July 17, 2012

Russia's 2012 grain harvest may fall below 80 million tonnes

Russia may harvest less than 80 million tonnes of grain in 2012, compared to the 94.2 million tonnes brought in 2011, according to Russia's National Union of Grain Producers head Pavel Skurikhin.

In late June, the Agriculture Ministry forecast the 2012 harvest at 85 million tonnes, with exports at 20 million tonnes. Russia downgraded its grain harvest forecast from 94 million tonnes to 85 million tonnes in June, owing to continued rains in the south of the country.

"The harvest seems to be less than 80 million tonnes but anyway it is enough to meet internal demand [at 73 million tonnes]. We do not expect any deficit," Skurikhin told reporters, adding the amount of exports for this year was still unknown.

The lower harvest has also been attributed to the farming sector's huge debts, including outstanding loans of RUB1.7 trillion (US$51.8 billion), higher than the industry's overall revenue. "The core problem is a high loan burden on farms which causes problems with access to working capital and hence a fall in technical capability," Skurikhin added.

Grain production costs grew at least four-fold from 2002-09, while wheat prices only grew from RUB2,000 (US$62) to RUB4,300 (US$133) per tonne in the same period, he said.

Lack of fertiliser is also sapping output, with farmers using only 2.2 million tonnes of fertilisers per year in the past decade, down from 11 million tonnes a year at the end of the Soviet period.