By Olga Popova and Gleb Bryanski
Russian farmers say they are going to sow much less wheat after heavy losses this yr, switching to extra worthwhile crops similar to peas, lentils, or sunflowers.
Such choices could have direct implications for international wheat costs and inflation in main consumers like Egypt, as Russia is the world’s high exporter of the grain.
The pattern represents a problem for President Vladimir Putin’s plan to increase exports and cement Russia’s place as an agriculture superpower, giving it extra worldwide clout amid confrontation with the West over its actions in Ukraine.
The nation’s wheat harvest will decline to 83 million tons this yr attributable to frosts and drought, down from 92.8 million tons in 2023 and a document 104.2 million tons in 2022. New forecasts level to a clouded outlook for subsequent yr as nicely.
Though Russia has been exporting wheat at a close to document tempo within the current months, exports are anticipated to sluggish attributable to a foul harvest and export curbs geared toward containing home value development, together with an anticipated lower in export quota by two-thirds from January 2025.
At a farm in Siberia’s Omsk area, which was hit by heavy rain throughout the peak of the harvesting season, farmer Maxim Levshunov takes benefit of a uncommon sunny day to gather what stays within the fields.
He chuckles as he picks up ears of wheat that sprouted early as a result of moisture. Now, most of his crops are solely appropriate for animal feed, which means the farm will obtain a fraction of the worth it had hoped for.
“We’ll in all probability begin transferring away from wheat, slicing again as a lot as doable. So, we’ll be serious about what extra worthwhile crops we will substitute it with proper now,” Levshunov instructed Reuters.
As this yr’s harvesting marketing campaign involves an finish, Russian farmers are assessing their losses from the exceptionally unhealthy climate and contemplating their subsequent steps amid falling revenue margins for wheat, Russia’s predominant agricultural export.
Winter wheat turned the primary sufferer as areas sown with it are set to shrink by 10% this yr, the bottom since 2019, in response to knowledge from Rusagrotrans, Russia’s flagship grain rail provider.
“There are losses on every ton. The promoting value doesn’t cowl the price,” mentioned Arkady Zlochevsky, head of the Russian Grain Union business foyer, predicting that Russia’s 26% share of the worldwide wheat commerce will shrink.
MORE PROFITABLE CROPS
Agriculture Minister Oksana Lut joked that farmers may pray to Saint Ilya, the patron saint of climate in Russia, to enhance circumstances for winter crops. The joke didn’t go down nicely with farmers, who’re contemplating extra pragmatic choices.
Some say they’ve already determined to plant much less wheat subsequent yr. Others are ready to see how international wheat costs carry out within the subsequent few weeks earlier than making a closing determination.
“The profitability of grain crops is approaching zero. The corporate has diminished the quantity of winter wheat sowing by 30%. There are two drivers now — soybeans and sunflower,” mentioned Dmitry Garnov, CEO of Rostagro Group, which owns land within the Penza and Saratov areas across the Volga River.
Rising prices of kit and gasoline, excessive export duties, a rising benchmark rate of interest that hit 21% in October because the nation’s central financial institution fights inflation, and the elimination of some agricultural subsidies have additionally eaten into revenue margins.
“It’s evident that in 2022-2024, the worth has been virtually the identical, whereas the price of grain manufacturing has elevated by a minimum of 28%,” mentioned Sergei Lisovsky, a member of the decrease home of Russia’s parliament from the Kurgan area.
Lisovsky argued that the excessive export obligation for grains, launched in 2021, in addition to rising transportation prices for areas with no direct entry to seaports, had been additionally components behind low margins.
“Subsequently, as of right this moment, farmers should not planting grain not due to the autumn drought, however as a result of they’re ready to see what the worth shall be, and haven’t but decided,” Lisovsky added, referring to spring wheat sowing.
NICHE CROPS
In Russia’s most fertile Krasnodar area, the profitability of wheat remains to be holding round 10%, however some giant native farms are additionally pondering a change of technique as droughts develop into extra extreme every year.
“It’s steadily getting hotter within the south, and we want to consider altering the construction of the sowing areas for the longer term,” mentioned Yevgeny Gromyko, govt from Tkachev Agrocomplex, one among Russia’s largest landowners, and a former deputy agriculture minister.
The area of interest crops have the potential to develop into new export success tales with Russia’s allies among the many BRICS nations, aiding the federal government in attaining Putin’s aim of accelerating agricultural exports by half by 2030.
Russia overtook Canada this yr as the highest peas exporter to China whereas regulators in India, the main importer of lentils, used to make daal, a staple for hundreds of thousands of individuals, gave a inexperienced mild to Russian imports.
Russia takes nice pleasure in being the world’s high wheat exporter, with the older technology recalling the meals shortages of the Soviet period and the humiliating grain imports from Chilly Conflict foes like the US and Canada.
Nonetheless, for struggling farmers, it’s declining earnings, not international standing, that matter most.
“Many farms that specialised solely in wheat crops have operated at a loss this yr and can face very critical monetary difficulties, probably resulting in chapter,” Levshunov mentioned.
This text was produced by Reuters information company. It has not been edited by International South World.
