Due to several factors, including the rise in the US Dollar, American agricultural products are becoming too expensive and uncompetitive. Meanwhile, Russian farmers are seizing leading positions in the market. This year, the international agricultural market saw significant changes due to such factors as a stronger dollar, the collapse of oil prices, and better crops. According to the Wall Street Journal, as a result, leading exporters gave way to new players. Recently, Canada and the USA, the world’s biggest agricultural exporters, lagged behind Russia in overall production of wheat. This year, Russia plans to export 23.5 million tonnes of grain. Canada expects to export 20 million tonnes and the USA projects exports of 21.8 million tonnes. These former agricultural market leaders could see their lowest rates of export in 44 years. Michael McDougall, director of agricultural commodities at Société Générale SA in New York, said:
Unless emerging-market currencies stop falling, the USA will lose more export market share and will begin to see more foreign products coming in.
Currently, international consumers aren’t very enthusiastic about buying American grain due to the stronger dollar, especially now that fierce competition on the international food market considerably lowered the cost of products in general. Chad Hart, a grain market analyst at Iowa State University (ISU) Extension, said:
The dollar’s strength is becoming a bigger issue for farmers than we’ve seen for a while. It’s really having an impact this year.
Meanwhile, the WSJ noted that Russia managed to balance prices and grab a larger share of established markets, such as Egypt. That includes markets traditionally dominated by the USA, so, American farmers will need to get ready for diminished demand and a downslide in prices.
8 February 2016 (MSK)
Journalist Fred Weir pointed up that Moscow’s retaliatory sanctions against the EU helped Russian farmers revitalise their country’s agricultural markets. He thinks that Russia’s “small domestic farmers” managed to “step up” due to Moscow’s retaliatory sanctions against the EU. In his article published in the Christian Science Monitor, Weir specifically quoted one such farmer, Aleksandr Sayapin, who said:
Russia’s near-complete ban on food products, including dairy imports from the EU, created an opportunity. We tripled our production in the past year; we carved out a place in the market.
Despite persistent economic woes, Russia’s agriculture seems to have rebounded briskly. The growth came due to a comprehensive subsidy programme aimed at promoting private farming. The programme began in 2012 and includes low-cost loans, controlled prices for fertilizers, support for producers of domestic farm machinery, and state financing for other vital elements of agricultural infrastructure. This clearly had an impact, and that Russia, which previously was one of the largest importers of chicken and pork from North America, became a net exporter of pork for the first time in history in 2015. Russian agricultural exports were [worth] 20 billion USD (1.55 trillion Roubles. 131.52 billion Renminbi. 1.358 trillion INR. 27.78 billion CAD. 28.23 billion AUD. 17.93 billion Euros. 13.79 billion UK Pounds) last year , more than international arms sales, and should grow further this year. The sanctions also boosted the revival of traditional Russian cuisine and a favourable environment for Russian producers of old ingredients like beets, cabbage, buckwheat, tvorog (Russian-style farmers cheese), and kefir (a yogurt drink).
Weir interviewed a former Soviet military officer-turned-businessman Andrei Davidov, who now runs a cattle farm in the nearby city of Kaluga in central Russia, saying:
Davidov has about 150 Hereford cattle at his farm, which he butchers himself, and he makes a comfortable living supplying a supermarket chain and a couple of restaurants in Kaluga.
I remain upbeat about my country’s future, as far as raising beef cattle is concerned. What this country needs are 800,000 private farms raising cattle, like in the USA; then, maybe, we’d be an agricultural superpower.
Moscow’s sanctions came in response to Western punitive measures levelled two years ago over Russia’s alleged role in the Ukrainian crisis. Repeatedly, Kiev and the West accused Russia of backing the Peoples Republics in the Donbass, in the former eastern Ukraine. Moscow vehemently denies the allegations.
3 February 2016