Lithuanian grain farmers brace for a financially challenging year due to falling procurement prices

In August this year, an official record wheat harvest was announced in the Pakruojis district - 9.5 tonnes per hectare. Although more grain growers in the country also recorded good results, the sector is not optimistic, but rather worried about this year's extremely low procurement prices and the significant deterioration in grain quality.

High – feed grain grade

According to Audrius Vanagas, Chairman of the Lithuanian Grain Growers Association (LGAA), no one in the country has attempted to set a grain harvest record so far, but this figure does not surprise progressive farmers, who cite higher figures. However, even if some cereal farmers have managed to break records this year, it will not necessarily be of much use – this year's cereals are of poor quality.

According to Darius Ufartas, a crop farmer in the Šakiai district, sufficient rainfall has fallen this summer, resulting in a good potential for a good grain harvest. However, according to him, Lithuanian farmers seemed to be splitting into two – some said they were expecting a bumper harvest, while others predicted that this year's harvest would not be exceptional.

While favourable weather at the beginning of the summer had led to a good harvest, once harvesting started, the forecast changed – the rains during threshing resulted in a poor quality of the harvest.

„Although the volume of grain appears to be high, the quality of the grain has deteriorated – high rainfall and bad weather during harvesting have resulted in wheat that has become light and lacking in weight. For example, whereas a trailer used to hold 20 tonnes of wheat, now it only holds 17-18 tonnes, although the volume has remained the same," farmer D. Ufartas told Elta.

The chairman of the LGAA also echoed the poor quality of this year's wheat harvest – according to him, the grain lacks protein or hectolitre weight due to the high amount of rainfall at the time of harvesting. In other words, even if farmers thought they were growing high quality wheat, it was only in the feed wheat class.

According to Mr Vanagh, the deterioration in wheat quality this year will lead to a 10-20% reduction in farmers' incomes.

Purchase prices at low levels

Lithuanian farmers are not only worried this year about the poor quality of the harvest, but also about the low wheat procurement prices, which are at decade lows, according to the LGAA chairman.

According to estimates by the Agricultural Data Centre (ADC), the average purchase price of cereals in Lithuania is around €210 per tonne. However, farmers in the country say they criticise such calculations and believe that the real purchase price of grain is calculated according to the figures available on the MATIF grain exchange.

„The data of the EAA is not accurate. This season, the price of wheat on the MATIF exchange is in the range of 188-195 euros. Farmers calculate the buying-in price of wheat according to a formula, e.g. the buying-in price for second-class wheat is equal to the exchange price minus €15, i.e. €175 per tonne. The buying-in price for feed grade wheat is currently €150 per tonne," said Mr Vanagas.

He adds that wheat procurement prices are calculated according to the place where the grain is bought in, either at the port or at the elevator. The above are the prices for wheat bought at the port, but the LGAA President said that a more accurate picture is provided by the prices for wheat bought at the elevator.

„For feed wheat, which currently dominates in Lithuania due to over-nutrition and under-falling, the elevator purchase price is around 140-150 euros per tonne, with some buyers quoting as high as 120 euros per tonne,

According to Mr Ufartas, production costs have risen sharply this year, while grain purchase prices have fallen. He said that the low grain procurement prices will be a real test for Lithuanian farmers and will force them to think about how not to go bankrupt.

D. Ufartas himself believes that this year's low farm gate prices will be compensated by another crop grown on his farm.

„At the moment wheat is in the red, and the loss of wheat will be compensated by oilseed rape. I still have crop insurance, and the insurance payments will also help the farm to stay viable," commented Mr Ufartas.

According to the LGAA chairman, the current extremely low grain procurement prices are causing farmers in the country to operate at cost or at a loss.

More than the official record

Although this year Pakruojis recorded the first official wheat harvest record, the LGAA chairman said that there is a tendency to share the average per hectare of all fields of a particular crop on a farm, which, according to Mr Vanagh, is the true picture.

„Under the right conditions, it is possible to find fields in Lithuania every year with yields similar to the recorded record. (...) This year, the results of the crop declarations show an increase in the area of wheat, which in itself means that more wheat should be harvested," said the LGAA President.

High yields this summer have been achieved in areas that were unaffected by spring frosts, had rain during crop growth and did not receive significant rainfall during harvesting, he said. According to Mr Vanagos, high yields are usually achieved on advanced farms in the country, regardless of the size of the farm.

It is true that Lithuania cannot compete with the world record yield of 17.96 tonnes per hectare of grain set in Great Britain. According to the LGGA President, this proves that Lithuania is not a record holder in the cereals sector.