Record grain harvest leaves Russian farmers facing nearly $12 bln in losses
Russian grain producers face estimated losses of RUB 810–980 billion ($9.5–11.5 billion) as falling procurement prices and rising input costs erode profitability. Southern regions account for up to 75% of losses, while limited exports, insufficient government support and mounting debts threaten future production.
Total losses incurred by Russian grain producers due to falling procurement prices are estimated at RUB 810–980 bln ($9.5–11.5 bln). The situation is particularly severe in southern Russia, where losses reach RUB 7–8 thsd ($82–94) per ton, while total regional losses amount to RUB 630–740 bln ($7.4–8.7 bln). The southern regions account for up to 75% of the industry’s total losses, with production losses estimated at 50–64% of costs.
In the Volga region, the situation is somewhat less severe, although grain production also remains unprofitable. Farmers’ losses are estimated at RUB 3–4 thsd ($35–47) per ton, with total losses reaching RUB 180–240 bln ($2.1–2.8 bln). The calculations are based on a grain harvest of 91–93 mln tons and the difference between procurement prices and production costs.
The main driver of the crisis is the widening gap between grain production costs and selling prices. Production costs continue to rise, primarily due to more expensive fertilizers and fuel, while procurement prices are declining. The situation is further aggravated by an estimated grain export shortfall of 14–20 mln tons. With limited export opportunities, surplus grain remains on the domestic market, putting additional pressure on prices.
Government support remains insufficient compared with the scale of the problem. Around RUB 10 bln ($118 mln) has been allocated to transport subsidies and approximately RUB 30 bln ($353 mln) to credit support. Total assistance is estimated at RUB 40–60 bln ($470–706 mln), covering only a small share of the reported losses. Meanwhile, planned government intervention purchases of up to 3 mln tons are unlikely to significantly reduce domestic oversupply or offset producers’ losses.
Prolonged losses are forcing Russian farms to cut spending on machinery, fertilizers and preparations for the next planting season, while accumulating debts to banks and suppliers. The greatest risks are concentrated in southern regions, where producers face the heaviest financial losses. If conditions do not improve, some farmers may reduce planted areas or cease operations altogether, potentially leading to lower grain production and higher food prices in the coming seasons.
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Source : UkrAgroConsult
