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Home / Industry / Agriculture /  Agriculture giants stay in Russia despite calls to exit over Ukraine war

The world’s largest agricultural companies are continuing to sell seeds and handle crops in Russia, despite pressure to sever ties following the invasion of Ukraine.

Companies including Cargill Inc., Bayer AG and Archer Daniels Midland Co. say humanitarian concerns over food availability for Russian citizens and other countries justify the companies’ continued operation in Russia, while Western oil companies, fast-food chains and other companies have pulled out or paused operations there.

Advocacy groups and employees of some agricultural companies have urged executives of businesses still operating in Russia to pull back further, however, and last week Ukrainian President Volodymyr Zelensky called for continued pressure on Western companies to exit Russia.

Companies in other industries, like drugs and consumer products, have also cited humanitarian grounds for their decisions to keep operating certain parts of their business in Russia. Those include Johnson & Johnson and AmerisourceBergen Corp., which said it has stopped doing new business in Russia, though it will keep distributing certain cancer drugs and finish clinical trials.

Agricultural companies’ ongoing operations in Russia could have broader effects on global food supplies. Russia’s war in Ukraine involves two of the world’s major grain-producing powers, upending a region that has become increasingly critical to feeding a growing and more affluent global population. A dent in Russian exports of food commodities such as wheat, on top of the likelihood of a diminished harvest in Ukraine, could lead to serious food shortages around the world, analysts said.

“It’s creating quite an angst in the coming production cycle," said Bill Biedermann, the Tennessee-based co-founder of AgMarket.net, a commodity brokerage and agricultural consulting company. “If it doesn’t perform, there’s only a couple times in recent history I can think where world food supplies would be this critical."

Russian President Vladimir Putin’s invasion of Ukraine has helped send wheat prices more than 30% higher over the past month. While sanctions haven’t directly targeted Russian food exports and ports in the country are operating, importers face high insurance costs to book cargoes from there, said Andrey Sizov, managing director of SovEcon, a research firm focused on Black Sea grain markets.

If crop suppliers pull out of Russia and the country cuts its production, Russia will likely have enough grain to feed itself, Mr. Sizov said, but not necessarily other countries.

“That’s a problem for Russia but a bigger problem for food importers all over the world," he said.

Other factors are likely to cut into wheat production, analysts said. Dry weather in South America is hurting crop production in the region. In the U.S., the Agriculture Department said earlier this month that it expects farmers to plant only slightly more wheat than last year, when the fewest acres were sown in more than a century. Lower U.S. yields are anticipated because of continuing drought in the West and Northern Plains.

Advocacy groups say Russia’s war requires a powerful message and agriculture companies need to do their part. Some Ukrainian and U.S. environmental and agricultural organizations penned a letter last week pressing Cargill to exit Russia completely.

“Doing business with and paying taxes to President Putin’s government is fueling Russia’s war machine," the letter said.

A Cargill spokeswoman pointed to the potential food-security implications outlined by the World Food Program, a United Nations agency, when responding to why the company is keeping essential food operations going. The U.N. agency notes the conflict could exacerbate food inflation and hunger in some of the world’s poorest countries.

Speaking to Congress on Wednesday, Mr. Zelensky asked lawmakers to encourage companies from their home states to stop doing business in Russia. He also called on Washington to ban the import of all Russian goods.

Minnesota-based food and agriculture giant Cargill, which employs roughly 2,500 people in Russia and began supplying grain to the Soviet Union in 1964, said earlier this month that it plans to continue running its food and animal feed facilities there, though it will scale back some operations and halt further investments.

“Food is a basic human right and should never be used as a weapon," the company said, adding that the region supplies ingredients for bread, infant formula and breakfast cereal, among other staples.

Pesticide and crop seed maker Syngenta, which has a more than $1 billion business in the Ukraine and Russia region, continues to supply seeds and chemicals to Russian farmers to mitigate a potential global food shortage, according to people familiar with the matter.

Other companies also have said they plan to continue operating in Russia while limiting certain operations and new development. They include commodities traders ADM, Bunge Ltd. and Viterra, the grain business of commodities giant Glencore PLC.

Bayer said it could withhold seeds for crops in Russia next year if the war in Ukraine continues. The German seed and pesticide giant said it has already provided essential agricultural supplies to Russian farmers for this year’s planting but would monitor the political situation and decide about supplies for 2023 and beyond at a later stage.

Bayer acknowledged calls to suspend sales and services in Russia, but said withholding agricultural products would add to the war’s human toll.

Some employees of big agriculture companies have pushed internally for the companies to take a tougher stance, according to people familiar with the matter, including sending messages to company leaders about pulling out of Russia completely.

Some large agriculture companies and grain traders have been communicating with each other to align their stances that pulling out of Russia will make the world’s food supply tighter, according to people familiar with the matter. The companies have also been working together on the logistics of moving products in and crop exports out of the area as well as working with governments—including Russia—on humanitarian efforts, the people said.

Agricultural analysts said the global food supply will be affected by the war. Up to 13 million people around the world could be pushed into hunger because of the spike in food prices and disruptions in supplies that result from Russia’s invasion of Ukraine, the Food and Agriculture Organization of the United Nations said. The impact will likely be felt most by import-dependent and low-income countries relying on Russian grain, according to analysts and agriculture industry officials.

Monika Tothova, an economist with the FAO, said Russian farmers would struggle if large Western agribusinesses pulled out of the country. There are few major players in the agriculture sector, she said, and substitutes for Western-supplied seed and chemicals may not be readily available.

“If you’re a farmer in the region, you have few options," she said.

This story has been published from a wire agency feed without modifications to the text

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