MOSCOW (Reuters) — Russia’s 2015 grain crop may fall short of official forecasts as the condition of winter grains in some key growing regions has deteriorated since last year, the managing director of a large agriculture group said.
Russia has been pushing farmers to harvest a large crop this year, after a near-record 105 million tonnes in 2014, to cover domestic demand and replenish state stocks after the rouble’s plunge spurred exports.
Basic Element’s agribusiness, owned by aluminium-to-airport tycoon Oleg Deripaska, contributes only a small fraction of the country’s crop — 211,000 tonnes of wheat and barley last year. But it operates in the Krasnodar region, key for exports, offering a unique insight into crop conditions there.
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“I think the harvest will come in a range of 70 million to 85 million tonnes (of grains),” Andrey Oleynik, managing director of the Russian company’s agribusiness, told Reuters.
Basic Element, a longtime investor in agriculture, owns Kuban Agro, which produces grains in Ust-Labinsk, Deripaska’s hometown, in the Krasnodar region.
“Winter grains were not in a very good condition after winter, but the weather has favoured us and their condition has improved,” Oleynik said. “We hope that the harvest will be flat in the Krasnodar region this year.”
“However, in Volgograd and Rostov the situation is worse and one is unlikely to expect farmers to re-sow much of the lost winter grains in spring as access to loans has become tougher.”
Russia, a key wheat exporter via the Black Sea to North Africa and the Middle East, saw its local rouble currency slide 43 percent against the dollar in 2014 due to tumbling oil and Western sanctions over Ukraine.
The sanctions closed Western debt markets to the majority of Russian companies and banks, boosting local interest rates on loans, while rouble weakness has lifted costs of imported inputs, such as seeds and fertilizers.
According to Oleynik, prices for some imported resources rose 50 to 200 percent.
The government has been investing in Russia’s agriculture sector, but the sector is far from covering domestic needs.
Oleynik stopped short of criticizing the state program, but said the company sends proposals to the Agriculture Ministry.
He said a state program to develop seed production in the country was needed, along with cheaper and longer loans.
Along with crop production, Basic Element’s agribusiness includes dairy and animal farms, a sugar refinery, grain elevators and seed production facilities. Its 2014 revenue rose nine percent to US $119 million.
