Russia: expectations for not the first, but not the second harvest




Traditionally, in the beginning of March all Russian government bodies, experts and participants of the grain market estimate the prospects for the spring crops planting campaign and the general prospects for the harvest. As of the beginning of spring, the forecasts are already quite certain. The conditions of the last winter, climatic expectations from the spring-summer period, the financial and raw material solvency of agricultural producers and a number of other factors, are the key components of such estimations.

In 2020, the reporting components can be called as quite unconventional, and we will try to estimate the situation in the current article. At the same time, the material will focus on the so-called "regions-breadbaskets" of Russia — Krasnodar and Stavropol Krais, as well as Rostov oblast, which annually provide almost 40% of the general grain harvest in the country.


Determining factors

The weather factor is one of the major ones. It largely determines the prospects of the future harvest. Especially since the winter-2019/20 gives good reasons for such development.

In the current season, the winter was abnormally warm unlike its precursors. At the same time, if in the first two months the temperature maximum figures were periodically updated, in February such records in the European part of the Russian Federation were recorded in series. And if in previous years possibility of crops frost-killing or formation of ice crust during rare thaws was the main threat for winter crops, then in the current year the threats had the completely different nature. For almost three months, most crops in the southern regions did not actually go into deep winter hibernation, and continued actively consuming the sugar accumulated for the wintering period. By the time of resumption of vegetation processes, which in many regions of the Southern and North Caucasian Federal Districts started in the first ten-day period of February, winter crops came in the more weakened condition than in previous years.

However, most polled agricultural producers see the main problem in the other issue. According to them, weakening of the crops can be compensated by more intensive application of mineral fertilizers. It is unlikely that crops that were not actually hardened will be threatened by the severe spring frosts, which probability actually approached zero. According to respondents from the south of Russia, the fact that the autumn planting works were often done in the dry soil, and the depth of precipitation in the winter was clearly insufficient, provide the major threat to winter crops. Therefore, in most regions in the beginning of the spring the soil moisture reserves are at the fairly low level (in some cases, the deficit totals 30-35% and more), which in terms of the absence of sufficient precipitation in the spring and summer period can significantly worsen the prospects for the future harvest.

To date, the regional ministries of agriculture of the south of Russia estimate the condition of winter crops as quite optimistic. Also, most respondents confirm the information, and estimated the areas located in the areas of special risk as quite single.

For example, in the beginning of March in Stavropol Krai winter crops sprouted throughout 2 mln ha, or 99.7% from the areas of 2.01 mln ha planted in the autumn (without rapeseed).

In Krasnodar Krai, the condition of nearly 99% from the areas of 1.66 mln ha of winter grains planted in the autumn, was estimated as good and satisfactory. The similar situation was observed in Rostov oblast, where 97% of the crops sprouted throughout the areas of 2.7 mln ha. In particular, 93.5% of the crops (2.53 mln ha) were in good and satisfactory condition.

Thus, by the beginning of the spring planting campaign, which in the current year in most southern regions of Russia began in mid-February, the factors for receiving of a good harvest looked quite prospective. Traditionally, many people call the weather factor a the determining one. In order to compensate the possible negative impact, agrarians increase additional fertilizing of winter crops, provide the most effective measures for moisture retention, as well as start planting early grains in the shortest possible terms.

But the proper treatment of winter crops and high-quality spring planting works require sufficient resources — seed material, fertilizers, fuel and lubricants. The point of issue is the real availability of resources among agrarians. Therefore, the financial condition of farms, in particular their access to credit resources, is the important factor.

As for the polling of agrarians in the south of Russia, it should be noted that most of them did not show any particular concerns about possible problems during the spring field campaign caused by the deficit of materials and resources.


Seeds availability

As for the availability of conditioned seed material, then according to experts of the Federal State-Funded Institution "Russian Agricultutal Center", as of March 1 Russian agrarians stocked 5.52 mln tonnes of grain and pulses seeds for holding the spring planting campaign in 2020, in terms of the required volumes of 5.54 mln tonnes. At the same time, as of the reporting date the share of conditioned seed material reached 84.1%, which was higher compared with the last year level in the same period (83.5%).

Traditionally, the highest share of available conditioned seeds was observed in the Southern (99.3%) and North Caucasian Districts (99.5%). In particular, as of the beginning of March Krasnodar Krai was provided with grain seeds at 100% of the need, or 69.6 thsd tonnes. Agrarians of Rostov oblast had 93.4 thsd tonnes of the required volumes — 95.1 thsd tonnes, while the provision level in Stavropol Krai even exceeded the need — 43.3 thsd tonnes at the required level of 43.1 thsd tonnes. Also, it should be noted that the seed material of grains and pulses available in the three regions, was classified as 100% conditioned.


Mineral fertilizers and fuel: there should be no problems

While estimating the provision level of Russian agrarians with mineral fertilizers, we should note that according to the Russian Association of fertilizer manufacturers (RAPU), in 2019 the supply of mineral fertilizers on the domestic market increased by 14.5% — to 9.5 mln tonnes in gross weight. According to the Ministry of Agriculture, last year the volume of their application slightly increased — to 48 kg/ha, and in the current year the Ministry forecasted it at the level of 50 kg/ha. At the same time, the scientifically justified figures total 80 kg/ha.

The last year volumes of deliveries — more than 3.5 mln tonnes of fertilizers of active ingredient — exceeded the planned indicators by almost 0.5 mln tonnes. The declared demand of the Russian agro-industrial complex for 2020 totals 3.7 mln tonnes per year. Taking into account the current volumes of fertilizer production, we can say that the need will be completely covered.

Also, the current condition of the agricultural machinery fleet and the availability of fuel and lubricants demonstrate quite optimistic starting positions of the spring planting campaign.

For the spring field works in the current year, agricultural producers need 1.9 mln tonnes of diesel fuel and 318 thsd tonnes of auto-petrol, declared the Minister of Agriculture of the Russian Federation, Dmitry Patrushev.

At the same time, he noted that the prices of fuel and mineral fertilizers remained stable, and expressed hope that the stability will be kept by the joint efforts of the central and regional authorities, as well as producers of the products, and the resources will be available for agrarians.

According to the Ministry forecasts, in 2020 agrarians plan to purchase nearly 56 thsd units of agricultural machinery and equipment.


Finances: cautious optimism

Nevertheless, all the above-mentioned plans can be realized if there is at least one component — availability of financial resources for agrarians.

According to the polling, many agricultural producers, while expecting for development of the government lending and borrowing, including preferential lending, still mainly rely on their own resources. In order to provide the sufficient volume of such resources, they still try to restrain sales of previous years crops until formation of the favourable price levels, and sometimes sacrifice the quality of purchased resources for more favourable and low prices, refuse to use certain resources, etc.

At the same time, in the current year the volume of loans attracted by agrarians increased by almost 42%. And there are all reasons to expect for continuation of the trend.

In addition, domestic agricultural producers will gradually test the possibility of preferential lending, which limits in 2020 will increase by almost 40% compared with the last year level — from 66.2 bln RUR to 90.9 bln RUR.

All these facts make it possible to believe that in 2020 the financial component will not become the constraining factor for the spring planting campaign.

After the analysis of all available information, we can say that Russian farmers have the fairly good starting position to achieve high production rates in 2020.

It is obvious that they will not break the absolute record of 2017 (135.5 mln tonnes of grains), but then the situation is quite optimistic. The starting conditions for 2020 are noticeably better than the last year ones: the areas of winter crops slightly increased, and the larger share of crops remained in good condition, and the figures of the spring planting campaign may also increase. Thus, in 2020 there is a high probability to harvest not the first, but not the second largest grain harvest.


Oleksandr Pryadko, APK-Inform Agency