the Russian invasion of Ukraine is already reverberating across Indiana as uncertainty mounts over the flow of produce Hoosier farmers need to feed livestock and grow crops.

The market instability created by the fighting extends from fertilizers to cereals and is good and bad news for farmers.

Russian and Ukrainian grain and fertilizer exports are expected to fall, driving up global costs, so Indiana farmers could spend more on fertilizer. But they could see higher prices for their crops of corn, soybeans and wheat.

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Either way, these cost increases will eventually show up at grocery store checkouts as food prices also rise.

“The volatility has just been crazy,” said Jonathan Sparks, a Hancock County farmer who is on the Indiana Farm Bureau Board of Directors.

Grain supplies could decline

While increase in oil prices might be a priority for most people, Russia and Ukraine are major exporters of fertilizers, wheat and corn.

Some commercial and cargo ports in the northern Black Sea are already at a standstill. That means the grain crops and fertilizers that Indiana farmers use in their barns and fields aren’t moving and prices could go up.

Russia is also the world’s largest wheat exporter, accounting for around 20% of the market share, said Michael Langemeier, associate director for the Purdue University Commercial Agriculture Center. Ukraine is another major wheat exporter with about 10% share.

As such important players, the Russian-Ukrainian conflict will disrupt the wheat market and world prices will react.

Wheat prices will be stronger with less inventory on the market, Langemeier said, which will be positive for U.S. producers. While most of Indiana’s agriculture focuses on corn and soybeans, there are approximately 300,000 acres of wheat fields in the southern part of the state.

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Ukraine is also a major maize exporter, accounting for around 14% of the market share. But the country’s ports aren’t open, Langemeier said, which is greatly disrupting that market.

“It’s not as big of a disturbance as wheat,” he said. But “the longer it lasts, the more fears exist that Ukraine will not plant its crop in a timely manner.”

Commodity markets have two trading sessions: one during the day and the other overnight.

“The night they actually started the war, the green market was crazy,” said Hancock County farm owner Sparks.

Farmers trying to get crops to market and maximize their income this year will face big challenges due to the unpredictability, Sparks said.

“Commodity markets don’t like uncertainty and there is a lot of uncertainty with Russia and Ukraine,” he said.

Bob White, director of national government relations at the Indiana Farm Bureau, said he has friends in Ukraine who are farmers. He said the main concern of at least one of them was not planting spring crops, which could have longer-term effects.

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“He’s on a farm in a rural area and he can hear the war every now and then, but it’s not close enough to him to worry about. He’s worried about planting his crop, though,” White said. “During the war, they don’t know what will happen. If they can’t get cash, they risk losing the farm.

Eventually, these market disruptions will lead to higher food prices for both animals and humans.

“We’ve seen it go up a bit and it’s likely they’ll go up more before it’s all over — especially, products that use corn and wheat,” White said. “That always trickles down to the consumer. Kellogg’s and other companies, they will have to pay more for the price of their inputs and pass that cost on to the consumer.

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Indiana farmers produced 1.03 billion bushels of corn last year, up 5% from 2020. Each bushel weighs about 56 pounds. A bushel was about $5.45 last year, and by the end of February the cost was up to $6.92 a bushel.

There’s a chance U.S. farmers will have the chance to export more this year due to the closure of Russian and Ukrainian markets, Sparks said.

“The market could see the biggest increase in demand from Ukrainians who are unable to farm,” he said. “All of this affects global supply and demand and ultimately it affects our prices.”

Fertilizer prices continue to rise

While Indiana farmers may be able to sell their crops for a better price, they may see higher input prices since Russia and Ukraine also export needed fertilizers.

Russia is a top exporter of fertilizer to the United States, White said, and sanctions imposed on the country will drive up prices.

“Russia will sell to China and we won’t import any of these fertilizers from now on,” White said. “This avenue has been closed.”

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The war exacerbated high fertilizer prices, White said, as tariffs and rising supply and demand issues had already driven up costs. In July and August last year, countries in the southern hemisphere planted more area than normal, putting a strain on fertilizer supplies. Then in November, Hurricane Ida disrupted nitrogen processing plants on the Gulf Coast.

“It hampered the whole supply,” White said. “It was total chaos for the fertilizer market.”

To make nitrogen for fertilizer, manufacturers use natural gas, Sparks said. In Europe, this supply normally goes from Russia to Germany. As the conflict continues and supply is disrupted, rising gas prices could lead to higher nitrogen costs.

While nitrogen and phosphorus make up a large part of American fertilizers, they are easily manufactured in the United States. Potassium — or potash — is imported, however, Langemeier said.

About 90% of the potash used in the United States is imported, he said. But most of it comes from Canada.

“It’s pretty widely used in the corn belt for corn and soy products,” Langemeier said. “A lot of it comes from Canada, but there’s some from Russia and Belarus.”

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There could be disruptions in the supply of potash from Russia and Belarus, but Langemeier said most Indiana farmers are applying it to their fields in the fall so the 2022 crops won’t. are not strongly affected.

“We are probably looking at tighter supplies this fall and next year due to disruptions in the Black Sea region, but thank goodness Canada is a major supplier,” he said. “Maybe Canada can supply the potash we need this spring.

Karl Schneider is an environmental reporter at IndyStar. You can reach him at karl.schneider@indystar.com and follow him on Twitter @karlstartswithk.

The IndyStar Environmental Reporting Project is made possible through the generous support of the non-profit Nina Mason Pulliam Charitable Trust.