Is Famine Coming To Russia?

Due to the weather, for the second year in a row, there will be a poor harvest and a jump in the prices of key products.

For the second year in a row, the weather has let Russian farmers down. With abnormal heat in some regions and rain in others, "we are literally fighting for the harvest again this year," an agricultural analyst said, according to The Moscow Times.

Agricians and industry experts estimate that Russia will harvest less wheat, sugar beets, potatoes and carrots this year than last year, when the harvest was also poor. At the same time, the weather also reduces the quality of harvested products - all this may lead to higher prices for a number of key products and possibly even shortages.

"Rain has beaten wheat"

In June, losses of the Russian South of unfavorable weather were estimated at 8% of sown areas of major crops, the forecast of grain harvest was reduced to the level of 2024, but weather risks remained, the Central Bank noted. This is an important topic for it: over the past year, food has become an important factor in accelerating inflation. Chief economist of Alfa Bank Natalia Orlova called the harvest one of the three main inflation risks (the other two are the ruble exchange rate and budget expenditures).

By July 11, Russia had threshed 11 million tons of wheat - 56% less than on the same date last year, the SovEcon think tank calculated. The main reason is the slow pace of harvesting. Due to the hot and dry weather in the southern regions, they are lagging behind not only last year's pace, but also the average annual pace. The second reason for the lag is a decrease in yields due to spring frosts and June drought in the Rostov region and Krasnodar Krai. According to SovEcon, the national average is now at 3.4 tons per hectare, while a year ago it was 4 tons per hectare. In a number of districts, yields have fallen to critical values, experts say. In their opinion, the persisting heat may also lead to a decline in grain quality.

In the opinion of experts "SovEcon", the lag from last year may decrease as the harvest in other regions. But if weather conditions do not improve and heat or rains spread to the central part of Russia, the consequences could be even more significant.

So far, hopes for high performance in the central region are not justified: harvesting has started here, but abnormal July rains prevent harvesting and reduce the quality of grain, especially wheat and malting barley, warns another agricultural analyst.

"The rain has beaten the wheat, the losses will be tangible, we have already lost almost 20% of the grain in the harvested areas, and further everything will depend on the weather," says a farmer from the Voronezh region. And if in the districts of Kuban officials are introducing an emergency regime due to drought, then the authorities of Novgorod region on July 19 introduced an emergency regime in the region due to overwatering of the soil. In spring, the region has already introduced a state of emergency due to floods that destroyed crops on more than 3,000 hectares, and now, according to the regional Ministry of Agriculture, the harvest has completely died on more than 100 hectares.

The Ministry of Agriculture has not yet changed its forecast: not less than 135 million tons. Independent experts are gradually lowering their expectations. The Institute for Agricultural Market Conjuncture (ICAR) has so far reduced the forecast of grain harvest in Russia by 1.1% or 1.5 million tons, to 130.3 million tons. In particular, the wheat harvest forecast has been reduced by 0.5 million tons to 84 tons. "The forecast changes are mainly due to dry and hot weather and reduced estimates of grain production in southern Russia," explains ICAR general director Dmitry Rylko. Prozerno CEO Vladimir Petrichenko agrees that grain will be harvested at least 1 million tons less than forecast in June. His forecast is 129.4 million tons.

Experts believe that exports will suffer first of all from the shortfall. This will lead to a decrease in grain exports by 1.3 million tons or 2.4%, down to 53.7 million tons, Rylko said.

But the domestic market will also suffer. Reduction of gross harvest and unstable weather conditions will lead to increased volatility in the grain market, especially in the wheat segment, warns SovEcon. "And this means that agrarians will try to hold back the harvest, assuming a significant rise in prices, which in turn will create a deficit and really drive up prices," an employee of one of the analytical companies is sure.

Not only grain

The weather is ruining the harvest of other key crops. This year, according to Rosstat, agrarians increased the area sown with sugar beets by 4.4%, but reduced the area under potatoes by 0.8% and other vegetables by 3.1%. At the same time, due to bad weather, part of the crops died and yields decreased.

Large agricultural holdings predict a decrease in sugar beet yields and its sugar content. Due to the lack of precipitation and hot weather, root crops do not gain weight well, explained in "Tkachev's Agroholding". Soyuzrossakhar reported that the sugar beet harvest test showed root mass and sugar content lower than last year (by 4% and 18%, respectively).

"The situation is not critical yet, but if the unfavorable weather persists, the reduction in the quality and quantity of the crop may be significant, which will lead to an increase in sugar prices," the industry expert reasoned. In the first half of the year, Russia produced 28.4% less sugar than a year earlier.

The abnormal spring price hike for vegetables, especially carrots, potatoes and cabbage, may be repeated, warns the head of a large agrarian farm in Central Russia. Their yields are already falling due to last year's ban on importing seeds from the Netherlands into Russia. Rosselkhoznadzor found in them a dangerous pest - the flower thrips - and the weed wilt. This June, the agency banned the import of Dutch seeds even as parallel imports through the countries of the Eurasian Economic Union (EAEU). And then there is bad weather, because of which root crops gain mass poorly and rot at the root, the agrarian laments. "Obviously, this will increase the need for imports of vegetables, and then this winter we will remember today's retail prices of 100 rubles per kg of potatoes and 70 rubles - per kg of carrots as quite democratic," he argues.

Now the prices for fruit and vegetable products are seasonally declining, but from the beginning of the year to July 21, potatoes rose in price by 30%, beets - by 39%, carrots - by 58%. On the initiative of the Ministry of Industry and Trade, the State Duma is working on measures to regulate manufacturers' selling prices for basic foodstuffs: setting a "fork" of minimum and maximum selling prices.

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