Flood of Cheap Food and Loss of Competitiveness

Farmers are justifiably concerned about a flood of cheaper food products, including meat, grain, and dairy. Agricultural production in Mercosur countries, particularly regarding environmental and quality standards, is not as rigorous, enabling cost reductions. In contrast, European farmers must adhere to high environmental protection standards, making their production more expensive. Combined with the lack of effective protective mechanisms against imports, this could lead to reduced income for European farmers.

Farmers’ Protests: Agreement Revision Needed

In response to the threats, farmers across Europe, including Poland, have begun organizing protests. Their goal is to pressure governments into renegotiating the terms of the agreement to ensure fair competition in the market. Without additional protective regulations, European farmers may be forced to scale back production, negatively impacting not only their incomes but also the food security of the entire EU.

Summary: Protecting Agriculture in the EU Is Key

In conclusion, the agreement with Mercosur could pose a serious threat to agriculture in Europe. The lack of effective mechanisms to protect farmers from cheaper products from South America puts the future of many farms in doubt. EU producers will be unable to compete with lower prices resulting from the lack of strict standards in Mercosur countries. Therefore, if appropriate regulations are not introduced, many European farms may disappear from the market. The agreement, negotiated on December 6, 2024, by Ursula von der Leyen (during her visit to Uruguay), seems to contradict the change in approach previously presented by the European Commission. It is certain that European agriculture (especially Polish and French) faces a trial period. We will keep you updated on further developments in this matter.

We encourage you to follow our news regularly and explore our offer in the field of precision agriculture.

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Undoubtedly, one of the reasons for this sharp increase is adverse weather conditions. They have affected the harvests in Russia and Ukraine. In April, wheat futures prices on the exchange rose by 12%, marking the largest monthly jump since February 2022. In the latter part of the article, we will present a detailed analysis of the causes of this increase and forecasts for the future.

The reasons

1. Russia and Ukraine – losses caused by weather conditions and projected losses

April brought hope for good wheat harvests for Ukrainian farmers. However, May turned out to be one of the driest months in the region’s history, dashing these expectations. In Ukraine, which along with Russia accounts for nearly one-third of the world’s wheat exports, drought and unexpected frosts destroyed a significant portion of the crops.

As a result, forecasts indicate that Ukrainian wheat harvests will amount to 19.1 million tons, the lowest level in over a decade. In Russia, early frosts in May destroyed hundreds of thousands of hectares of crops, and analysts have lowered production forecasts by more than 10%.

Analysis by the Harvium team – satellite projection

Our team analyzed satellite data covering the wheat-growing area in southern Russia :-). Data from a representative winter wheat field in the Rostov region, which was most affected by frosts in early May 2024, show a significant decline in crop condition. Losses exceed 50% in the studied area.

Additionally, this situation did not improve at the beginning of June. This is shown in the maps and NDVI index graph below, which serves as a proxy for chlorophyll content and crop condition. In some fields, irreversible die-off of wheat shoots is visible. This may prompt local farmers to reseed with other crops on the most damaged fields to minimize losses this season. So far, such operations have not been observed.

Undoubtedly, an interesting temporal correlation can be observed between the occurrence of severe frosts in the wheat-growing region of southern Russia and the rise in prices in the following weeks. This is shown in the graph below.

2. Situation in other parts of the World

The increase in wheat prices has also been influenced by the situation in other parts of the world. Australia is struggling with drought, and India is likely to become a net importer of wheat.

Forecast by the U.S. Department of Agriculture

As a result, the US Department of Agriculture forecasts in its report that global wheat stocks will reach their lowest level in nine years, which may lead to further price increases in global markets.

3. Weather conditions

Weather forecasts predict improved conditions for western and central Ukraine and western Russia, which may limit further losses. However, in southern Russia, the lack of rainfall could exacerbate losses and lead to even lower wheat yields.

Conclusion

In summary, the sudden weather changes in Russia and Ukraine, as well as the challenging situation in other wheat-producing regions, have led to an increase in wheat prices on global markets. This situation has driven up wheat prices on global markets. Forecasts indicate possible stabilization in some regions, but overall prospects for global harvests remain uncertain. To obtain information about prices of various products and commodities, check the quotations and contact Harvium.

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Introduction

With the challenges in agriculture growing, satellite technology is becoming a key component of modern precision agriculture. Satellite data, until now mainly associated with research and military applications, is becoming the basis for more accurate management of natural resources. Precision agriculture is opening up new opportunities for farmers and agricultural market traders.

Introduction to Precision Farming

Precision agriculture integrates modern technologies such as GPS, sensors, data analytics and remote sensing to revolutionize the management of agricultural resources. The use of these tools enables more precise decision-making that leads to optimized agricultural processes, reduced waste and increased yields. This allows farmers to better monitor and manage their fields, resulting in higher efficiency and profitability.

Key Monitoring Technologies in Precision Agriculture

1. Ground Sensors:
   • Description: Mounted on agricultural machinery or as stationary points in fields, ground sensors provide precise data on soil conditions and plant growth. These sensors can measure soil moisture, temperature, pH levels, and nutrient levels.
   • Operability: They require a physical presence at the crop site, which is labor-intensive. In addition, installation and maintenance of these devices can be costly.
2. Drones:
   • Description: They allow rapid coverage of a medium-sized area. Offering detailed images and data that can be used to analyze plant and soil health. Drones can be equipped with multispectral and thermal cameras to monitor plant health, detect water stress, and identify diseases and pests.
   • Operability: They require the presence of an operator and are expensive to operate, especially with high flight frequencies and when monitoring large and remote acreages. The high cost of purchasing and maintaining drones can be a barrier for many farmers.
3. Satellite Data:
   • Description: They offer the highest cost effectiveness. Satellite missions such as Sentinel (European Space Agency) and Landsat (NASA) provide free multispectral data that, when processed, provide precise information on crop condition. Satellites can monitor huge areas in a short period of time, which is crucial for large farms.
   • Operability: Satellites can monitor huge areas in a short period of time. The data is regularly updated (e.g., every 5 days) and can be accessed remotely. Resolution of satellite data, although slightly lower than drone data, is usually sufficient to identify areas of lower productivity and crop stress. The data is automatically collected and archived for easy access and analysis through dedicated platforms.

Satellite data efficiency in practice

Satellite data, with its breadth and accessibility, allows to identify problems on a scale that no other method would. This information is crucial for early diagnosis and intervention in cases of crop stress, drought, or improper fertilization. The regularity and wide coverage of satellite data allow continuous assessment of crop health and rapid response to changing conditions. With this data, farmers can also more accurately plan field operations such as irrigation, fertilization and crop protection, resulting in higher efficiency and lower production costs.

Examples of satellite data application

1. Plant health monitoring: Satellites can detect changes in plant health at an early stage, allowing rapid response and minimizing losses. For example, a decrease in chlorophyll levels in plants can indicate nutrient deficiencies, which can be corrected with proper fertilization. It is also easy to identify areas of agricultural takeoff caused by weather or pests.
2. Optimization of fertilization: Analysis of satellite data helps to accurately identify areas of lower productivity, e.g. slower crop growth, which reduces costs and minimizes environmental impact. Instead of fertilizing the entire field uniformly, farmers can apply fertilizer exactly where it is needed, leading to more efficient use of resources.
3. Water management: satellite data can monitor soil moisture and help optimize irrigation, which is especially important in regions with limited water resources. Precise water management can not only increase yields, but also reduce irrigation costs and conserve water resources.

Impact on operational and strategic decisions

Farmers and market traders alike use this data to better plan production and manage risk. For farmers, precise information on crop condition allows to optimize resources and cultivation techniques. As or traders, this information is the foundation for more accurate market forecasts and strategic investment portfolio management. Satellite data enables more predictable and stable production and investment strategies.

Cost-effective advantage of satellite data over other sensors

Satellite data offers a significant cost-efficiency advantage over other sensors, such as ground-based sensors and drones. Ground-based sensors, while precise, are time-consuming and require physical presence, which increases operational costs. Drones, on the other hand, are more flexible and can quickly cover medium-sized areas, but require operators and frequent overflights, which also generates high costs.

Satellite data, available free of charge from missions such as Sentinel and Landsat, offer regular and wide-area monitoring without the need for a permanent operator presence. The resolution of satellite data, although slightly lower than drone data, is usually sufficient to identify areas of lower productivity and crop stress. The latest dedicated agricultural satellite missions, moreover, offer resolutions whose usefulness at the operational level matches that of drones. In addition, the data is automatically collected and archived for easy access and analysis through dedicated platforms.

Summary

The use of satellite reports is a strategic step that increases agricultural productivity and profitability. This data opens up new opportunities for agriculture, enabling efficient resource management on an unprecedented scale. We encourage agricultural entrepreneurs and traders to explore the opportunities offered by precision agriculture to maximize their profits while minimizing their environmental impact. In this regard, our team of experts is at your service 24/7. Contact Harvium and check out our dedicated satellite data platform yourself. You’ll also find the latest news from agricultural markets on our site.

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