The Russian invasion of Ukraine raged on in the markets, especially those of the supply of energy resources and agriculture. In particular, the rising cost of the first one affects the cost of the second one, making it skyrocket.
Indeed, the food supply chain, ranging from the production in the farm to delivery, to transformation, to storage and finally to reatiling, depends heavily on energy.
For the Italian farmers, the greater impact is derived from the effects of the natural gas on the market, which is the main raw material for production of nitrogenous fertilizers.
The prices of these fertilizers, already high at the end of 2021, might rise in the coming months from the latest available price lists which refer to the first decade of March 2022, reaching 200% increases on a yearly basis.
What are the increases?
The CREA (Council for Agricultural Research and Economics) Research Centre for Agricultural Policies and Bioeconomy calculated how much the production costs of farms increase based on enterprise data collected by the FADN (Farm Accountancy Data Network, official EU source) and it recently published its study.
It points out that for the 6 items in question, the average corporate impact is a rising current costs of more than 15.700 euros.
If you want to go further into detail, the largest percentage increase in current costs, ranging from 65 to 70% are in companies specialized in cereal growing and horticulture due to rises of fertilizers costs.
Arboricolture and extensive animal husbandry see more contained increases. At national level, the increase in costs amounted to +54% with significant effects on economic sustainability of agricultural holdings, especially on marginalised farms.
What are the consequences?
The main consequences of the current international crisis belong especially to agricultural holdings which, often, can not cope with necessary expenses for the production process, exiting in practice the international market.