Russia will supplant the United States as the world’s top wheat exporter by the end of this decade, according to a new U.S. Department of Agriculture report.
As well, the entire former Soviet Union will be shipping out double the volume of the U.S.
Growth in exports from that emerging wheat breadbasket will come at the expense of the U.S., Canada, the European Union and Argentina, says the report, which was published in the June 2010 issue ofAmber Waves,published by the USDA’s Economic Research Service.
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Al Scholz has firsthand experience growing grain in the FSU. He spent this spring working on a large corporate grain farm in northern Kazakhstan.
Scholz believes the U.S. report has painted an accurate picture.
“These countries are going to dominate the export market on commodity grains and we’ll back away,” he said.
The region imported 35 million tonnes of grain in the Soviet era. Last year it exported nearly 55 million tonnes, 35 million of it wheat.
Wheat exports by Russia, Ukraine and Kazakhstan are expected to increase by 50 percent to more than 50 million tonnes by 2019, says the USDA report.
The exponential growth is due to the region’s transition to a market economy, a vastly smaller livestock sector and rising wheat yields.
The USDA projects that yields will have risen a further 20 percent in Russia, 17 percent in Ukraine and five percent in Kazakhstan by 2019 from their yearly averages in 2001-09.
Scholz said such increases will depend on farmers embracing new management practices.
Most of the wheat in Kazakhstan is produced on corporate farms ranging from 40,000 to 100,000 acres.
Oil barons, holding companies and investment groups backed by European banks took over the former state-owned farms, but there are still many holdovers from the Soviet era.
For instance, the farm Scholz worked on had 150 workers, each with a specific set of skills.
“The guy who drives the air seeder doesn’t adjust the seeding rate and doesn’t put the seed in the air seeder,” Scholz said.
They stick to rigid traditions. Seeding starts on May 15 regardless of moisture and temperature because that’s tradition. Sloppy and inefficient work habits are commonplace.
Scholz walked many wheat stubble fields that contained partially threshed heads because the combine operator set the header in the morning and failed to adjust it during the heat of the day.
Farm operators don’t know their cost of production because somebody makes input purchases higher up the chain and doesn’t share the information. Scholz said there is an alarming lack of curiosity about such matters.
“That goes back to the old culture, where it was dangerous to know more than you needed to know.”
He said there might be six to eight people running a 40,000 acre farm in Saskatchewan, all capable of multitasking. That doesn’t happen in Kazakhstan and any attempt to cut some of the 150 jobs would be met with theft and violence.
The USDA acknowledged that its forecast comes with caveats:
• world wheat prices remain high enough to encourage continued acreage expansion;
• infrastructure is improved for storing, transporting and exporting grain;
• government attempts to revitalize the region’s livestock industry don’t impede wheat export growth.
Wheat yields increased by 32 percent in Russia and 25 percent in
