 crop production and related outlook for 2017 and ahead were presented. The first key finding: Due low input cost – nitrogen in particular – as well as low land cost and the devaluation of their national currencies, crop producers in Russia and Ukraine had a rather profitable year. In combination with yield increases this has and will lead to significant increases in exports. In 2015 and 2016 – after a decade of growth in exports by more than 10% per year – Russia became the number one wheat exporter.

Argentine crop production – particularly wheat and corn – benefited a lot from the abolishment of export taxes: Profits of up to 50 USD per tonne have been achieved. Therefore, it is rather likely that in the near future Argentina will become a major player in global wheat markets again. Both trends together are likely to contribute to ongoing pressure on global commodity markets – especially wheat.

The second major topic of the conference was challenges for European producers because of (a) tighter regulations on nutrient surpluses in order to protect water resources, (b) shrinking availability of effective crop protection products and (c) tighter margins. The German agri benchmark partner Thomas de Witte presented results on adaptation strategies of two cases studies based on focus group discussions with regional advisors and growers.  The key outcome: Moving away from winter crops towards a more balanced mix with spring crops seems not only to be feasible but also economically viable. agri benchmark partners from the United Kingdom, Denmark and France confirmed that their growers face similar challenges. Therefore, agri benchmark will intensify its efforts in exploring options to adapt to new circumstances.

Finally, for the first-time, economic analyses from sugar cane production in Mozambique, Zambia, and Tanzania were presented. Even though the region has a sugar deficit and high sugar prices, production volumes are still relatively small. First results on the economics of sugar cane production show a cost disadvantage for rain-fed crop of roughly 100 USD/t compared with Brazil, the world market leader in sugar production.

However, irrigated areas, for example in Zambia, can produce sugar at very low cost and seem to be internationally competitive.  Even with higher costs, production in these countries is very profitable, mainly due to high domestic prices. That might motivate future investments in Africa, which should increase production volumes and limit opportunities for current sugar exporters, if trade barriers remain in place.

Media interested in further details regarding these significant pending changes in global agriculture may get in touch with with Jeanette Malchow at the agri benchmark Center in Germany.

Selected presentations of the conference are available on the
 agri benchmark Cash Crop website