The record harvest of bread can turn into big losses for Russia

The unprecedented grain harvest of 155 million tons last year put our farmers in a dead end. Unaccustomed to setting records, domestic farmers now do not know what to do with millions of tons of wheat, rye and barley. According to the agency “Yakov and Partners”, “extra” 26 million tons of grain have accumulated in warehouses and elevators. And this is a problem for the entire industry. It is necessary to spend 260 billion rubles for maintenance and storage of such a volume. Farmers can’t get that kind of money from anywhere. Therefore, it is necessary to look for buyers for excess wheat in foreign markets. And that’s a big problem right now. “MK” understood the situation: what prevents us from exporting bread.

As we were informed in the Grain Union of Russia, the export of the crop continues. Since the beginning of the season (from July 1 last year to January 31 this year), grain supplies amounted to about 35 million tons, including 31 million for wheat. Our bread is bought in 30 countries of the world. Egypt has become significantly more active: in the first week of February alone, it imported 370,000 tons of wheat, 10 times more than in the same period last year. Turkey purchased 2.5 times. Active shipments go to the UAE, Bangladesh and other countries.

– In January of this year, 3.9 million tons of grain were exported, while in January 2022 – 1.7 million, – said Elena Tyurina, director of the analytical department of the union, – In the first days of February, the trend continues, shipments of wheat increased three times : 765 thousand tons against 250 thousand a year earlier.

European wheat of the 4th class is traded at $323 per ton, Russian wheat is sold at a significant discount, in December and January – at a discount of $25-35 per ton.

However, experts believe that these volumes could be higher, but export duties slow down deliveries. The authorities use them as a price regulator in the domestic market, curbing the appetites of exporters. In early February, they were set at $63.7 per ton.

Export duties have a great impact on our domestic market. If world prices exceed, say, 200 dollars per ton, duties in Russia are set (on average) at about 60-70 dollars per ton.

This is literally crazy money, their APK has never paid. In different years, the budget withdrew 200-300 billion rubles. According to experts, payments from grain growers to the budget seriously exceed the subsidies that the state pays them from its treasury.

At the same time, the Ministry of Agriculture promises to return duties back to grain growers by spring, so that they can prepare for the sowing campaign. Purchase seeds, mineral fertilizers, plant protection products, agricultural machinery. In general, everything that is needed.

Ideally, our farms from year to year should expand production and increase the supply of products for export. But nothing is perfect in economics. Money, as a rule, is returned to the village. But not to those who earned them, that is, not to the grain growers. There are many areas in the agro-industrial complex that are on a starvation diet and are waiting for subsidies from the state. This is dairy farming, and crop production, and potato growing … Well, each sister gets an earring, including grain growers – but they share this very duty with other colleagues in the industry.

On the eve of the 2022 sowing year, according to some estimates, only 15% of the amount of duties was returned to grain farms. As a result, they did not purchase sufficient volumes of plant protection products and fertilizers.

Such “savings” affected the quality of the harvest: farmers harvested a large amount of wheat of the 4th class, which is not the best for the bakery industry.

Due to the record harvest of grain, prices for domestic consumers have been set very low, about 11.5 thousand rubles per ton. This is what always happens in production. At such prices, it is extremely problematic for grain growers to recoup their costs. So the peasants are wondering: to engage in this crop for the next year or switch to something more stable and profitable. In a word, the number of those wishing to grow bread this spring may decrease.

But, according to Vasily Uzun, Doctor of Economics, chief researcher at the RANEPA Center for Agro-Food Policy, there are “pluses” in duties.

“Thanks to them, the processing of grain is stimulated,” he says. – We supply the world market, as a rule, with raw grain, and now we are starting to increase the export of flour. Italy does not sell wheat, it supplies ready-made pasta and vermicelli. Low prices in the domestic market stimulate the growth of livestock production – pork and poultry. We are also starting to sell them to other countries …

At the same time, the scientist believes that the price regulation mechanism needs to be improved.

– It’s a strange situation. Export duties reduce the income of grain growers. And in order to support prices in the domestic market, the Ministry of Agriculture conducts intervention purchases. That is, with one hand the state lowers prices, and with the other it raises, – the expert points out.