Russia is becoming an ever bigger player in the world grain market
A severe drought in eastern Russia has dealt a 4-millionton blow to the country’s grain production, particularly its wheat. Despite the setback, momentum from recent years will keep the country a big player in the world grain market. The question of how much surplus grain Russia will end up with after it feeds its growing livestock sector continues to be a factor in the world market. It’s estimated that exports will total 14 million tons, which is almost half of the 2011 record.
"In the long term, Russia
could catch up with and
perhaps even surpass the
United States as the world’s
leading wheat exporter."
Livestock Numbers Up. Russia’s livestock industry contracted by about half in the years following the country’s independence from the former Soviet Union, notes Bill Liefert, an economist with USDA’s Economic Research Service (ERS). "Now it is beginning to revive," he says. From 2000 to 2010, Russian poultry production increased by more than 400%. "Pork production, which was very badly hurt during the transition, is also turning around," Bill says.
Russian per capita meat consumption has been climbing, from 90.2 lb. in 2001 to 138.6 lb. in 2010, an average annual increase of more than 5%. While Russia’s gross domestic product has slowed from pre-2008 recession levels, it is expected to grow at an average annual rate of about 3.5% during the 2011–2020 period, according to ERS data.
Recovery in the country’s pork and poultry industries has meant increased demand for feed grain, but production of feed grains has been climbing as well. "Over the past decade, Russia did not increase its land area planted to grains by much, but output has increased from rising yields," Bill says.
ERS data shows that Russia produced 3.5 tons of grain per acre per year from 1996 to 2000. By 2006–10, the average annual yield had climbed to 5.25 tons per acre, a yearly increase of nearly 5%. The increase was partly due to favorable weather.
Large vertically integrated farm enterprises called "agroholdings" are buying up farms and improving their performance. Agroholdings now control about 15% to 20% of Russia’s arable land. "It appears they are getting better performance out of existing farms," Bill says.
Export Potential. In 2008, Russia exported 1.3 million tons of corn, the first year its corn exports surpassed 1 million tons, says Olga Liefert, also an economist with ERS. Prior to 1994, Russia was a net importer of corn as well as wheat and barley. "Agroholdings are interested in exporting grain because that’s where the money can be made," she says.
Russia produced 3.5 TONS OF GRAIN PER ACRE each year from 1996 to 2000. From 2006 to 2010, the average annual yield climbed to 5.25 TONS PER ACRE, an increase of nearly 5% PER YEAR, according to USDA data.
Widespread drought hammered a third of the country’s crop in 2010. As a result, the government put a ban on grain exports. That won’t happen this year because Russia joined the World Trade Organization late this summer and is obliged to respect free trade rules.
"Over the long term, Russia could catch up with and perhaps even surpass the United States as the world’s leading wheat exporter," Olga says.
- October 2012