UN farm fund in talks with IMF to join forces on resilience trust -president

By Jorgelina do Rosario and Nigel Hunt

LONDON (Reuters) – The United Nations International Fund for Agricultural Development (IFAD) is in talks with the International Monetary Fund on joining forces on a new financing programme designed to shore up sustainable growth in poorer countries.

IFAD could become a partner of the IMF’s $45 billion lending initiative, the Resilience and Sustainability Trust (RST), bringing its expertise on how small-scale producers and farmers cope with climate change in vulnerable countries, the incoming IFAD president told Reuters.

“The IMF needs implementing partners and is still in the process of deciding how that works,” said Alvaro Lario. “We could participate through the climate adaption angle of the RST.”

Food security is key for many emerging and frontier market economies, which are vulnerable to the effects of climate change and have also been at the sharp end of a global rise in inflation in countries where foodstuffs make up as much as 40% in inflation baskets – the selection of goods used to calculate the cost of living.

Launched in spring, the RST will start lending in October – coinciding with policy makers from around the globe meeting in Washington for the annual meetings of the IMF and World Bank.

IFAD approved just over $1 billion in low-interest loans and grants in 2021, according to its annual report, and is invested in 94 countries, with 207 ongoing programmes until the end of last year, mainly focused on Africa. It works closely with lenders such as the World Bank and the African Development Bank.

MORE PAIN TO COME

Lario noted that Russia’s invasion of Ukraine on Feb. 24 pushed up the price of key products farmers need, adding the cost of raising a broiler chicken in Nigeria had gone from $5 to $8 while a 30 kilogram fertiliser bag in Liberia soared from $40 to $100.

Heads of state, especially in Africa, have identify food security as a national security matter, Lario added.

“The global food crisis is not going to get better,” he said.

Lario, who takes up his post on Saturday, said he saw the strength of the U.S. dollar as one of the main challenges he will face, as many of IFAD’s funding pledges to countries are in local currencies.

IFAD is also joining forces with the IMF on the new food shock window under its emergency financing instruments, as the U.N. agency’s main goal is to tackle poverty in rural areas.

IFAD’s member states review the fund’s performance every three years and replenish its resources and this process is due to take place in 2023.

Current world circumstances meant donors had to weigh up the need for immediate food security needs and longer term support, Lario said.

(Reporting by Jorgelina do Rosario and Nigel Hunt; Editing by Karin Strohecker and Frances Kerry)

Tereos slows sugar output as TotalEnergies halts fuel supplies

PARIS (Reuters) – France’s largest sugar maker Tereos had to slow output slightly at some factories after TotalEnergies said ongoing strikes at its refineries would prevent it from supplying diesel fuel until the end of the week, a spokesperson said on Thursday.

Strikes over wage demands have disrupted the French oil giant’s products refining and delivery for the third day on Thursday, threatening supplies at a time of deepening energy instability.

“TotalEnergies has warned us yesterday that we would not be supplied this week,” a Tereos spokesperson said in answer to a Reuters question.

“We found substitution supplies to last until at least the end of the week but there have been some adjustments made in production rates,” she added. She did specify how much production had slowed, and said the slowdown did not affect all sites.

Tereos provides farmers with fuel for the trucks that bring sugar beets from the fields to the factory where they are processed into sugar and ethanol.

Cristal Union, France’s second-largest sugar maker, was not facing disruption to lorry fuel supplies, the group told Reuters.

This comes just as French sugar producers are trying to speed up production ahead of possible energy restrictions or shortages this winter if Russia cuts off gas supplies.

Sugar production is among the most energy-intensive industries. French factories, which usually run between mid-September to late January or early February, are highly reliant on gas to transform their sugar beets into the sweetener.

(Reporting by Sybille de La Hamaide; Editing by David Gregorio)

Exclusive-VTB urges Putin to curb Western grain traders’ Russian ops – letter

By Polina Devitt, Michael Hogan and Darya Korsunskaya

MOSCOW/HAMBURG (Reuters) – Sanctions-hit VTB Bank has urged President Vladimir Putin to curb the activities of Western grain traders in Russia, citing the need to strengthen Russian traders’ role in the global market, a letter seen by Reuters shows.

In the letter dated Sept. 14, VTB Chief Executive Andrei Kostin asked Putin to issue a decree to prohibit companies belonging to “persons related to unfriendly states” from buying grain and oilseeds from Russian farmers for onward export.

The order should also prohibit firms related to “unfriendly” states from owning Russian companies involved in grain loading capacity in ports, and grain storage, he said.

“Exporters from unfriendly countries own about 15% of Russian port transhipment capacity in the Azov-Black Sea basin, allowing them to extract additional profits from trade in Russian grain… while the Russian economy and budget are missing out on significant revenues,” Kostin said.

VTB owns stakes in a number of major Russian grain export hubs in the Black Sea. The bank declined Reuters’ request for comment on the letter.

Russia is the world’s largest wheat exporter, mainly supplying the Middle East and Africa.

Russian grain market players should still be allowed to sell grain to international traders for export on a free-on-board basis, which includes delivery to the final destination, the letter said.

Dozens of foreign firms, including Starbucks and McDonald’s, have left Russia since Moscow sent thousands of troops to Ukraine on Feb. 24.

Although food supplies were not targeted by Western sanctions, some global grains traders, such as Bunge and Cargill Inc, began scaling back their Russian operations in March.

However others, including Viterra, which is part-owned by Switzerland-based mining and trading giant Glencore, continue working extensively in Russia.

Viterra and VTB share ownership of a grain terminal in the Black Sea, while Louis Dreyfus also has a terminal in the Azov Sea.

Viterra said: “We are aware of VTB’s proposal, but we are not in position to comment further at this time.” Louis Dreyfus declined to comment.

LEVEL OF INFLUENCE

According to the VTB letter, the measures outlined in the proposal would allow Russia to “determine the main geography of countries importing Russian grain” and give Moscow “a fundamentally different level of influence over market pricing”.

Hand-written notes apparently signed by Putin on the letter suggest that he had asked his aide to review the proposal with the government.

The Kremlin does not comment on confidential correspondence, spokesman Dmitry Peskov told Reuters.

A source close to the Kremlin told Reuters that the proposal had been already sent to the government for consideration.

“But the main idea is to strengthen the position of Russian traders on the global market, not to prohibit anyone from doing anything,” the source said.

Russia’s agriculture ministry did not reply to a Reuters request for comment.

In May Russian agriculture minister Dmitry Patrushev, when asked by Viterra about Moscow’s stance on foreign companies which still operate in Russia’s grain sector, said Moscow wants them to stay and will support them.

According to one grain trader, the government is expected to prepare its response to VTB’s proposal by Sept. 30.

If the proposal results in a decree, it would be unprecedented, the trader told Reuters: “It has never been done with any other (industry) in Russia.”

(Reporting by Polina Devitt, Michael Hogan, Darya Korsunskaya, Elena Fabrichnaya, Gus Trompiz and Sybille de La Hamaide; Editing by Jan Harvey)

Ukrainian grains still using Danube as gateway to Romanian Black Sea port

By Luiza Ilie

BUCHAREST (Reuters) – Ukraine continues to ship grain across the Danube to the Romanian Black Sea port of Constanta even after some of its own ports reopened, and the new routes are likely to remain, the deputy chief of freight logistics group TTS said on Wednesday.

Ukraine’s grain exports slumped after Russia invaded the country on Feb. 24 and blockaded its Black Sea ports, driving up global food prices and prompting fears of shortages in Africa and the Middle East.

The country, one of the world’s leading grain exporters, was forced to find alternative routes by train via its western border or through its small Danube river ports of Reni and Ismail into Romania.

Those routes are still being used even after three Ukrainian ports reopened under a U.N.-backed safe passage deal, as too few ships are arriving in Ukraine.

“Some of the traders we deal with have reduced their operations at Reni and Ismail, but the flows we have created are still going and we see them going even after the war ends,” TTS deputy chief executive Ion Stanciu told Reuters in an interview.

“Our grain volumes are slightly lower but the pace is almost the same as before.”

TTS Group handles agricultural products, minerals and chemicals across the Danube river and in the Black Sea port of Constanta. It operates the largest fleet of barges on the Danube, with a transport capacity of 800,000 tonnes, while its grain silo in Constanta can store up to 110,000 tonnes.

Since the war started, the group has transported nearly 1 million tonnes of cargo to and from Ukraine, with grains accounting for just under half of the total, Stanciu said.

TTS director for investor relations Gabriel Techera said the company had implemented a logistics chain based on two offshore buoy terminals in Constanta port, fast-tracking the loading of grain from barges to ships.

The company has also invested over 10 million euros this year in its fleet. It has a full-year investment target of 20.1 million euros ($19.35 million).

Ukraine has sent roughly 4.5 million tonnes of grains to Constanta since the war started, the port told Reuters.

TTS, which listed on the Bucharest Stock Exchange last year and was included on an FTSE Russell index, saw its turnover rise 46.9% on the year in the first half, and a 28.5% jump in the volume of grains it handled.

Increased demand and a jump in tariffs have helped offset higher operation costs, including steel and electricity prices, Stanciu said. An additional growth boost will come from contracts to bring coal shipments to Romania, Serbia and Ukraine ahead of winter. The company was also actively looking at potential acquisitions of ports or fleets.

($1 = 1.0385 euros)

(Reporting by Luiza Ilie; editing by David Evans)

Exclusive-Afghan Taliban sign deal for Russian oil products, gas and wheat

By Mohammad Yunus Yawar and Charlotte Greenfield

KABUL (Reuters) -The Taliban have signed a provisional deal with Russia to supply gasoline, diesel, gas and wheat to Afghanistan, Acting Afghan Commerce and Industry Minister Haji Nooruddin Azizi told Reuters.

Azizi said his ministry was working to diversify its trading partners and that Russia had offered the Taliban administration a discount to average global commodity prices.

The move, the first known major international economic deal struck by the Taliban since they returned to power more than a year ago, could help to ease the Islamist movement’s isolation that has effectively cut it off from the global banking system.

No country formally recognises the group, which fought a 20-year insurgency against Western forces and their local Afghan allies before sweeping into Kabul as U.S. troops withdrew.

Western diplomats have said the group needs to change its course on human rights, particularly those of women, and prove it has cut ties with international militant groups in order to gain formal recognition.

Russia does not officially recognise the Taliban’s government, but Moscow hosted leaders of the movement in the run-up to the fall of Kabul and its embassy is one of only a handful to remain open in the Afghan capital.

Azizi said the deal would involve Russia supplying around one million tonnes of gasoline, one million tonnes of diesel, 500,000 tonnes of liquefied petroleum gas (LPG) and two million tonnes of wheat annually.

On Wednesday, Russia’s state-owned TASS news agency quoted Moscow’s special representative for Afghanistan, Zamir Kabulov, as confirming that “preliminary agreements” had been reached on fuel and food supplies to Kabul.

Russia’s energy and agriculture ministries did not immediately respond to requests for comment on the agreement. The office of Russian Deputy Prime Minister Alexander Novak, who is in charge of oil and gas, also did not immediately respond.

Azizi said the agreement would run for an unspecified trial period, after which both sides were expected to sign a longer term deal if they were content with the arrangement.

He declined to give details on pricing or payment methods, but said Russia had agreed to a discount to global markets on goods that would be delivered to Afghanistan by road and rail.

The deal was finalised after an Afghan technical team spent several weeks in discussions in Moscow, having stayed on after Azizi visited there last month.

ECONOMY IN CRISIS

Since the Taliban regained power, Afghanistan has been plunged into economic crisis after development aid upon which the country relied was cut and amid sanctions that have largely frozen the banking sector.

The trade deal is likely to be watched closely in the United States, whose officials have held regular talks with the Taliban on plans for the country’s banking system.

Washington has announced the creation of a Swiss trust fund for some of the Afghan central bank reserves held in the United States. The Taliban have demanded the release of the entire amount of around $7 billion and said the funds should be used for central bank operations.

Azizi said international data showed most Afghans were living below the poverty line, and his office was working to support trade and the economy through international outreach.

“Afghans are in great need,” he said. “Whatever we do, we do it based on national interest and the people’s benefit.”

He said Afghanistan also received some gas and oil from Iran and Turkmenistan and had strong trade ties with Pakistan, but also wanted to diversify.

“A country … shouldn’t be dependent on just one country, we should have alternative ways,” he said.

The Group of Seven (G7) nations are trying to find ways to limit Russia’s oil export earnings in the wake of its invasion of Ukraine in February.

Moscow has managed to maintain revenues through increased crude sales to Asia, particularly China and India. The European Union will ban Russian crude imports by Dec. 5 and Russian oil products by Feb. 5.

(Reporting by Charlotte Greenfield and Mohammad Yunus Yawar; Editing by Mike Collett-White and Jane Merriman)

Farmers among Russians drafted into the military, Putin says

MOSCOW (Reuters) – Farmers are among the Russians being drafted into the military, President Vladimir Putin told a meeting with officials on Tuesday, signalling potential further risks for the 2023 crop.

Russia is the world’s largest wheat exporter. Autumn is a busy season for farmers as they sow winter wheat for the next year’s crop and harvest soybeans and sunflower seeds. Winter grain sowing has already been significantly delayed by rains.

“I would also like to address regional heads and the heads of agricultural enterprises. As part of the partial mobilisation, agricultural workers are also being drafted. Their families must be supported. I ask you to pay special attention to this issue,” Putin told the televised meeting.

Wednesday’s announcement of Russia’s first public mobilisation since World War Two, amid what Moscow calls its special military operation in Ukraine, has triggered a rush for the border by eligible men and unease in the wider population.

Officials have said 300,000 more Russians will be called up to serve as part of the mobilisation campaign. Some regions bordering Ukraine in the southern and central part of Russia, such as the Kursk region, are major grain producers.

Putin also told the meeting that Russia is on track to harvest a record grain crop of 150 million tonnes, including 100 million tonnes of wheat, in 2022.

(Reporting by Polina Devitt; editing by David Evans)

Droughts, Ukraine war push global grain stocks toward worrying decade low

By Tom Polansek

CHICAGO (Reuters) – The world is heading toward the tightest grain inventories in years despite the resumption of exports from Ukraine, as the shipments are too few and harvests from other major crop producers are smaller than initially expected, according to grain supply and crop forecast data.

Poor weather in key agricultural regions from the United States to France and China is shrinking grain harvests and cutting inventories, heightening the risk of famine in some of the world’s poorest nations.

Importers, food manufacturers and livestock producers had hoped crop availability would improve after war-torn Ukraine resumed shipments from Black Sea ports this summer and U.S. farmers planted large crops. But the United States, the world’s top corn producer, is now expected to harvest its smallest corn crop in three years. Drought also punished European harvests and is threatening South America’s upcoming planting season.

By the end of the 2022/23 crop year, the world’s buffer stocks of corn will be enough for just 80 days’ worth of consumption, down 28% from five years ago and the lowest level since 2010/11, according to figures compiled for Reuters by the International Grains Council, an intergovernmental organization.

That would be fewer days of corn stocks than the world had in 2012, when the last global food crisis spurred riots.

Policymakers are worried.

The World Bank has earmarked $30 billion to help offset food shortages worsened by war, and U.S. President Joe Biden last week announced nearly $3 billion in additional funding to combat global food insecurity.

Half a million Somali children face hunger in the worst famine anywhere this century, according to the United Nations, as a severe drought grips the Horn of Africa.

Thousands of miles away in the United States, South Dakota corn grower Mark Gross expects to harvest as few as 20 bushels per acre on some fields this autumn, down more than 80% from the local average last year, after drought and fierce winds ravaged his land.

Gross said the weather remained too dry in the spring and then two derecho windstorms brought destructive 100-mile-per-hour (160 kph) gusts across fields in Hutchinson County and southeastern parts of the state.

“It’s lining up to be like 2012,” Gross said. “No one wants to admit it, but it’s true.”

Tight grain supplies reflect the impact of climate change on crop production as well as growing global demand for livestock that feed on corn, eating away at stockpiles. Inventories of all harvested grain on hand globally will reach an eight-year low at the end of this crop year, the International Grains Council said on Thursday.

More poor weather could further reduce global inventories, particularly if the current dry weather in South America continues into the main planting season, as the crop cycle shifts to the southern hemisphere.

Crop forecasts in Argentina, the world’s No. 3 corn exporter, are already being scaled back due to dry weather.

Graphic: World corn supply slumps to 12-year-low https://graphics.reuters.com/GRAINS-FORECAST/jnvwemqoovw/chart.png

‘VERY LITTLE WATER’

In the Mayenne region in northwestern France, the European Union’s top grain-producing country, farmer Dominique Defay, said some corn plants have few ears and he is bracing for a crop 35% below his average.

He had been hoping for at least 135 bushels per acre, near the low-end of his five-year average. He may get only about 90 bushels after France suffered its worst recorded drought since 1958.

“These are crops that have had very little water,” Defay said.

On average less than 1 cm of rain fell across France in July. River tributaries dried up as successive heatwaves and wildfires devastated the countryside.

EU production is expected to hit a 15-year low, a decline that will push the bloc to increase 2022/23 imports from Ukraine by about 30% from the previous year to 10.4 million tonnes, consultancy Strategie Grains said.

Bigger European import demand means less for places like the drought-stricken Horn of Africa.

Ukraine’s exports of corn and wheat have risen since a U.N.-brokered deal with Russia allowed shipments to restart from ports that had been blockaded since the war started. But it remains to be seen how much Ukraine can export, especially if the war drags on.

“It’s sort of a false hope that Ukraine is going to bridge the current gap in supply and demand,” said Gary Blumenthal, head of Washington-based agricultural consultancy World Perspectives.

Ukraine is expected to harvest 25 to 27 million tonnes of corn in 2022, down from 42.1 million tonnes in 2021, following Russia’s invasion, according to official estimates.

Sanctions related to the war mean Russia has also struggled to export what is expected to be a record-large wheat crop.

Shipments of wheat and other agricultural products from Ukraine have been a fraction of pre-war levels, said Kevin Hack, a global vice president for ingredients supplier Univar Solutions.

“The supply that’s coming from that area can be cut off at a moment’s notice,” he said.

SOUTH AMERICAN HOPES

Farmers in China meanwhile, have grappled with dryness, threatening crops, while India has limited rice exports due to poor weather.

Agricultural lender Rabobank said the next U.S. wheat crop is also at risk and will be planted in dust this autumn unless rains fall. That is “a recipe for another tough crop production year and strong support for prices,” Rabobank said.

A ratio that factors in U.S. wheat inventories compared to usage and that reflects stockpile levels is expected to drop to a nine-year low in 2022/23, according to Reuters calculations of government data. The same ratio is also predicted to hit a nine-year low for U.S. soybeans.

“We end up, on the balance sheets, finding that it will be another year where global consumption exceeds global production,” said Dan Basse, president of consultancy AgResource.

Importers are setting their sights on South America, where Brazilian farmers are expected to produce record corn and soybean crops in 2023, according to analysts and the government. Farmers hope for better weather for soy plantings that are under way, after dryness spoiled part of last season’s harvest.

In Argentina, though, the Rosario Grains Exchange predicts plantings that just began for the 2022/2023 corn crop will fall 7% from last season to 8 million hectares (20 million acres) due to a familiar problem – drought.

    The Argentine government has also capped export of the crop, which will be planted in coming weeks, at an initial 10 million tonnes, compared to 36 million tonnes in the 2021/22 corn season.

    “If this were a race, farmers are starting in last position with trouble in their engine,” Cristian Russo, the exchange’s head agronomist, told Reuters. “The situation is extremely complex, the most complex season we’ve had this century so far.”

(Reporting by Tom Polansek in Chicago, Gus Trompiz in Paris, P.J. Huffstutter in Bloomington, Illinois, and Maximilian Heath in Buenos Aires. Additional reporting by Karl Plume in Chicago, editing by Caroline Stauffer and Ross Colvin)

Ukraine ports have shipped around 4.7 million tonnes of food under grain deal – ministry

KYIV (Reuters) – A total of 211 ships with 4.7 million tonnes of agricultural products on board have left Ukraine so far under a deal brokered by the United Nations and Turkey to unblock Ukrainian sea ports, the Ukrainian infrastructure ministry said on Saturday.

The ministry said eight ships with 131,300 tonnes of agricultural products are due to leave Ukrainian Black Sea ports on Saturday.

Ukraine’s grain exports slumped after Russia invaded the country on Feb. 24 and blockaded its Black Sea ports, driving up global food prices and prompting fears of shortages in Africa and the Middle East.

Ukraine, a global major grain producer and exporter, shipped up to 6 million tonnes of grain per month before the war.

Three Black Sea ports were reopened under a deal signed on July 22 by Moscow and Kyiv and the ministry has said these ports are able to load and send abroad 100-150 cargo ships per month.

(Reporting by Pavel Polityuk. Editing by Jane Merriman)

Analyst APK-Inform raises Ukraine’s 2022 grain crop forecast

KYIV (Reuters) – Ukraine’s 2022 grain harvest could total between 54.1 to 55.7 million tonnes compared with a record 86 million tonnes due to the Russian invasion which has reduced the harvested area, analyst APK-Inform said on Saturday.

The consultancy said in a report that the harvest could include 19 million tonnes of wheat, 30 million tonnes of corn and 5.5 million tonnes of barley.

It said a smaller harvest and logistical difficulties could cut 2022/23 July-June exports to between 22.6 and 38.8 million tonnes.

(Reporting by Pavel Polityuk; Editing by David Clarke)

Ukraine 2022/23 sunoil output seen at 3.5 to 4.9 million T – analyst

KYIV (Reuters) – Ukraine’s sunflower oil output could total between 3.5 and 4.9 million tonnes in the 2022/23 season compared with 5 million tonnes in 2021/22, analyst APK-Inform said on Saturday.

The consultancy said in a report that sunoil exports could be between 3.0 and 4.6 million tonnes in 2022/23 depending on the sunflower seed harvest and the logistical situation.

(Reporting by Pavel Polityuk; Editing by David Clarke)

Ukraine starts 2022 corn harvest, ministry says

KYIV (Reuters) – Ukrainian farms have started the 2022 corn harvest, threshing 92,200 tonnes of the commodity from 0.5% of the sown area, the agriculture ministry said on Friday.

The ministry said in a statement that the corn yield stood at 4.41 tonnes per hectare.

The ministry has said Ukraine could harvest 25 to 27 million tonnes of corn this year versus 42.1 million tonnes in 2021 and the Russian invasion was the main reason for the decrease in the harvest.

Ukraine is a major global grain producer and exporter but is likely to register a significant drop in output this year, falling to about 50 million tonnes from a record 86 million tonnes in 2021 because of the invasion.

The ministry said farmers had harvested a total of 26.1 million tonnes of grain from 61% of the sown area in 2022 as of Sept. 23. and the average grain yield stood at 3.84 tonnes per hectare.

It said the country had completed its 2022 wheat harvest with output at 19.2 million tonnes in bunker weight and the yield at 4.1 tones per hectare.

Farms also harvested 5.5 million tonnes of the barley from 100% of the area and 250,700 tonnes of peas from 98% of the sown area.

(Reporting by Pavel Polityuk; Editing by Gareth Jones)

Nearly 1 million people face starvation in hunger hotspots – U.N. agencies

By Maytaal Angel

LONDON (Reuters) – Nearly one million people in Afghanistan, Ethiopia, South Sudan, Somalia, and Yemen are starving or will face starvation this year in the absence of aid, as the global food crisis worsens, United Nations agencies warned on Wednesday.

Local conflict and weather extremes remain the primary drivers of acute hunger, aggravated this year by economic instability linked to the ripple effects of the COVID-19 pandemic and the Russia-Ukraine war.

“The severe drought in the Horn of Africa has pushed people to the brink of starvation. Acute food insecurity is rising fast and spreading across the world. Without a massively scaled up humanitarian response, the situation will likely worsen in the coming months,” said the head of the U.N. Food and Agriculture Organisation (FAO).

Although global agricultural commodity prices have come off record highs in recent months, local food prices in several countries remain high and risk heading back up if a U.N.-brokered deal to boost Russian and Ukrainian grain and fertiliser shipments collapses.

Ukraine is the world’s fourth largest grain exporter, while Russia ranks third for grain and first for fertiliser exports.

According to the FAO’s quarterly ‘hunger hotspots’ report, co-authored by the U.N. World Food Programme (WFP), high prices for food, fuel and fertiliser have forced advanced economies to tighten monetary policy. This has increased the cost of credit for low-income countries, constraining their imports and forcing them to introduce austerity measures.

“These trends are expected to increase in coming months, with poverty and acute food insecurity rising further, as well as risks of civil unrest driven by increasing socio-economic grievances,” said the report.

(Reporting by Maytaal Angel; Editing by Peter Graff)

As war, drought hit global crops, Argentina gambles on GM wheat

By Maximilian Heath

PERGAMINO, Argentina (Reuters) – In fields near Argentine farm town Pergamino, spiky green shoots of wheat stretch in neat rows to the horizon, a crop developers hope will boost yields of the grain thanks to a single gene borrowed from sunflowers helping it better tolerate drought.

Reached along a dusty farm track, the field is one of dozens of sites growing a genetically modified (GM) wheat strain called HB4, developed by local firm Bioceres and state scientists. Argentina, the world’s No. 6 wheat exporter, gave commercial planting approval to HB4 in 2020. It was the first GM wheat strain in the world to receive such approval.

Its backers say HB4, also modified to tolerate the herbicide glufosinate-ammonium, could help ward off food shortages at a time when climate change has led to severe droughts in China, North America and Europe, and a war between major growers Russia and Ukraine has snarled food supply chains.

Many environmental and consumer groups have resisted GM wheat, fearing unforeseen side-effects from changes to the genome in a grain used in bread, pasta and other staples. Genetic modifications have long been used in soy and corn, used predominantly for animal feed.

Bioceres is leading the way globally towards commercializing GM wheat, Reuters found from interviews with the firm and importers, documents on U.S. field trials obtained through a freedom of information request and a rare visit to the Argentina test fields.

The firm has gained varying levels of approvals in Brazil, Nigeria, Australia and New Zealand. It is using blockchain and georeferencing to avoid contamination with regular wheat, a risk local farmers fear could prompt import bans.

“There is some ignorance about what transgenic is, it is not a monster,” said Raquel Chan, biochemist and researcher at the National Council for Scientific and Technical Research (CONICET) who led development of the strain, now licensed to Bioceres.

She explained the plant was “almost indistinguishable” from normal wheat, but that it could better tolerate a lack of water due to an extra gene edited in from the sunflower plant.

“It’s something that could have happened in nature and has in fact happened in other instances… Normally it takes thousands of years. We just did it faster.”

HB4 could improve crop yields 20% versus regular wheat under dry and warm conditions, according to a 2020 academic paper, published in Frontiers in Plant Science and on which Chan was a co-author.

Even with Argentina’s approval, Bioceres has yet to start selling the GM wheat for commercial use in the South American country. It is also testing it in neighboring Brazil.

GM WHEAT: STILL TABOO?

In the Bioceres laboratories in Argentina’s inland grains port hub of Rosario, on the banks of the Parana river, Reuters saw scientists working on strains of soy, a GM crop long established in the global food supply chain.

GM wheat, however, has long been taboo.

“The main concern is the possibility that GM wheat and non-GM wheat could end up mixing,” said Julio Calzada, chief economic analyst at Argentina’s Rosario grains exchange.

“This could spark bans in international markets and Argentina needs these $4.5 billion dollars in exports. They’re key at such a complicated moment for the country’s economy.”

No other global seed company has publicly endeavored to develop GM wheat since 2004, when giant seed maker Monsanto, now owned by Bayer AG, dropped plans to develop GM wheat that could withstand its weed killer Roundup. Consuming countries were threatening bans of U.S. wheat, even though the company has long sold corn and soy whose genomes were changed to withstand Roundup, or glyphosate.

In 2020, Bayer agreed to pay billions of dollars to settle lawsuits by people who claimed they were harmed by its weedkiller.

U.S. Department of Agriculture records show agribusiness companies BASF SE, Biogemma USA Corp, and Pioneer Hi-Bred International, owned by Corteva Inc, received permits for GM wheat trials in the United States in recent years.

BASF told Reuters it discontinued the trials in 2019 and is developing wheat through traditional breeding methods. Corteva said it does not intend to commercialize wheat from its trials. Biogemma conducted field trials only for research and development, according to owner Limagrain. Bayer said it is not working with GM wheat.

Bioceres has said it is trying to get commercial approval from the U.S. and Australian governments for planting HB4 wheat in those countries.

In Indonesia, top buyer of Argentina’s wheat behind Brazil, the head of the wheat flour mills association Ratna Sari Loppies played down contamination worries, but said millers there would not yet buy Argentina’s GM wheat to avoid a “negative” impact on their own exports of consumer wheat products.

Brazil, which hopes to boost its own wheat harvest and exports of the grain, appears to have softened its stance. Rubens Barbosa, president of the Brazilian flour millers association Abitrigo, said he believes Brazil might approve HB4 wheat. In 2020 he had threatened to halt wheat imports from Argentina after its government approved Bioceres’ GM wheat. Brazil approved flour made from HB4 wheat in 2021.

“The seeds that will come and be planted in the north of Cerrado will have higher yields,” he said in August, referring to the GM strain. “All of these factors justify optimism related to output and Brazil’s self-sufficiency in wheat production.”

THE ‘MESSI’ GENE

In the Pergamino test fields, Reuters crossed regular farm gates and fences to access the growing area estimated at some 80 hectares where the GM wheat strain was planted.

Bioceres said it has taken strong steps to avoid cross-contamination, including using blockchain technology in a “preserved identity production system” to ensure traceability of the HB4 strain.

The crop is audited at planting and harvesting. Planters must georeference in a computer system the areas planted with HB4 and any work done in those fields. Growers receive financial incentives to ensure compliance and regular inspections are carried out, Bioceres said. Seeds stored in silo bags are monitored until shipment and paperwork documents the chain of custody of the seeds and grains during transport.

Federico Trucco, Bioceres chief executive, said these steps help win over doubters. A new landmark is the recent approval in Nigeria, the only country to fully approve imports of HB4 wheat grains. He said the firm was pushing in Indonesia and Vietnam, as well as North Africa. In Brazil consumers and millers were warming up to GM wheat, he added.

“Approvals are happening much faster than anticipated,” Trucco told Reuters in Rosario, where at a nearby laboratory HB4 wheat was being grown to produce seeds, with tall golden heads of the cereal in a specialized greenhouse.

Trucco said Russia’s invasion of Ukraine and severe droughts in Europe and China had shifted the needle on drought-tolerant GM wheat. The United Nations has warned https://www.undrr.org/gar2021-drought that droughts could be the next “pandemic” as global temperatures rise.

Chan, who helped develop HB4, cited Argentine soccer great Lionel Messi to explain how the sunflower gene could help as drought events increased worldwide.

“Wheat has a regulatory protein for response to water stress but it is not as good,” she said. “It’s like the sunflower lends it a good gene. Imagine yourself as a team of soccer players… if you add in Messi to the mix you will obviously do better.”

(Reporting by Maximilian Heath; Additional reporting by Ana Mano in Sao Paulo, Sarah El Safty in Cairo and Bernadette Christina in Jakarta and Tom Polansek in Chicago; Editing by Adam Jourdan, Caroline Stauffer and David Gregorio)

Exclusive-Climate change, conflict decimate Syria’s grain crop – UN FAO

By Maha El Dahan

DUBAI (Reuters) – Climate change, a faltering economy and residual security issues have decimated Syria’s 2022 grain crop, leaving the majority of its farmers in a precarious position, the United Nations Food and Agriculture Organization (FAO) said.

    Syria’s 2022 wheat harvest amounted to around 1 million tonnes, down some 75% from pre-crisis volumes, while barley was almost non-existent, Mike Robson, FAO’s Syria Representative told Reuters.

    Erratic rainfall patterns in the past two seasons have shrunk Syria’s wheat crop from around 4 million tonnes annually pre-war, enough to feed itself and export to neighbouring countries in a good year.

    Now after more than a decade of conflict many farmers are struggling with harsh economic conditions and security issues in some areas while having to adapt to the new realities of changing weather conditions. 

The meagre harvest adds strain on Syria’s sanctions-hit government as it struggles to source wheat from the international market. Food is not restricted by Western sanctions but banking restrictions and asset freezes have made it difficult for most trading houses to do business with Damascus.

International import tenders conducted by the state’s main grain buyer, Hoboob, have repeatedly failed in previous years with most wheat sourced from ally Russia.

Global wheat prices have also surged since February, after Moscow’s invasion of Ukraine halted grain exports from the Black Sea for months.

    “Climate change isn’t easy anyway but it is doubly not easy in a place like Syria with high inflation, no power, no good quality inputs and some residual security issues that are still playing up in parts of the country,” Robson said.

    The bulk of Syria’s wheat crop, or around 70%, relies on rainfall with irrigation underdeveloped due to war.

    Compared to planted areas, the harvest was around 15% of what farmers expected of the rainfed wheat areas.

    “When the rain fell it was concentrated and it didn’t follow traditional patters,” Robson said.

    “A late start to the rainfall meant that farmers were delayed in planting and they couldn’t prepare their land in time and then the rains finished early by March,” he said.

Farmers in Syria typically plant their wheat crop around November-December and harvest in May-June.

    Syria’s economy is also faltering under the weight of its complex, multi-sided conflict, now in its twelfth year.

    The collapse of the Syrian pound has driven up the price of good quality fertilizers, seeds and fuel needed to power water pumps. On Monday, Syria further weakened its official exchange rate to the U.S. dollar by roughly seven percent.

    The productivity of one hectare of wheat planted in irrigated lands should be around three to four tonnes but is currently at only around two as farmers struggle with agricultural inputs.

    PRECARIOUS EXISTENCE

    The one million tonne production figure is far lower than government estimates of around 1.7 million tonnes.

The government did not immediately respond to a request for comment on the figures.

    The FAO estimate translates into a need to import around 2 million tonnes from abroad to feed government-controlled areas.

A drop in global wheat prices in August, partly on the back of grain exports resuming from Ukraine under a July deal between Kyiv and Moscow makes the situation less dire than a couple of months ago but there are still concerns over the government’s ability to provide funding for purchases.

“The (international) market is slowly getting back to functioning but I’m still concerned as obviously there’s a need for foreign exchange to buy the wheat,” Robson said.

    With the barley crop also failing, some sheep herders are choosing to de-stock, selling most of their animals as they are unable to feed them.

    Syria used to be able to produce around 4-5 million tonnes of feed barley a year to feed its livestock but this year many are struggling to keep their livelihood.

    “When they needed to buy feed, sheep farmers used to sell one animal to buy a tonne of barley for instance and they can feed 20 with that,” Robson said.

    “This year they would need to sell 10 animals.”

    The effects are already being felt in the food market where poultry meat is now selling for more than lamb as financially struggling farmers continue to sell their sheep.

    “The price will go way down but then it will become in short supply and it will be a real problem,” Robson said.

    Areas that are relatively lush in winter and could be used for grazing animals are plagued with lingering security issues and so livestock keepers prefer not to venture there.

    Farmers who have been unable to make a profit for the past couple of years are now worn out financially and may consider other livelihoods as opposed to taking on more debt to grow more grains.

    “It is a very uncertain and precarious existence farming in rainfed conditions right now.”

(Reporting By Maha El Dahan; editing by David Evans)

Bread prices jump by nearly a fifth in EU, Eurostat says as war in Ukraine weighs

(Reuters) – The price of bread rose by almost a fifth in the European Union in August as Russia’s invasion of Ukraine, both major exporters of grains and fertilisers, continued to disrupt global markets and headline inflation accelerated.

Global wheat prices have surged since February, after the war halted grain exports from the Black Sea for months and restricted fertiliser shipments as Russian producers lost access to Baltic Sea ports they had used to ship ammonia, a key ingredient in nitrate fertiliser.

The average price of bread in the EU was 18% higher in August 2022 than a year earlier, data from the bloc’s statistics office showed on Monday, the highest rise since December 2017 when Eurostat began compiling the statistic.

In August 2021, the average price of bread rose 3% year-on-year, Eurostat said.

Hungary and Lithuania saw highest annual changes in average bread price in August, with increases of 66% and 33% respectively.

The countries with lowest average increases were France at 8%, and the Netherlands and Luxembourg which recorded a 10% rise each.

Bread prices have risen consistently in the EU this year, from an average of 8.3% in February, when Russia launched what is calls its “special military operation” in Ukraine.

Combined prices of bread and cereals increased by 16.6% in August, their highest rise since at least January 1997.

Euro zone inflation hit a record high of 9.1% in August, Eurostat confirmed on Friday, driven by sharply higher energy and food prices.

It said 2.25 percentage points of the year-on-year change came from food, alcohol and tobacco.

(Reporting by Diana Mandiá in Gdansk; editing by Milla Nissi and David Evans)

Around 3.7 million tonnes of food left Ukraine ports under grain deal – ministry

KYIV (Reuters) – A total of 165 ships with 3.7 million tonnes of agricultural products on board have left Ukraine under a deal brokered by the United Nations and Turkey to unblock Ukrainian sea ports, the Ukrainian infrastructure ministry said on Sunday.

The ministry said 10 ships with 169,300 tonnes of agricultural products are due to leave Ukrainian Black Sea ports on Sunday.

“At 10:00 a.m., 8 ships left the ports of Great Odesa, and 2 more are waiting for their turn and favourable conditions,” the ministry said in a statement.

Ukraine’s grain exports slumped after Russia invaded the country on Feb. 24 and blockaded its Black Sea ports, driving up global food prices and prompting fears of shortages in Africa and the Middle East.

Ukraine, a global major grain producer and exporter, shipped up to 6 million tonnes of grain per month before the war.

Three Black Sea ports were reopened under a deal signed on July 22 by Moscow and Kyiv and the ministry has said these ports are able to load and send abroad 100-150 cargo ships per month.

(Reporting by Pavel Polityuk; editing by David Evans)

Argentina corn planting stalled as ‘great drought’ fears rise

By Maximilian Heath

BUENOS AIRES (Reuters) – Argentina’s main farming zones are facing the driest conditions in around 30 years, agricultural and weather experts said, raising fears about a new “great drought” and stalling planting of corn in the world’s No. 3 exporter of the grain.

The vast Pampas plains of the South American nation are hitting the start of the corn planting season after almost no rainfall in some four months. Forecasts predict more dry weather ahead with scarce showers.

Argentina is the world’s top exporter of processed soy oil and meal and an important producer of corn, wheat and barley.

“This is one of the most complex situations we have seen in recent decades. We have to say that it is the worst planting scenario for corn in the last 27 years,” Cristian Russo, chief agronomist at the Rosario grains exchange, told Reuters.

Russo added the exchange would likely cut its planting estimate for 2022/23 corn in its monthly report due next week. It currently predicts a planting area of 8.2 million hectares.

Germán Heinzenknecht, a meteorologist at the Applied Climatology Consultant, pointed to farming towns like Pergamino in Buenos Aires province, which had only 6 millimeters of rain in the southern winter from June-August, the lowest since 1933.

“It is serious. There are problems everywhere,” said Heinzenknecht, adding that risks were rising that the country could see a repeat of the “great drought” in 2008/09, which hammered crops. “A person who wants to plant now just cannot.”

In Argentina, late September usually heralds the start of a wetter spring season, but an expected third straight La Nina weather pattern is expected to limit precipitation.

Andrés Paterniti, crop analyst at the Buenos Aires grains exchange, the other main cereals body in the country, said there were “massive” delays to planting in core farming areas as well as the province of Cordoba.

“The current scenario is discouraging,” he said.

Heinzenknecht added that farmers needed a miracle.

“The only thing that can get us out of this is something disruptive, something that no one is seeing. It’s the only thing that can change the landscape, which is alarming,” he said.

(Reporting by Reporting by Maximilian Heath; Editing by Adam Jourdan and David Gregorio)

Hundreds of seafarers still stuck in Ukraine despite grains corridor – industry

By Jonathan Saul

LONDON (Reuters) – Around 82 ships with 418 seafarers remain stuck around Ukrainian ports despite the opening of a U.N.-backed sea corridor to ship grains with efforts to get the mariners sailing still stuck, shipping industry officials said on Thursday.

The agreement reached in July, creating a protected sea transit corridor, was designed to alleviate global food shortages, with Ukraine’s customers including some of the world’s poorest countries.

However, the initiative only involved dry bulk ships around three Ukrainian ports with dozens of other vessels including oil tankers not able to access the corridor and awaiting approval to leave while waterways remain controlled by Russia and other ports are blocked by Ukraine.

According to analysis by the International Chamber of Shipping (ICS) six ships, which had been stuck since Moscow’s Feb. 24 invasion of Ukraine, had been able to leave Ukraine before the corridor was announced in July.

“The corridor was made only for the purpose of loading the grain to leave,” ICS Chairman Emanuele Grimaldi told a news briefing.

“You can understand they (Ukraine) are at war and there are mines around.”

At the start of the conflict in late February approximately 2,000 seafarers from all over the world were stranded aboard up to 94 vessels in Ukrainian ports.

Grimaldi said the ICS, which represents over 80% of the world’s merchant fleet, had discussions this week with U.N. shipping agency the International Maritime Organization (IMO) to speed up matters.

“It is not easy and a complicated matter,” he said.

There was no immediate IMO comment.

(Reporting by Jonathan Saul; editing by Jonathan Oatis)

Ukraine military successes may widen winter sowing area- farm ministry

KYIV (Reuters) – The successes of the Ukrainian army, which has liberated a significant territory in the northeast and south of Ukraine, may improve the forecasts of the winter sowing area for the 2023 grain crop, a deputy agriculture minister said on Wednesday.

Ukrainian forces liberated most of the Kharkiv region and some areas in the south during successful counteroffensive actions in recent days.

Ukrainian farmers have already started winter sowing and the ministry says the sowing area could fall by 35% this year to around 4.7 million hectares due to the Russian invasion. Farms sow winter wheat, winter barley, rape and rye.

“Regarding the liberation of Ukrainian territories from occupation by the Armed Forces of Ukraine, we have reasonable optimism that this forecast of 4.7 million hectares will improve,” Markiyan Dmytrasevych said.

The ministry said on Tuesday farms in almost all regions had started sowing winter wheat for the 2023 harvest, seeding 141,000 hectares, or 3.5% of the expected area.

Minister Mykola Solsky told Reuters last month that the winter wheat area could fall to 3.8 million hectares from 4.6 million a year earlier due to the Russian invasion.

Farmers had already sown 7,100 hectares of winter barley, or 1.1% of the expected area, and 5,400 hectares of rye, the ministry said.

It said farmers had sown 841,000 hectares of winter rapeseed, 87% of the forecast.

Ukraine harvested 19 million tonnes of wheat this year compared with around 32.2 million tonnes in 2021. Hostilities in many regions and the occupation of large areas by Russia accounted for the decline.

(Reporting by Pavel Polityuk; Editing by Bernadette Baum)

Ukraine’s grain exports accelerate in Sept following grain deal -ministry

KYIV (Reuters) – The pace of grain exports from Ukraine has risen so far in September but volumes are still well below last season’s levels, agriculture ministry data showed on Wednesday.

Ukraine’s grain exports have slumped since the start of the war because its Black Sea ports, a key route for shipments, were shut, driving up global food prices and prompting fears of shortages in Africa and the Middle East.

Three Black Sea ports were unblocked at the end of July under a deal between Moscow and Kyiv that was brokered by the United Nations and Turkey.

The ministry’s data showed Ukraine exported 1.5 million tonnes of grain in the first 13 days of September, 34% less than the 2.3 million tonnes exported in the same period a year ago. The exports were 40% less in the first week of September.

The ministry gave no reason for the increase, but analysts say the reopened seaports have helped to boost the shipments from Ukraine.

Ukraine’s infrastructure ministry said on Wednesday 134 cargo vessels with 3.1 million tonnes of various agricultural goods on board left Ukrainian ports under the grain deal.

The agriculture ministry data showed that Ukraine’s grain exports totalled 5.8 million tonnes so far in the 2022/23 July-June season, versus 10.9 million tonnes in the same period in 2021/22.

The data showed that exports so far in the July 2022 to June 2023 season included 3.4 million tonnes of corn, 1.83 million tonnes of wheat and 525,000 tonnes of barley.

The government has said Ukraine could harvest at least 50 million tonnes of grain this year, compared with a record 86 million tonnes in 2021, because of the loss of land to Russian forces and lower grain yields.

(Reporting by Pavel Polityuk; Editing by Gareth Jones)