GENERICO.ruEconomicsRussian farmers intend to export even more grain

Russian farmers intend to export even more grain

But Russia still has double reserves for the domestic market

Russian grain growers are not going to stop at their export records. And this year they plan to supply up to 70 million tons of grains abroad: wheat, corn and barley. The head of the Ministry of Agriculture, Dmitry Patrushev, announced this during a meeting with Vladimir Putin.

But Russia still has double reserves for the domestic market

Agricultural exports in 2023 brought the budget $43.5 billion. Grain crops occupy their niche in supplies. In terms of wheat exports, Russia generally ranks first in the world.

This is the “breakthrough” among some Russians and causes some concern. There is an eternal worry that, having sold everything for dollars, we ourselves may be left “without beans.”

In fact, the grain harvest in 2023 turned out to be notable, but not a record one: 142.6 million tons versus 157 million in 2022. That is almost 10% lower.  

In the current agricultural season, we managed to sell 66 million tons on the foreign market (mainly to friendly countries), including 51 million tons of wheat. Does it make sense to increase exports every year if this is not particularly reflected in consumer prices in the store? And will we be able to grow an additional 4 million tons so that the words of the Minister of Agriculture do not diverge from deeds?

We are talking about this topic with independent agricultural expert Alexander Korbut.

“The harvest is predicted based on two factors,” he says. – Winter crops, their areas and condition. The area has increased quite significantly. The state of entering winter, according to data from the regions, is also positive. Losses may be even less than last year's values.

And the high harvest of winter crops – This is the key to the overall grain harvest. This year it is predicted to be 135-147 million tons, this is a high result, and we may well achieve it. The forecast is very objective and accurate.

– She can make any adjustments. But if everything remains within the limits of average annual temperatures, then we will get 135-147 million tons of grain. By the way, the expectation of a high harvest affects prices on the world market.

– If markets were open, our grain farmers would receive 75-80% of the world price. There are natural costs for transportation, transshipment, preparation of documentation… That is, from the current world price of 210-212 dollars per ton, a Russian peasant would receive 160 dollars. However, it costs 115-120 dollars, the money is eaten up by high export duties.

– Russia has enormous export potential. For example, China and India produce more grains than us. But they eat them themselves. Our domestic consumption is not growing and cannot grow. We won’t eat, say, not two slices of bread, but a whole loaf of bread at lunch.

For internal needs, we need 80-82 million tons. If we produce 135 million, and in recent years much more, then the surplus needs to go somewhere. In addition, at the beginning of the season, the country still has 25-40 million tons left from last year’s harvest. In fact, for domestic consumption we have double the volume.

The problem is how to remove excess stocks and not drop product prices to such a level when grain production simply becomes unprofitable for the manufacturer. In addition, do not forget that exports also provide substantial revenues to the budget. It is better for the country's economy to receive money from the foreign market.

– They won’t disappear, such a “scarecrow” no need to believe. If normal conditions are provided, grain can be stored for a very long time. In a good way, we would reduce our reserves by another 10 million. But this is unrealistic – neither in terms of infrastructure capabilities, nor in terms of market prices. They are low, and there are no prerequisites for an increase yet.

– There is no paradox. More supply of a product always leads to lower prices. This is the market. Why are European farmers protesting? Their production costs have also increased, and purchase prices do not suit them. Ukraine has greatly unbalanced the market, dumping by 20-30 dollars per ton – both wheat and sunflower oil.

– There are goods that will be bought regardless of the price. Countries that are friendly to us – this is the “Russian meridian”: from the Black Sea and further south. Then the Mediterranean Arab states. Buyers also include Africa, Southeast Asia, and Latin America. Yes, they have money problems. But the consumption of bakery products in terms of total calorie content in some countries is 60-80%. They buy our high-quality grain; they simply physically need these volumes. Their prices are reasonable. We, of course, would like to get more. 

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