Oct 12, 2020
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Russia takes away the grain market from Western countries

Washington is forced to admit Russia's superiority in agriculture. Over the past two decades, our country has achieved impressive success, from an importer of wheat to an exporter, displacing the United States and Canada. This year, Russia has every chance to finally secure the title of the absolute world leader in wheat exports, significantly moving one more major player in this market.

“Grain production is one of our key export positions, more grain has already been threshed than on the same date last year - according to the latest data, more than 126 million tons,” said Russian Prime Minister Mikhail Mishustin, speaking at a meeting of the Russian government. This allows the country not only to meet its own needs, but also to increase exports, he added.

Russia's rivals speak best of Russia's success. US Agriculture Secretary Sonny Purdue is forced to admit that Russia "has made significant progress" using "modern technology." Before Russia was "an importer of wheat, and now it is an exporter." Therefore, Washington views Russians "more as competitors than trading partners in the food and agriculture sectors."

During the Soviet years, our country really imported wheat, and bought it from its political opponents, including the United States. However, from the beginning of the 2000s, Russia began not only to feed itself, but to make the first attempts to sell for export. In 2001, the leaders were the USA, Australia, Canada, France, Germany, and even Ukraine sold more wheat than Russia. North America sold more than 25 thousand tons, and Russia - 25 times less (1636 tons). However, the situation gradually changed. Wheat exports from Russia grew almost every year. By 2014, our country had already come close to the USA and Canada, overtaking other rivals. Washington was still selling 25.6 thousand tons of wheat, and Russia already more than 22 thousand tons.

Since then, Russia has more than once managed to bypass both Canada and the United States in wheat exports, and in 2020 it promises to consolidate its global superiority. “This year Russia exports 50 million tons of grain, of which 39-40 million tons is wheat,” says Vladimir Petrichenko, general director of ProZerno.

For comparison,

In 1985, the USSR purchased a record 46 million tons of grain, including 21 million tons of wheat. Now Russia itself feeds many countries, selling 50 million tons of grain.

Of course, such successes are impossible without good harvests. “This season in Russia is expected the second largest harvest after the record 2017. Then we harvested 135.5 million tons of grain, and now we will collect more than 130 million grain, ”says Petrichenko.

The Ministry of Agriculture of Russia expects that the grain harvest this year will be more than 125 million tons, wheat - at least 82 million tons. Export of grain, according to the forecast of the department, will be 50 thousand tons.

A unique situation has developed this year. “The harvest is high, but the prices are also high. This is extremely rare. This happened because our competitors, with the exception of Australia and Canada, had a bad season, ”says the source.

Of course, Russia has been going to success for more than one year. “This is a long progressive process that began at the beginning of the 2000s. Important structural changes have taken place in the Russian grain industry. And the driving force behind these changes was global demand. In Russia, more attention is paid to wheat. Ten years ago, the sowing of winter wheat increased, the yield of which is higher than that of spring. They also began to develop the corn theme, gradually increasing its crops and production. This is a high-tech industry. We also increased the sowing of another highly profitable crop - legumes, as the world demand for peas, chickpeas, etc. increased, ”says Petrichenko. Russia began to grow what is in demand. However, these are not simple crops, therefore, a technological background was created in parallel: from seeds, plant protection, mineral fertilizers to agricultural machinery.

“Russia began to use better quality seeds, more modern plant protection products, more efficient fertilizers and agricultural machinery,

which delivers it all to the fields, and then reaps the harvest. This has all happened over the past 15-20 years, ”says Petrichenko.

In the agriculture of Russia as a whole, there is a dominance of imported seeds. However, in the grain segment, this problem has begun to be addressed. World seed producers localize their production in Russia. “Many seeds, such as corn and sunflower, are imported. But for wheat, these are mainly our seeds, ”says Petrichenko.

“Thanks to the developments of Russian scientists, we ensured our independence in wheat seeds. Experts will confirm how critical it is, ”said Vladimir Putin, summing up the results of 2018.

Another high-tech sector is surprising - the production of machines for farmers. Manufacturers of agricultural machinery are already testing the first samples of unmanned agricultural machines that sow and plow themselves. And all because there are not enough hands for seasonal work.

As a result, all this technological revolution in the grain industry, plus the use of winter wheat and maize, made it possible to increase the yield per hectare. Moreover, an increase in the share of winter wheat leads to a higher reliability of the crop, as winter and spring crops insure each other, says Petrichenko.

Since the demand for grains within Russia is stable and not growing much, the increase in harvest made it necessary to grow outside the country. Every year Russian wheat conquered more and more countries, often taking a share from competitors. At first, as it always happens with a new player entering a rather competitive market, Russia took the opportunity to set a low price tag.

Russian exports now account for a fifth of all world wheat exports. More than a hundred countries buy Russian grain. For example, in Egypt, Russia won almost 80% of all tenders for the supply of wheat. And this list of countries continues to expand. Last year, Russian wheat opened the doors to Saudi Arabia, and recently managed to enter the Algerian market, which is the third largest grain importer on the planet. Russian exporters have already received invitations from Algeria to participate in the next tender, and a test batch of grain from Russia has been tested, Bloomberg reports. The supply of Russian grain to the Algerian market will be a severe blow to wheat exporters from France, who until now have dominated this North African country. Experts expect a drop in grain exports from France this year by a factor of two.

“We can provide the quality that the buyer needs. Russia is chosen because we are closer and more reliable as a supplier, we have stable indicators. France one year produces good wheat, another year worse in quality, as it is now. Americans give the most different quality, whatever you please, but their prices are high, they are too expensive on the market, ”explains Petrichenko.

It is curious that the sales markets for Russian and American wheat differ and, as a rule, do not overlap. Russia is rather close on the heels of European suppliers. “The United States sells grain mainly to the American continent, Japan and to the countries of Southeast Asia. Russian grain continues mainly in the Mediterranean, the Middle East, the Indian Ocean and throughout Africa, ”says Petrichenko.

What is the United States so afraid of? The point is probably the food security that Russia has managed to ensure for itself. Second, Russia has already begun to earn more from grain exports than from arms exports, and continues to increase these indicators.

It is unlikely that any of the competitors will succeed in surpassing the volume of Russian wheat exports by 39–40 million tons. Australia had a very poor harvest for two years, so it exported 10 million tonnes each. “This year the Australian harvest is excellent, so 18 million tons of wheat will be exported. But this is still half the export of Russian wheat. The entire European Union will export 25 million tons of wheat this season. The United States may supply 27 million tons of wheat, ”says Petrichenko.

Olga Samofalova

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