Russia, Ukraine, Kazakhstan dominate wheat

HANOVER, Germany – Traditional wheat exporters already feeling competition from the Black Sea region should realize it is only the beginning.

Black Sea farmers are rapidly boosting production, thanks to profitable crop prices, farm equipment subsidies, no taxation on farm production and heavily subsidized interest rates on farm loans.

Perez Dominguez of the Organization for Economic Co-operation and Development said his group’s analysis of the global wheat market shows major growth in wheat production and exports from the former Soviet republics.

The first decade of the 2000s saw Russia, Ukraine and Kazakhstan export 18 percent of the planet’s wheat. The second decade is expected to see that jump to 30 percent.

Dominguez said Canada will hang onto its market share better than others against this onslaught, but he expects it will drop to 13.4 percent in 2010-20 from 14.2 percent in 2001-10.

“Canada is a mature producer with shipping issues,” he told a meeting held during the Agritechnica farm show in Hanover last month.

“Eastern Europe and Kazakhstan are improving their production technology, land ownership and transportation situation.”

The United States, now the world’s top agricultural exporter, is expected to drop the most of any region both in percentage and volume of sales. Its market share will drop to 17.7 percent in 2010-20 from 25 percent in 2001-10.

The European Union will drop to 12.5 percent from 13.7 percent and Australia will drop to 10.8 percent from 12 percent.

Stefan Duerr, who farms 400,000 acres in Russia, said his operation is making dramatic increases in wheat production, helped by sustained high commodity prices and government encouragement to modernize.

“You wouldn’t say no to loans at three percent when inflation is running 10 and government subsidy of up to half on farm equipment,” he said

“Wheat production will rise a lot here and in the Ukraine under these circumstances.”

Alexander Petrikov, Russia’s deputy minister of agriculture, said his country’s investments in the export sector should make it an increasingly significant player in world markets over the next five years.

“We are investing in transportation and port infrastructure. We understand that our agricultural productivity is suffering due to lack of modernization and we need to improve this, both with machinery and agronomy and our ability to get products to market,” he said.

“Agriculture is attracting more foreign investment than any other part of our economy. And we are welcoming it.”

Oleksandr Sen, Ukraine’s deputy minister of agriculture, said his country will double agricultural production over the next decade. All of it will be destined for export.

“We had an increase in production of 17 percent this year. We will harvest 54 million tonnes (of wheat) this year and 12 million of oilseeds, 2.2 million tonnes of soybeans. We will meet our own domestic markets and export as well,” he said.

“We exported $9 billion US (in agricultural production) with a $4.2 billion farm products trade surplus.”

Dominguez said the market is signalling farmers around the world to produce more. Producers are hearing the message most clearly in developing countries, where there is significant untapped capacity.

“Despite even a modest production increase in grains and oilseeds, the population growth alone will take it up,” he said.

“Per capita production will rise only 0.7 percentannually over the coming decade.”

FOR A RELATED STORY, SEE PAGE 80.