The Warsaw Network
Russian grain – success with a lining made of failure
27.03.2018

Russia is currently the world’s largest exporter of grain. According to official data, also confirmed by foreign analysts, last year, 135.4 million tonnes were harvested in Russia, including 85.9 million tons of wheat. But why is this joy not to be heard in the voices of Russian farmers?

The authorities estimate that exports of grain, mainly wheat from Russia, will amount to 35-38 million tonnes of this year’s harvest. When you look at these data from a slightly longer perspective, i.e. a dozen or so years, they look even more impressive – last year, Russia exported food products, mainly grain and sugar, worth USD 20 billion, a 15-fold increase since 2000, while in 2025, the authorities announce that the country will export USD 30 billion worth of produce. That is success and on a global scale. No wonder then that this kind of narrative can be often heard from the representatives of the Russian authorities. The sanctions did not hurt us, they argue, on the contrary, they helped in the development and in the launch onto and the conquest of world markets.

But why is this joy not to be heard in the voices of Russian farmers? The answer is simple – prices, some of the lowest in history. Statistics indicate that while the amount of exported grain increased by 35.7% over the last three years, the value dropped by 1.8%. But not only the prices are problematic; also warehouses that are full of grain, which today has to be sold for a song to free up space for new harvests. Only you do not really know how to do it, because the world’s reserves have now reached 270 million tonnes – 9% more than a year ago. The authorities are already announcing that they will prolong the subsidies for rail transport planned originally only until the end of the first half of the year, thanks to which the transfer of grain from Altai to the ports on the Black Sea coast is virtually free of charge for a Russian farmer. But will it save the day? Russian farmers and agricultural experts say that one needs to learn from Kazakhstan, which a few years ago, seeing what was happening on the market introduced a special program to reduce wheat areas, because its cultivation is gradually becoming unprofitable. Similarly, America, where wheat crops are now smallest in a century. Or like, again, Kazakhstan, invest in milling and sell flour – the margin is higher and it’s easier to store. But no, the Russian Federation wanted to be a global leader. And it is, but is it making money out of it…?

Author: Marek Budzisz