Müllermeister on the consequences of Ukraine: "The roll will also be more expensive here"

Created: 03/14/2022, 09:40 am

By: Christian Masengarb

Although master miller Norbert Seeger buys almost exclusively Bavarian grain for the Miesbacher Leitzachmühle, the price explosion caused by the Ukraine war also affects him.

He has to explain to his customers how this is connected.

It's a difficult time, he says.

© Thomas Plettenberg

In the Leitzachmühle in Miesbach, Norbert Seeger processes almost exclusively Bavarian grain.

However, the Ukraine crisis is also affecting his flour prices.

Miesbach – In the Leitzach mill in Miesbach, master miller Norbert Seeger (67) processes almost exclusively Bavarian grain.

In our conversation, he explains why the Ukraine crisis is still affecting his flour prices, why dairy farmers are hoping for rising milk prices and why he sees the supply situation in Germany as secure despite everything.

Ukraine war: master miller on the consequences: "The roll will also be more expensive here"

Mr. Seeger, almost a third of global grain exports come from Ukraine and Russia.

They source products almost exclusively locally.

Does the war still affect you?

Yes.

German mills grind around 95 percent of the grain harvested in Germany and almost none at all from the Ukraine or Russia.

So we are self catering.

Nevertheless, the grain price is a global development that also affects us.

Explain it.

A few things come together.

As early as summer 2021, world grain stocks were not plentiful and prices have risen.

This is also due to climate change with droughts and storms.

We millers thought that grain would become cheaper after the harvest in autumn 2021.

But that didn't happen because the global harvest was weak again.

Then came the crisis.

This has nothing to do directly with our market.

However, it cuts off around 30 percent of world exports, mainly to North Africa and Arabia.

These countries are now buying elsewhere.

This further tightens the already tight market.

This makes it expensive.

And that also affects the district and Bavaria?

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For sure.

Ten months ago a tonne of wheat cost less than 200 euros, before the Ukraine crisis it was less than 300 euros, now it's over 400. Wheat is easy to transport.

If we don't pay the price, we don't get the goods and they are exported.

As a result, the price explosion on the world market also affects mills that only buy grain locally.

The bun will be more expensive even if everything from the farmer to the baker happens regionally.

More on the effects of the Ukraine war:

Ukraine war: Hundreds more refugees are expected in the Miesbach district

The milk will also be more expensive

Don't you have supply contracts that fix prices for a year, such as for gas?

Of course, we also conclude longer-term contracts.

However, the mills avoided this last year because the price was high.

Nobody felt the need to buy big.

Nobody saw the current development coming.

Now, of course, we are totally wrong.

This is the case with many mills.

Are you signing contracts now to at least secure the current price?

This is risky at this extreme price level.

We sometimes commit ourselves to what will be needed until the new harvest, and sometimes we leave it open.

On the other hand, sellers, warehouses and farmers are not very willing to sell, as they are waiting for even higher prices.

They also make feed for dairy farmers in the county.

Feed for dairy cattle consists largely of grain, mill by-products and oil meal, and the price has also gone up significantly.

Dairy farmers are now waiting for milk to become more expensive.

Otherwise your return will be in the basement.

What other effects does the crisis have?

Much of the corn destined for southern Germany comes by ship from Hungary.

Hungary stopped exporting because of the crisis.

They say: "We need the corn ourselves." As a result, the corn price has also skyrocketed.

You can see how everything is connected.

"The regional miller and baker ensure the supply."

Where is this all going?

Will a roll cost two euros in a few months?

I hope not, but we'll let the bakers decide how to accommodate the increased costs.

In our mill, grain accounts for more than three quarters of our costs.

If the grain price goes up, the flour has to go with it.

Otherwise we'll be broke in four months.

However, we are exposed to tough competition and will withdraw our prices immediately as soon as the situation on the raw materials market eases.

Are we facing hard economic times?

The economy is now as it is.

We can't change that;

we have to go through this together.

The worst thing about the situation is the human side.

Ukrainian women with children cross the border, fathers go to war and know that 50 percent of them will never see their families again.

That's brutal.

On the other hand, we can forget the economics that overwhelm us.

Then the roll costs more.

We don't go into that.

You shop regionally.

So far, this has mainly been considered ecological.

Does the crisis show how important the approach is for security of supply?

This is a very important point.

The regional miller and baker ensure the supply.

I don't think we're going to have bountiful harvests around the world anytime soon.

Nevertheless, we are in a great position in Germany: as an industrial nation, we can be proud of having a high-performing agricultural sector that gives us security of supply.

Crises like the current one show how important this two-pronged approach is.

Even without Ukraine: Supply is secured

Worried grain might run out?

A striking number of private individuals are currently shopping with us who have precisely these concerns.

In normal harvest years, however, the yield is sufficient.

But I can't imagine that it will be so extreme that it will change.

Some are calling for a move away from organic farming in order to get more yield from the same area.

I don't demand that.

Of course it's true: The more organic farming we do, the less income we have.

But as I said: In normal years, the yield is sufficient.

You can find more current news from the district of Miesbach and the Tegernsee region here.

By the way: everything from the region is also available in our regular Miesbach newsletter.