Russia set a record for the agricultural sector by harvesting almost 112 million tonnes of grain by 4 October, setting a 25-year record. Furthermore, Bloomberg reports that Russia is becoming the world’s grain-export powerhouse. Bloomberg admits that Russia is about to retake the leading role in the world’s wheat trade it last held a century ago. It commented on the country’s record grain harvest:
From the Black Sea coast and the Volga River heartland to the sun-scorched steppes of Siberia, Russia’s farm belt is enjoying a renaissance, with grain at the leading edge. Turbocharged by the 45 percent drop in the rouble against the dollar over the last few years and bumper crops, local producers are crowding into export markets long dominated by big Western players.
Indeed, the estimate for this year’s total grain harvest should be well over 115 million tonnes. RIA Novosti quoted Chairman of the RF Government D A Medvedev:
Let me put it straight… this is an all-time record for the Russian agricultural sector.
According to the Ministry of Agriculture, Russia will produce 116 million tonnes of grain, or, perhaps a bit more. The ministry envisions that Russia will sell up to 40 million tonnes of grain in 2016-17 (including 30 million tonnes of wheat) on the world market, up from 32 million tonnes exported in 2015. Russia broke it’s previous record in 2008 when farmers produced 108.2 million tonnes of grain.
Citing the US Department of Agriculture, Bloomberg reminded its readers that last season Russia outpaced the USA as a wheat exporter for the first time in decades. According to the media outlet:
Russia is likely to displace the EU from the top spot this year.
Indeed, in mid-September, according to International Growth Centre (IGC) figures, EU export expectations have gone down to 25.5 million tons. Heavy rains dealt a heavy blow to wheat hopes in Germany and France this year. So far, Russia entered into new grain markets, toppling its competitors. This year, the main export destinations for Russian wheat are Egypt (the world’s biggest buyer), Bangladesh, and Mozambique, as well as Indonesia, Mali, Malta, Mexico, and Burma. Furthermore, this year, Moscow struck export deals with Algeria and Morocco. According to agricultural watchdog Rosselkhoznadzor, Russia may also begin supplying wheat to Venezuela by the end of 2016. Meanwhile, in late September, Chairman Medvedev inked a directive to drop the duty on wheat exports, introduced in February 2015, from 23 September 2016, until 1 July 2018, to support Russian farmers and boost the development of the grain market.
Incredible as it may seem, the US-led sanctions policy bolstered the growth of the Russian agricultural sector, it took advantage of the embargo on EU food products and a weakened rouble. On 2 September, Agriculture Minister Alexander Tkachyov highlighted that Russia’s grain output may reach 170 million tonnes a year by 2030 with annual exports of 64 million tonnes. Earlier this year, Tkachyov signalled:
Russia plans to increase its grain production to 120 million tonnes per year by 2020.
Tom Basnett, general manager at Market Check, a Sydney-based commodity consultant, said:
Russia will be among the top exporters for a long time, especially given the potential advances in productivity there. Other producers need to fight harder to maintain their traditional markets.
Arkady Zlochevsky, President of the Russian Grain Union noted:
With our nature and climate, it’s our destiny to be an exporter.
8 October 2016