Farmers solve the problem: what to do with the “extra” 26 million tons of grain

As the leader of the world proletariat rightly noted, the best way to talk about successes is to discuss shortcomings. And they are even in the driver of the Russian economy – the agro-industrial complex. Yes, just like the Sun, our village also has spots. It was studied in detail by the analysts of Yakov and Partners (the former Russian subsidiary of McKinsey) and brought their conclusions to the judgment of the agricultural community.

The conclusions turned out to be both large-scale and equally ambiguous. The most positive of them: Russia has confirmed the status of a great grain power, having collected about 155 million tons last year – an absolute record! But it doesn’t come without problems. The authors of the study revealed four main “ulcers” of the domestic village, which do not allow our peasants to live and work in peace.

Let’s call everyone by name!

The first headache is that the ending stocks of cereals today amount to 26 million, of which 17 million tons are wheat. At current prices associated with long-term storage of products, this is 260 billion rubles. That is, our country is forced to spend these crazy billions simply on storing the harvested grain. And so that these billions do not grow like a snowball, Russia needs to export more than 4 million tons every month.

And here is problem number two. On the one hand, covert and overt sanctions imposed by the European Union interfere. On the other hand, the process is hampered by export duties imposed by us on producers. Grain growers have been calling on the authorities for a long time if they are not canceled, then at least reduced.

Neither of these are happening yet. The logic of our Ministry of Agriculture, obviously, is as follows: if the farmers are given free rein, they will drag everything to the world market, because prices there are much higher than domestic ones. There is a risk that a deficit will form in Russia because of this and food prices will skyrocket.

Not the best situation for quality seeds. Almost 20% of respondents are concerned about it. As previously reported by MK, sunflower crops will have to be reduced this year – we do not have a worthy alternative to the seeds of this crop. And some Western companies have already said they may suspend their deliveries to Russian customers.

In particular, there are no highly productive varieties of wheat and barley of domestic production. According to analysts, it is necessary not only to develop and finance the Russian selection, but also to actively promote our developments on the domestic market.

However, some farmers, while generally agreeing with this concept, see the other side of the coin here. To achieve the result, the authorities can take the shortest and easiest way – imposing quotas on imports and providing subsidies to those who buy domestic seeds. There will be such pressure, and it is already being exerted on some agricultural crops. And if there is no competition, why should our seed growers improve varieties, because everyone will buy anyway?!

Well, and like a cherry on the cake – the presence, or rather, just the lack of modern agricultural machinery and components. 34% of respondents are worried about shortages of tractors, 25% – harvesters and 11% – trailers and attachments. As soon as possible, we need to localize production from aggregates to spare parts, purchase finished equipment, using new export corridors through Turkey, China and Iran.

Meanwhile, according to information from the Grain Union, the export of the crop is quite successful, although we sell Russian grade 4 wheat at a discount of $25-35 per ton in relation to Western products.

– Will we be able to export the remainder of 26 million tons of grain? – we ask Vasily Uzun, Doctor of Economics, Chief Researcher at the Center for Agricultural Policy of the RANEPA.

– This is, of course, a very large balance and its export depends on many factors. Here is the impact of duties on the export of crops, and prices on the world market, especially for wheat. If they do not go down, then we can reduce the balance to a transitional stock, that is, until the next harvesting campaign. Experts are talking about a reduction to 17 million tons. Anyway, it’s a lot, a lot. If prices start to fall, it is better to wait with the export.

– Wait by the sea weather?

– Forecasts on the future harvest can play a big role. If information appears that in 2023 Russia will harvest not 155 million tons of grain, as in 2022, but, say, 125 million, the situation with prices will immediately change, a rush will begin. And we will understand that haste is not always good, it is better to wait for better prices.