War in Ukraine: the first effects of the crisis are being felt in companies in Occitania

Some, such as Prosain, producers of organic products in the Pyrénées-Orientales, are planning to close for a week to absorb rising gas prices. Others are very observant.

The effects of the war in Ukraine on economic activity are, as in any crisis, felt unevenly. There are actors who suffer more than others. “It’s still a bit early to learn a lesson, the environment is so uncertain”says Stéphane Latouche, regional director of the Banque de France.

However, he believes that“it is likely that we will have less growth than expected and more inflation, through the commodity price channel, including energy”

However, the first effects of the crisis are beginning to spread across the region. For example, Prosain, a company specializing in organic ready-to-eat meals, has established in bagsnear Perpignan, is considering reducing its activity. “We are strongly influenced by the gas priceexplains Geneviève Giacone, director of the site. The gas is intended for our boilers for all our cooking. It was multiplied by 6 in January and should be by 10 in April.”

Result : “We wonder if we can continue to produce or if we stop. We don’t want to be weakened, endanger ourselves with an activity that would not be profitable.” Especially because some suppliers “We give ourselves a raise, for frozen vegetables, glass or even metal capsules”† This is why management “week-long closure planned in April”

“No reason” to drop prices

Inflation is here. And it must continue because of the Ukrainian crisis. “In the inflationary context of recovery after the pandemic, there is no reason not to let prices fall. And any measures aimed at supporting demand can only amplify the price increase.”says Alain Marciano, professor of economics at the University of Montpellier

“To avoid this price increase, demand would have to fall, which requires changes in consumption habits, or increase the supply, find new sources of supply.”

Finally, in the case of energy sources, ‘If governments react quickly, it can prevent a price increase’“The faster the response, the shorter the adjustment period. And until the adjustment is complete, the prices will serve as the adjustment variable.”

Fishermen threaten

The road sector is beginning to see the start of a critical crossing. “The situation is really dramatic for companies that run on diesel and gas. is concerned Françoise Gleize, Occitanie Regional Delegate of the National Federation of Road Transporters. The problem is that there is no more prize. We see even higher prices for filling the tanks than at the pump.” Of the 7,000 regional companies, 2,200 are structured companies and half have barrels.

Professional fishermen are also beginning to express their concerns. Because, again, from the price of diesel. “With the incarceration, we went back to fishing to feed the population, recalls Bernard Pérez, President of the Regional Fisheries Commission† Now we have to help.”

Especially because the sector is unique in that it cannot pass on the costs associated with the activity to the selling price of the fish. If no solution is found, the professionals threaten to leave the boats at the quay, “within a week to ten days”.

Another sector involved: agriculture. “We are a sector closely linked to the oil industrysays Nelly Dubosc, head of the economic center of the regional chamber of agriculture. The price of fertilizer has increased by 90% at the end of 2021, that of energy by 30%.

Farmers are highly dependent on fertilizers and other phytosanitary products, of which Ukraine is “a very big supplier”. In addition, the price of grains and oilseeds “exploded”. All of this “will play on the prices of animal feed for breeders”.

Why farmers suffer?

While the magnitude of the crisis is not yet clearly defined, the agricultural sector should suffer from the paralysis of the Russian and Ukrainian markets, two countries that supply large quantities of raw materials.

“We are in an unprecedented situation, emphasizes Michel Portier, president of Agritel, a business expert in agricultural and agro-industrial market strategies. Prices are soaring.” He recalls that “Russia is the world’s first exporter of wheat, Ukraine the fourth of maize”.

A situation that is all the more unprecedented because “the loading of boats, with which the goods are transported, is no longer possible in the ports”. The productions are currently blocked in both countries and thus are not in international markets.

“Ukraine currently has 6 million tons of wheat to export, Russia 8 million. So it will be 14 million tons short.” Who can make up for these shortcomings? “Europe, but not completely. Argentina and the US, even India, that will have to contribute a little more”, analyzes Michel Portier.

But another problem will also have to be taken into account: “There will be logistical and transport costs, which “will also increase”. There is also an important element for farmers: nitrogen. “In agriculture, one cannot grow without liquid nitrogen; 80% of the production cost of a liquid nitrogen unit is gas. However, the price of gas has risen sharply.” A tonne of liquid nitrogen “has gone from €200 to €800”.

Increases that are passed on to the end products, to the consumer.