Fuel shortages threaten profitability of grain production in Russia
Russia’s diesel shortage and rising fuel prices are increasing production and logistics costs for farmers during critical fieldwork and harvest preparations. Experts warn of reduced profitability, potential crop losses from delays, and weaker competitiveness of agricultural exports despite government intervention measures.
A severe diesel shortage and rapidly rising fuel prices in Russia are creating significant risks for the profitability of the agricultural sector, particularly in key grain- and oilseed-producing regions. During the peak of seasonal fieldwork, including preparations for the harvest, farmers face supply restrictions, local disruptions, and tighter state control, which is already increasing costs per hectare.
The Federal Antimonopoly Service (FAS) has expanded oversight of the fuel market, instructing regional offices across several federal districts to tighten control over sales at depots, storage facilities, and filling stations. Authorities are compiling lists of agricultural enterprises and assessing their fuel needs, although experts warn that these measures may come too late. The situation is further complicated by an investigation into three oil traders suspected of coordinating resale activities and inflating prices.
The government has imposed a full ban on gasoline and jet fuel exports and is considering restrictions on diesel exports. Refinery utilisation has been increased and maintenance schedules adjusted. Independent analysts describe the situation as “challenging,” with shortages particularly acute in southern grain-producing regions ahead of the upcoming harvest.
Experts estimate that fuel accounts for around 10–20% of farmers’ direct production costs. Even existing stockpiles do little to offset rising expenses of thousands of rubles per hectare. Higher logistics costs — both for field operations and crop transport — are adding further pressure. In some regions, where diesel prices have nearly doubled, farmers report difficulty securing supplies even at elevated prices.
Independent agricultural analyst Alexander Korbut warns that harvest delays due to fuel shortages could lead to crop losses of 5–10%, a critical level for many farms. The SovEcon analytical centre also points to mounting pressure on sector margins.
For grain producers, already operating in difficult conditions in recent years, additional fuel and logistics costs could become a decisive factor in reducing profitability. Russian experts do not expect a total disruption of the harvest campaign, but they warn of a significant deterioration in the financial performance of the agricultural sector, which threatens investments in subsequent seasons and the overall competitiveness of Russian agricultural exports.
Overall, the ongoing fuel crisis is exacerbating structural weaknesses in Russian agriculture. Rising costs combined with potential fieldwork delays are creating a clear risk of sharply lower profitability in key crops, with possible longer-term consequences for agricultural exports and the broader economy.
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Source : Ukr Agro Consult
