Why Russia began to lose its status of "agrarian superpower"

Just a year ago, the Russian Federation was the world's leading exporter of cereals. We began to earn even more money from food than from weapons. However, today our country from this honorable pedestal began to be significantly "pressed" by Ukraine, which was able to sell several times more wheat on the traditional Russian sales market in Egypt. How did it happen, and are we really losing the status of an "agrarian superpower", which we gained quite recently, and have already managed to get used to it?

The reason why Ukrainian or, for example, Romanian wheat is sold better on the world market today than Russian wheat is extremely commonplace. Ours is simply more expensive, and all other things being equal, the consumer prefers a more comfortable price for himself. But why did domestic farmers "charge" such price tags for their export products that there were fewer buyers for it? The point is not at all about their exorbitant appetites, but about the fact that they have lost a significant part of their competitiveness. How did it happen, let's try to figure it out.



At first, 2021 can already be called a relatively lean year for Russia. In 2019, we harvested a record harvest of 121 million tonnes of grain, of which 74,2 million tonnes came from wheat. According to Rosstat, in 2020, 133,465 million tons of grain were harvested in Russia, including 85,896 million tons of wheat. In 2021, we expected a wheat harvest of 84,6 million tons, but the numbers will definitely be different, much less. The Russian Grain Union and experts from a number of industry companies estimate the real volume at 75 to 75,5 million tons of wheat.

The cause of the crop failure was the weather anomalies of 2021: cold winter, then drought, followed by torrential rains and floods in the South of Russia. Alas, nothing much can be done about bad weather. However, climate change concerns not only us, so why did the price tags for grain grow so significantly among domestic farmers?

Secondly, Russian farmers have noticeably increased financial costs. Mineral fertilizers have risen in price, as well as imported agricultural machinery, components for it, chemical treatment products, etc. The need to buy all this abroad for foreign currency raises the question of the need for an early import substitution.

Thirdly, representatives of the expert community in unison criticize the so-called export duty. In early 2021, the authorities introduced it in order to limit the export of grain abroad. According to their plan, this was to stop the flow of wheat flowing to the world market from Russia, so that the population of our country would not be left without a piece of bread. The duty is gradually increasing and is expected to rise to $ 70 per ton by the end of September. Mercantile considerations force Russian farmers to have time to sell grain for export until the screws are tightened even more thoroughly.

For our competitors, things are a little different. The problems with bad weather also affected them, but this did not prevent, for example, Ukraine from collecting a record harvest for itself, the size of which amounted to 31,6 million tons. Kiev or Bucharest, for example, has no problems with Western sanctions, which would increase the size of their financial costs. And, since Nezalezhnaya does not at all care about the daily bread for its population, there are no protective duties there that would limit the export of grain from the country.

All this allows Ukraine or Romania to offer food buyers more comfortable prices than domestic farmers can afford. For example, Egypt, our long-time regular client, bought 60 thousand tons of Russian wheat against 240 thousand tons of Ukrainian wheat at the last tender. Not a good tendency, but the situation is such that you have to make some kind of choice. Either the interests of its own population are a priority, and some surplus goes for sale, or Russia is turning into a banal grain producer for foreign buyers, so to speak, “on outsourcing”. That is, we feed them, and we ourselves eat what remains.

In this context, it is gratifying that the country's authorities prioritize the interests of Russians. As for the problems with imported materials and agricultural technique, then they belong to the category of solvable. With the weather, yes, nothing can be done about it, but this is not only our problem. In particular, Ukraine is predicted to decrease the cultivated area due to the expansion of the arid zone. The fact that in Nezalezhnaya there is already an acute problem of a shortage of water resources in rivers has been said for a very long time. We will not gloat, but this attraction of unprecedented generosity with cheap Ukrainian grain cannot be endless.