Dry spell threatens to raise price of agricultural products and elecricity
The continued dryness of the summer has weakened hopes for a good harvest. It is estimated that the total grain harvest in Finland could fall below three billion kilos - about a billion less than last year’s record crop. In addition to grain, the dry summer is reducing vegetable crops, and is leading to a shortage of animal feed. The extra costs are likely to be passed on to the consumer in the coming months.
The lack of water means that grain is ripening too early, before the individual kernels have grown sufficiently. Especially in the south of Finland, farmers have already harvested stunted barley.
The situation is similar to that which prevails in many other countries. Grain has already been harvested in France, the largest grain producer in Europe, where the price of a tonne of wheat has risen from EUR 110 to EUR 130.
Grain prices are set to rise in Finland as well.
Small grain size is a problem. In the worst case it can make the entire crop unsalable.
On the other hand, the protein content of small kernels is high, which is good for the production of bread, but bad for malt barley.
Finland is both an importer and exporter of grain. Finland has sold about half a million tonnes of feed grain to other countries. The main import is rye. Last year nearly 70,000 tonnes of it were imported.
Not even rain can save the grain harvest - in fact, at this stage it would only further harm the quality, and make harvesting more difficult.
Heavy rains at this stage would reduce the starch content of grain, and cancel out the advantage of a dry summer - the lower cost of drying grain, which usually accounts for about ten percent of the price.
Crops that could benefit from rain include potatoes, vegetables, and rapeseed.
Food stores have already reported a shortage of vegetables such as cauliflower, even though many vegetable farmers have been irrigating their fields day and night.
The hot and dry weather has also hurt cattle grazing areas, forcing farmers to buy more feed. However, thanks to last year’s bumper crop in hay, many farms still have silage left over from last year.
Nevertheless, the shortage of animal feed could force many farmers to prematurely sell their cattle for slaughter.
The dry spell has made the EU relax its regulations on the use of fallow land. Last week, the EU decided to allow grass growing on fallow fields in all of Finland to be fed to cattle.
The lack of rain has also reduced the amount of water available for the production of hydroelectric power.
For instance, the electricity producer Fortum has had to take more of its coal-fired plants into use. The company says that if the situation continues, it might be forced to buy more greenhouse gas emission rights. This could lead to higher consumer prices for electricity.
Last year there was so much hydroelectric power available, that both Fortum and Pohjolan Voima were able to sell emission rights.
Previously in HS International Edition:
Lakes more than half meter lower than normal in unusually dry summer (2.8.2006)
Quarter of Finland´s emission allowances unused last year (16.5.2006)
Figures on last year´s greenhouse gas emissions brings down prices in allowances trade (28.4.2006)