Russian grain harvest

Russia's grain harvest may decline on continuous rain

Russia's grain harvest harvest may decline to 80 million tons in 2012 compared to the 94.2 million tons brought in last year.

Commodity Online,

13 July 2012

Russia's National Union of Grain Producers head Pavel Skurikhin says that, the production decreased by 15% in 2012 when compared to the previous year.

Agriculture Ministry forecast the 2012 harvest at 85 million tons in late June, with exports at 20 million tons. Continued rains in the south of the country has made Russia to downgrade its harvest forecast.

"The harvest seems to be less than 80 million tons but anyway it is enough to meet internal demand [at 73 million tons]. 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 1.7 trillion rubles ($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.

From 2002 to 2009 grain production costs grew at least four-fold , while wheat prices only grew from 2,000 rubles to 4,300 rubles per ton in the same period. Lack of fertilizer is also sapping output, with farmers using only 2.2 million tons of fertilizers per year in the past decade, down from 11 million tons a year at the end of the Soviet period.