IKAR in Mass and Industry Media

Russia federal emergency expected to boost farmers, not block exports

MOSCOW, June 5 (Reuters) - Russia will boost financial support to farmers but is not expected to ban grains exports if a federal emergency is declared due to frosts that have damaged crops, industry experts said on Wednesday.

Agriculture minister Oksana Lut said on Monday that Russia may declare a nationwide emergency possibly, as soon as the end of this week. Emergency regimes have already been introduced in 11 regions.

As the world's top wheat exporter any Russian export curbs could lead to a sharp rise in global prices which have already been climbing on the potential for tighter supplies in the upcoming 2024/25 season.

"We don't expect strict restrictions on exports, but reduction in our supply to the world market is quite possible. We will be less flexible on prices, recognising the limitations of our supply", said Eduard Zernin, head of the Rusgain, an exporter group which regularly meets with the government to discuss their views on the state of the industry.

Russia's agriculture ministry did not immediately respond to a request for comment.

Consultants IKAR has cut its forecast for Russia's wheat crop this year to 81.5 million metric tons, a drop of 12% since mid-March. Last year's harvest was around 93 million tons.

"It is a question of speeding up the procedure for farmers to receive compensation, as well as knocking out additional money for them", said IKAR head Dmitry Rylko.

Andrey Sizov of consultant Sovecon said rapidly deteriorating prospects for the crop, combined with rising domestic prices, meant the risk of additional restrictions on grain exports has, however, increased.

"I don’t think the Ministry of Agriculture itself wants such restrictions," he added.

Russia banned grain exports in 2010 after drought and wildfires devastated its harvest, leading to a surge in global prices. The wheat crop that year, however, totalled just 41.5 million tons, according to the U.S. Department of Agriculture, around half the projected total for this season.

Igor Pavensky, Rusagrotrans' marketing director, estimated that the drought and May frosts affected regions that account for up to 40% of Russia's winter wheat area.

Rusagrotrans is a railway infrastructure operator for the transportation of agricultural and mineral raw material bulk cargoes by special-purpose hopper cars.

"Everything will become clearer after the harvesting campaign starts in main grain-producing regions that suffered most from natural disasters," Zernin said.

Last week, Russian Deputy Prime Minister Dmitry Patrushev said that the wheat harvest is expected to be 85 million tons, with exports of 53 million tons.

Following cuts to its production outlook, however, IKAR now forecasts wheat exports at 44 million tons.

05.06.24

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