Page 8 - bne magazine February 2022_20220208

8 I Companies & Markets bne February 2022
Russia reports poor harvest, Ukraine bumper crop in 2021
bne IntelliNews
Droughts, death of winter crops and a shortage of migrant workers for seasonal field work hit Russia’s 2021 harvests, which was down to a three-year low, the Russian Ministry of Agriculture reports. By contrast, Ukraine had one of its best harvest ever.
Russia and Ukraine are vying with each other for the title of “world’s biggest grain exporter” and agriculture has become a major money spinner for both countries.
Russian farmers had taken in 120.7mn tonnes of grain at the end of 2021, which was 9.6% more than in 2020, according to RosStat statistics. But the grain harvest was at a 3-year low, less by almost 15mn tonnes from the previous year.
The wheat harvest fell too, by 12%, or 10mn tonnes, and amounted to 75.9mn tonnes, off from the Ministry of Agriculture’s start-of-season forecast of 81mn. The barley harvest fell by 14% to 18mn tonnes but the corn harvest was up by 6% more than a year earlier at 14.6mn tonnes.
“The decrease in the volume of cereals was due to the death of winter crops due to drought in many regions of the country,” analysts told the finanz.ru website.
The US Department of Agriculture predicted a Russian harvest of 85mn tonnes of wheat in Russia, but in August sharply lowered the estimate to 72.5mn tonnes due to bad weather hitting some large producing regions including Tatarstan, Bashkortostan and Orenburg. The yield of harvested wheat in the Central Federal District fell by 24% year on year and in the Volga Federal District by as much as 45%.
Falling crop harvests were experienced in 2021 by most of the largest exporting countries, including Canada, Brazil and the United States, where, according to the Ministry of Agriculture, wheat harvest were at their lowest levels in the past 19 years.
A supply gap, coupled with rising demand and record purchases by China for the state food reserve, pushed
the average price of wheat on world markets up 31% y/y, according to an estimate by FAO (the Food and Agriculture Organization of the United Nations).
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Agriculture has become a major export item for both Ukraine and Russia as they vie with each other for the title of "world's biggest grain exporter."
The FAO Aggregate Food Price Index, which takes into account the prices of 95 staple foods, added 23% last year to its highest level in a decade.
"Not a very good harvest," warned Kirill Tremasov, director of the monetary policy department of the Central Bank of the Russian Federation, which will feed high inflation in 2022, he added. At the end of last year, according to RosStat, food inflation hit a six-year high of 10.6%.
“Russia and Ukraine are vying with each other for the title of “world’s biggest grain exporter” and agriculture has become a major money spinner for both countries”
Ukraine has bumper harvest
By contrast, Ukraine had its biggest harvest ever, bringing in 106mn tonnes of cereals, legumes and oilseeds in 2021 thanks to favourable weather conditions in 2021, according to Roman Leshchenko, the Minister of Agriculture.
The record harvest included more than 84mn tonnes of cereals and legumes, as well as 22.6mn tonnes of oilseeds.
Russia grain production, export m tonnes