While Russia and Ukraine represent 30% of world wheat exports, the war launched by Vladimir Putin against Ukraine is entering its 4th month and will have a lasting impact on world wheat prices. “On the market, the maturities for wheat in September 2022 and September 2023 are already very high. Yes, there is speculation and anticipation but the fundamentals are on the rise for the current campaign and for the next one” , thus warns Jean-Christophe Roubin, agricultural manager at Crédit Agricole. As a result, production costs increase in all agricultural sectors, mechanically reducing margins, especially for breeders.
“We are already measuring the impact on our customers by regularly reviewing their cash flow. We must anticipate needs at unprecedented levels”, confirms Patrice Gentié, president of Crédit Agricole d’Aquitaine. Especially since the problems accumulate for farmers with episodes of late frost in 2021 and 2022 which gave way to a vast drought while avian influenza has been known since December 2021 “a 4th episode in six years” and that a huge demographic challenge arises with the aging of farmers.
“You must not panic”
In short, the picture is gloomy and it should remain so for at least a few more months. “You shouldn’t panic, you have to play on cash flow and plan for the long term as prices can rise quickly before falling again”, however tempers Jean-Christophe Roubin. And in order to spread a dose of optimism, the Crédit Agricole d’Aquitaine chose the Salon de l’agriculture de Nouvelle-Aquitaine to present its societal project adopted last December.
“The real subject is the repetition of these events. But what we have lost in short-term visibility must be gained in medium-term vision to move towards decarbonization, social inclusion and agricultural sovereignty”, summarizes Olivier Constantin, the managing director of the bank active in Gironde, Landes and Lot-et-Garonne.
Carbon neutrality in 2050
Concretely, in line with the national strategy, Crédit Agricole d’Aquitaine has thus set itself a carbon neutrality target for 2050 for its loans and investments within the framework of the NZBA initiative (net zero banking alliance) launched in 2021 by 43 banks and now has 111 members. This will gradually result in the integration of extra-financial criteria known as ESG (environmental, social and governance) which will make it possible to grant preferential rates to projects deemed virtuous for the environment, animal well-being, carbon emissions and job creation. A similar operation to the impact loans already distributed by several competing banks.
“The objective is first of all to be an incentive to switch to more responsible agricultural practices. The reduced rate could correspond for us to an effort of up to a quarter of our margin”says Sandrine Kergosien, director of specialized markets at Crédit Agricole d’Aquitaine.
A “wood and forest” sector is also being set up from June 1 to initiate and support the economic development of the sector in the territory throughout the value chain: from foresters to distributors via transformation.
Towards climate insurance
Finally, on January 1, 2023, it is a form of insurance against climatic risks which will be distributed by the bank within the framework of the national solidarity fund provided for by the law of March 2, 2022 relating to a better distribution of insurance. harvest. This new universal scheme is based on risk sharing between the State, farmers and insurers, depending on the intensity of the risk. “We played a major role in creating this new scheme which combines state insurance and complementary private insurance to compensate for 100% crop losses beyond the deductible”says Olivier Constantin, who invites professionals to prepare for it before January 1st.
The State should contribute up to 600 million euros per year to this fund in order to eventually double the number of farmers insured against multiple climatic risks: drought, hail, flood, storm, frost, etc.