Russian farmers ditch wheat for other crops after heavy losses

MOSCOW/IRTYSH VILLAGE, RUSSIA — 

Russian farmers accidental they volition sow little wheat aft dense losses this year, switching to much profitable crops specified arsenic peas, lentils, oregon sunflowers.

Such decisions volition person nonstop implications for planetary wheat prices and ostentation successful large buyers similar Egypt, arsenic Russia is the world's apical exporter of the grain.

The inclination represents a situation for President Vladimir Putin's program to grow exports and cement Russia's presumption arsenic an agriculture superpower, portion trying to summation much planetary clout amid confrontation with the West implicit its actions successful Ukraine.

The country's wheat harvest volition diminution to 83 cardinal tons this twelvemonth owed to frosts and drought, down from 92.8 cardinal tons successful 2023 and a grounds 104.2 cardinal tons successful 2022. New forecasts constituent to a clouded outlook for adjacent twelvemonth arsenic well.

Although Russia has been exporting wheat astatine a adjacent grounds gait successful the caller months, exports are expected to dilatory owed to a atrocious harvest and export curbs aimed astatine containing home terms growth, including an expected cut successful export quota by two-thirds from January 2025.

At a workplace successful Siberia's Omsk region, which was deed by dense rainfall during the highest of the harvesting season, husbandman Maxim Levshunov takes vantage of a uncommon sunny time to cod what remains successful the fields.

He chuckles arsenic helium picks up ears of wheat that sprouted aboriginal owed to the moisture. Now, astir of his crops are lone suitable for carnal feed, meaning the workplace volition person a fraction of the price, and income, it had hoped for.

"We'll astir apt commencement moving distant from wheat, cutting backmost arsenic overmuch arsenic possible. So, we'll beryllium reasoning astir what much profitable crops we tin regenerate it with close now," Levshunov told Reuters.

As this year's harvesting run comes to an end, Russian farmers are assessing their losses from the exceptionally atrocious upwind and considering their adjacent steps amid falling nett margins for wheat, Russia's main cultivation export.

Winter wheat became the archetypal unfortunate arsenic areas sown with it are acceptable to shrink by 10% this year, the lowest since 2019, according to information from Rusagrotrans, Russia's flagship atom obstruction carrier.

"There are losses connected each ton. The selling terms does not screen the cost," said Arkady Zlochevsky, caput of the Russian Grain Union manufacture lobby, predicting that Russia's 26% stock of the planetary wheat commercialized volition shrink.

Agriculture Minister Oksana Lut joked that farmers mightiness commune to Saint Ilya, the patron saint of upwind successful Russia, to amended conditions for wintertime crops. The gag did not spell down good with farmers, who are considering much pragmatic options.

Some accidental they person already decided to works little wheat adjacent year. Others are waiting to spot however planetary wheat prices execute successful the adjacent fewer weeks earlier making a last decision.

"The profitability of atom crops is approaching zero. The institution has reduced the measurement of wintertime wheat sowing by 30%. There are 2 drivers present — soybeans and sunflower," said Dmitry Garnov, CEO of Rostagro Group, which owns onshore successful the Penza and Saratov regions astir the Volga River.

Rising costs of instrumentality and fuel, precocious export duties, a rising benchmark involvement complaint that deed 21% successful October arsenic the country's cardinal slope fights inflation, and the removal of immoderate cultivation subsidies person besides eaten into nett margins.

"It is evident that successful 2022-2024, the terms has been practically the same, portion the outgo of atom accumulation has accrued by astatine slightest 28%," said Sergei Lisovsky, a subordinate of the little location of Russia's parliament from the Kurgan region.

Lisovsky argued that the precocious export work for grains, introduced successful 2021, arsenic good arsenic rising proscription costs for regions with nary nonstop entree to seaports, were besides factors down debased margins.

"Therefore, arsenic of today, farmers are not planting grain, not due to the fact that of the autumn drought, but due to the fact that they are waiting to spot what the terms volition be, and person not yet made a decision," Lisovsky added, referring to outpouring wheat sowing.

In Russia's astir fertile Krasnodar region, the profitability of wheat is inactive holding astir 10%, but immoderate ample section farms are besides pondering a alteration of strategy arsenic droughts go much terrible each year.

"It is gradually getting warmer successful the south, and we request to deliberation astir changing the operation of the sowing areas for the future," said Yevgeny Gromyko, enforcement from Tkachev Agrocomplex, 1 of Russia's largest landowners, and a erstwhile lawman agriculture minister.

The niche crops person the imaginable to go caller export occurrence stories with Russia's allies among the BRICS countries, aiding the authorities successful achieving Putin's extremity of expanding cultivation exports by fractional by 2030.

Russia overtook Canada this twelvemonth arsenic the apical peas exporter to China. Regulators successful India, the starring importer of lentils, utilized to marque daal, a staple for millions of people, gave a greenish airy to Russian imports.

Russia takes pridefulness successful being the world's apical wheat exporter, with the older procreation recalling the nutrient shortages of the Soviet epoch and the humiliating atom imports from Cold War foes similar the United States and Canada.

However, for struggling farmers, it is declining profits, not planetary status, that substance most.

"Many farms that specialized exclusively successful wheat crops person operated astatine a nonaccomplishment this twelvemonth and volition look precise superior fiscal difficulties, perchance starring to bankruptcy," Levshunov said.