The International Grains Council (IGC) puts Russia’s total grains production in 2017-18 at 124.5 million tonnes, up from 114.2 million tonnes the previous year. It projects 2017-18 wheat production at 80 million tonnes, up from 72.5 million and maize production at 15.7 million tonnes, up from 15.3 million. Russian barley production in 2017-18 is put at 20 million tonnes, up from 17.5 million the year before. Production of oats is forecast at 4.9 million tonnes compared with 4.8 million the prior year. Rye production is put at an unchanged 2.5 million tonnes.
The IGC forecasts Russia’s total 2017-18 grains exports at 41.8 million tonnes, a figure that would make the country the second largest exporter in the world, after the United States. Its total grains exports in 2016-17 were 36.2 million tonnes. The total for 2017-18 includes wheat exports of 32 million tonnes, up from the previous year’s 28 million. Russia’s maize exports in 2017-18 are put at 5.6 million tonnes, up from 5.3 million the year before. Russian barley exports in 2017-18 are projected at 4.1 million tonnes, of which 4 million would be feed, up from 2.8 million, of which 100,000 were feed, the year before.
“Most grain crops produced in Russia are based on low-cost agro-technologies with a minimum use of agrochemicals,” the attaché’s annual report on the grains sector said. “This is reflected in the low average yields of most grain crops.”
The exception is in the maize sector, with average yields up nearly 30% in the last six years.
“The corn yield increase was due to the use of better planting seeds and the use of modern agro-technologies, which envisage agrochemicals,” the attaché said. “There are no data on the use of agrochemicals by crop.”
Currency fluctuations — although when the report was written the ruble had recovered to some extent against the U.S. dollar — and farmers’ weaker general financial situation meant that industry analysts were not expecting to see an increase in the use of agrochemicals.
With wheat and total grains exports set to beat records, the IGC looked at the potential logistical challenge.
“Provided that weather conditions are favorable and supplies are marketed in an orderly fashion, the volume is likely to be within transportation capacity,” the IGC said. “However, it is possible that the huge quantity of grains to be moved could cause logistical bottlenecks on railways and at ports at times. Because of this, market participants speculate that Russia’s wheat exports could be constrained to 30 million to 35 million tonnes, regardless of the size of the harvest.”
Egypt and Turkey remain the main markets for Russian wheat exports, although Russian exporters actively develop other markets for Russian wheat, the USDA attaché said in a June report.
“In MY 2016-17, exports of wheat to Turkey and to Egypt were hindered by several factors dependent on general relations between Russia and these countries,” the USDA said. “These factors may again play an important role in the exports of Russian grain to these countries in MY 2017-18. In the beginning of June 2017, the Egyptian phytosanitary authority again threatened to restore zero tolerance for ergot on imported wheat, which may result in the closure of the Egyptian market for Russian grain. The previous period of zero tolerance on ergot lasted from August to September 2016 and caused a decrease of exports of Russian wheat in this period.”
On March 15, 2017, Turkey excluded Russia from the list of countries that may export grain to Turkey duty-free, the report said.
“This action resulted in a decrease of Russian exports to Turkey in April 2017,” the USDA said. “However, in May Turkey lifted these restrictions, but not completely. According to Russian grain traders, Turkey only partially lifted the prohibitive import duty regime for Russian grain; the quantity of licenses that Turkey issues for duty-free imports of Russian wheat shall not exceed 20% to 25% of the total number of licenses. According to industry analysts, 70% to 75% of Turkish wheat flour is produced from Russian wheat. The ‘license’ quota will decrease the share of Russian wheat in Turkish flour and will affect Russian wheat exports to Turkey.”
The limitations on duty-free imports of wheat from Russia to Turkey may lead to the decrease of so called “shallow-water” exports of grain from Russia, the attaché said.
“Exporters of the Rostov-on-Don river basin should switch to the harbor-transshipment and deep-water ports,” the attaché said.
Flour, oilseed and biofuels
The Russian Union of Flour Mills and Cereal Plants is an associate member of the European Flour Millers. According to the European Flour Millers, there were 295 industrial mills and more than 3,000 smaller mills in Russia in 2015. They produced 9.035 million tonnes of flour, with 4.7 million coming from very small mills.
In a report published in March, the attaché forecast Russia’s 2017 production of the main oilseeds (sunflowerseed, soybeans, and rapeseed) at 15.3 million tonnes, a 2% increase from the previous year. The forecast includes 11 million tonnes of sunflowerseed, up 1%, 3.2 million tonnes of soybeans, up 2%, and 1.1 million of rapeseed, a 10% increase.
“In the last five years, Russia has also increased production of niche oilseed crops, such as oil flax, camelina and safflower,” the report said. It forecast total production of those three crops at an unchanged 1 million tonnes in 2017.
“Oilseeds in Russia compete for fertile soil and climate-friendly regions with grains, sugar beets, and other crops,” the attaché said. “Therefore, a significant increase in the area sown to oilseed crops is not possible. The financial situation for most Russian farmers remains poor, and they cannot afford significant investments in new expensive agro-technologies (i.e. clearfield technology for sunflowerseed), which would improve yields and made crop production less dependent on weather and pests.”
An attaché report on the biofuels sector made clear how undeveloped it is in Russia.
“The development of the biofuels sector has never been a priority for the government in the past, and currently with the strong focus on the import substitution program and agricultural export support programs, biofuels is even less of a priority,” the attaché said. “There are no initiatives to, or even incentives to, commercialize biofuels.
“Development of the bioethanol and biodiesel sectors will continue to stay low priority for the government. No major breakthrough is expected, at least in the short term. The production of biofuels still remains small and has almost no impact on Russia’s overall domestic grain and oilseed prices. High excise taxes for ethanol in Russia, coupled with high production costs and increasing demand for grain for other uses, are all major obstacles for the development of the ethanol industry.”
Russia has taken an anti-biotech stance.
“Over the last several years, there have been numerous heated public discussions and various federal legislative drafts considered regarding the use of plant and animal biotechnology,” the USDA reported in its annual report on the sector. “Finally, on July 3, 2016, Russia adopted the Federal Law 358-FZ (FL 358); ‘On amendments to certain legislative acts of the Russian Federation concerning improvement of the state regulation in the sphere of genetic-engineering activities,’ which prohibits the cultivation of genetically engineered (GE) plants and the breeding of GE animals on the territory of the Russian Federation.”
