The big three countries in the former Soviet Union have huge potential to become major grain producers and exporters.
But they also face challenges in developing that potential, Canadian Wheat Board analyst Bruce Burnett concluded after visiting Russia, Ukraine and Kazakhstan in the past year.
“For agriculture there to get momentum, you’re going to need an influx of capital that hasn’t appeared yet,” said Burnett, who is expected to share his conclusions during a session at Manitoba Ag Days in Brandon next week.
The three countries stunned markets in 2002-03 by rapidly filling in the gaps in wheat supply left by short crops in Canada, the United States, Argentina and Australia, causing prices to slide all winter.
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But last summer those three countries produced much smaller crops, and Russia and Ukraine had to import some grain in the fall.
The likely production potential of those countries is unclear to many analysts, and that’s why the wheat board sent a team to investigate.
Burnett said his tour of farms showed that southern Russia and Ukraine have a similar climate to the U.S. Midwest, while the northern Russia grain belt and Kazakhstan are similar to southern Alberta and southern Saskatchewan.
In the Russian spring wheat area and in Kazakhstan “you have to conserve moisture because you’re expecting a drought every five years or so,” said Burnett.
“You see a lot of summerfallow.”
Soil is rich in the region but across all the regions the farm sector is starved for cash, and that is holding back productivity.
Not only are farmers using old equipment and shipping their grain on a weakening transportation system, they also have trouble getting operating loans. Because Russian banks seldom lend money to farmers to finance production, most farmers cannot afford fertilizer or chemicals.”There’s a lot of progress (that still needs) to be made,” said Burnett.
The vast scale of most Russian farms surprised Burnett, who had expected family farms to spring up after the end of communism.
Instead, most Soviet farms, which were giant collectives where many people farmed a common land base, have survived as units, but are now operated as co-operatives or corporate farms.
“Farms having 100,000 or 200,000 hectares are not uncommon,” said Burnett. “They’re more the rule than they are the exception.”
There are relatively few family farms and complex land laws are slowing the evolution of farming structures.
“It’s not nearly as straightforward as one would expect. There’s still a lot of work to be done,” said Burnett.
