What Russia's Black Sea grain blockade could mean for Minnesota
One of the first ships to pass though the Black Sea after Russia agreed to ends its blockade of Ukrainian grain last summer was chartered by Cargill. The Wayzata-based company is just one of multiple Minnesota agriculture corporations with ties to Ukraine. Now they face uncertainty, as Russia pulls out of the deal, as do the state’s farmers and East African community.
For a look at what this news could mean across Minnesota, All Things Considered host Emily Bright spoke with Star Tribune agriculture reporter Christopher Vondracek.
Hear their conversation using the audio player above, or read a transcript of it below. Both have been lightly edited for clarity and length.
You covered what the blockade of grain shipments meant for Minnesota agribusiness companies at the start of the war. Given that, what do you think they're bracing for today?
I think it's going to be a time of uncertainty. Initially, when the corridor went into place, one of the very first ships that was allowed to make passage out of a port in Ukraine was a ship that was chartered by Cargill.
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CHS in Inver Grove Heights also had a ship of grain that was sitting in Ukrainian port, but they also had employees who were in Kyiv and had to help those employees get out of Ukraine in the early days. And so I think it's striking how closely connected Minnesotan and Ukrainian agricultural communities really are.
You mentioned Cargill, tell us more about their tie with Ukraine.
Cargill is the world's leading, if not largest, grain buyer and seller. And they have many, many ships that are in the Black Sea transporting this grain.
Ukraine and Russia are the breadbasket of Europe — I think Ukraine is in the top five when it comes to world exports of corn, wheat and barley, so the foodstuffs that either lead to feeding livestock or make up our bread. The World Food Program is a major buyer of Ukrainian wheat, and that wheat then gets sent into Somalia and other parts of East Africa. And so Cargill is playing an important conduit role. They're sort of the mortar to the bricks of that global food system.
We produce a lot of grain here in Minnesota, so I think it might be helpful here to talk about how the grain market works.
Minnesota is growing a ton of corn and a ton of wheat. And for corn, of course, we think about biofuels here. Our corn can go into hog feed. But our corn is also sent abroad. I think Sen. Amy Klobuchar says this whenever she can when she's speaking to an agriculture community: Minnesota is, like, the fourth largest in the nation for agriculture exports.
So when we move away from the agribusiness side of things with CHS and Cargill, and we talk more about real crop farmers across the state, they're very much tuned to what's happening internationally.
So stepping away from that corporate balance sheet and looking at consumers and farmers, what might this news mean for them?
This could be a short cessation, because one of the largest buyers of Ukrainian corn is actually the Chinese government. And so if China is upset that all of a sudden their corn prices are spiking, they're going to pressure Russian President Vladimir Putin.
But if China has to start buying corn from elsewhere, and they go to Brazil and drain Brazil’s stockpile of corn and then come to the United States, the corn price in our backyard could actually increase. That could be a good thing for that farmer in Renville County. But it could be a bad thing for that farmer in Stearns or Goodhue County who has dairy cows, because then their feed price is getting more expensive. So it really is like a whack-a-mole game figuring out how this will shake out for folks.
We have a large East African community in Minnesota that has their eyes on famine in Ethiopia. What does this news mean in that regard?
It's scary. It's certainly scary. In the long run, the goal would be to be able to produce food locally and not have their food supply be short-circuited because of an authoritarian leader in Eastern Europe. But I think in the short term, those areas still do remain reliant Ukrainian or Russian wheat.
So what will you be watching for in the coming weeks?
The price of corn in China. If they're not getting that supply and they're getting increasingly cantankerous, that could lead to some pressure being applied upon Putin to go back to the negotiating table.