Increase in costs, Russia's invasion of Ukraine creates uncertainty for the agriculture industry

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WEST BEND, Wis. (CBS 58) -- Russia's invasion of Ukraine is having an impact on industries worldwide, including the agriculture industry. It's an impact that farmers throughout the United States are feeling and one experts warn consumers will soon experience as well.

"Our world has become small," explained Mark Stephenson, director of agricultural and life sciences at UW-Madison. "We trade globally for all kinds of things. Small things that most people wouldn't think about. When we get some of these disruptions in supply chains, we found just through time periods like Covid that, that's pretty bad."

Ukraine is a major exporter of a variety of grains that feed people directly in many parts of the world. Those grains also feed livestock in many other places.

"There's concern that those crops won't be able to be planted in Ukraine," Stephenson said. "This may not be just a month or two, or however long the conflict lasts. It could be, and is likely to be, a full year. Those grains that are used as feeds are feeding European dairy cattle and so the European producers are very concerned about whether they'll be able to maintain production or not and they're thinking about having to cull animals. That tightens worldwide supplies and can cause some real disruptions."

On top of the uncertainty about whether a grain crop will be planted and make it out of Ukraine this year, farmers have also been hit with price increases for products needed to run their operations, including fuel, chemicals, fertilizer and seed.

Ryan Elbe is a second-generation farmer at Golden "E" Dairy Farms in West Bend. He says local farms continue to have to crunch numbers and make changes so that they can make ends meet.

"Every year it's just a new challenge, but this year and into the future, I think it's going to be a greater challenge," Elbe said. "Every year, we try to invest in ourselves and in our future, so we're sticking money into doing a better job with what we have to get ourselves ahead."

The Consumer Price Index, a measure of the average change over time in prices paid by urban consumers for a market basket of consumer goods and services, is currently sitting just below eight percent. Stephenson says that the impacts farmers are feeling will be felt by consumers as well.

"It's a little difficult to disentangle some of the impacts that are causing these price rises because we've been seeing inflation at fairly substantial levels for five or six months already," Stephenson said. "Now with Ukraine, it's just simply compounding that and we're going to be seeing prices for grains and feeds, which can kind of sit at the bottom of a lot of different things, going up."

According to Stephenson, that can include gasoline prices caused by changes to ethanol production and prices in grocery stores as food items are impacted in different ways. He says that despite what's expected to be a good milk price year for farmers, he encourages them to keep their heads.

"I urge dairy farmers to think or invest cautiously this year," Stephenson said. "It's going to be a pretty good milk price year even though a lot of their costs of production are up quite high. There will be a point in time here when they begin to produce more than the market actually wants. It's a time of just, huge question marks."

Despite the worldwide uncertainty, Elbe says consumers can be confident that farmers will continue to show up, providing food for American families.

"We're going to keep doing this. Yes, it's a struggle. Yes, there's hardships," Elbe said. "Everybody's going to fall on hard times and I think this is just one of those times. We just got to toughen up, get together, realize your neighbors, your neighboring farmers are working hard to keep everybody going and everything going. As long as everybody keeps working together, everything's going to be fine."

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