Low grain prices push Russian farmers to abandon wheat and use grain for feed
Low grain prices in Russia are squeezing farm profitability, with wheat and barley offered at RUB 6–8/kg against production costs of RUB 12–13/kg. Debt forces some farms to sell, while others store grain or divert it to livestock feed.
Low grain prices in Russian regions are putting increasing pressure on farm economics and forcing producers to revise their production plans. Some farms are delaying crop sales, others are forced to sell at current prices because of debt burdens, while livestock producers are increasingly diverting grain into feed.
According to farmers in the Voronezh and Kursk regions, buyers are currently offering around RUB 6–8/kg for wheat and barley, equivalent to about $71–94/t. At the same time, production costs at some farms are estimated at RUB 12–13/kg, or around $141–153/t, meaning sales at current prices do not cover costs.
For some producers, one option is to store grain and wait for better prices. However, this strategy is not available to everyone: farms with sufficient working capital can postpone sales, while those with loans and debt obligations are often forced to sell at the prices available on the market.
Another option is to use low-priced grain in livestock production. Farmers say that under current market conditions it can be more profitable to feed part of the grain to cattle than to sell it. Some farms are already expanding beef production to partly offset weak returns from crop farming.
Low grain profitability is also affecting planting plans. One farm in the Kursk region, for example, does not plan to sow wheat next season. Producers are also considering cutting some spending on field treatments, fertilizers and crop protection products, although they are not prepared to abandon essential agronomic practices.
Weak grain prices are also limiting farmers’ ability to prepare for the next season, including purchases of fertilizers, seeds and fuel, machinery repairs and working capital formation. Smaller farms focused mainly on grain production remain the most vulnerable, as they have fewer opportunities to offset losses through other business segments.
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Source : UkrAgroConsult
