Russia

GIEWS Country Brief: The Russian Federation 04-June-2020

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HIGHLIGHTS

  1. Favourable prospect for 2020 wheat crops

  2. Slightly above‑average cereal production obtained in 2019

  3. Above‑average cereal exports forecast in 2019/20

  4. Export prices of wheat remained stable in May after increasing in April

Favourable prospect for 2020 wheat crops

Harvesting of the 2020 winter crops, mainly winter wheat, accounting for about 70 percent of the total annual output, planted in September‑October 2019, will begin in July. Despite favourable rains in May, crop conditions are reported to be below average in the key winter wheat producing Southern Federal District due to drier‑than‑average weather conditions in March and April 2020. By contrast, in the other main winter wheat producing North Caucasus, Volga and Central districts, cumulative rains as of late May were above the average levels and crops conditions were overall favourable.

Planting of the 2020 spring crops, mainly barley and maize, is ongoing under favourable weather conditions and crops are expected to be harvested from August.

Given that the total area planted with wheat (winter and spring crops) is forecast to reach a record high of 29 million hectares, if weather conditions will be favourable in the remainder of the season, the aggregate 2020 wheat output can be expected at about 77 million tonnes, 5 percent above the average level.

Slightly above‑average cereal production obtained in 2019

Harvesting of the 2019 cereal crops was completed last September and the 2019 aggregate cereal output is estimated at about 118 million tonnes, slightly above the five‑year average level. Despite drier and warmer‑than‑average weather conditions in May and June 2019 in the key producing Volga and Central federal districts, the output of wheat is officially set at about 74.5 million tonnes, 6 percent above the average level due to an expansion in plantings. Barley and maize outputs are also estimated at above‑average levels, at 20.5 million and 14.3 million tonnes, respectively, due to favourable weather conditions in the season, which boosted yields.

Above‑average cereal exports forecast in 2019/20

Aggregate cereal exports in the 2019/20 marketing year (July/June) are forecast at 41.6 million tonnes, 5 percent above the five‑year average volume. Wheat shipments, accounting on average for 80 percent of the total cereal exports, are forecast at 32.5 million tonnes, about 7 percent above the average volume. Similarly, barley and maize exports are foreseen at 4.7 million and 4 million tonnes, respectively, slightly above the five‑year average levels.

In response to the COVID‑19 emergency (see box below), on 27 March 2020, the Government set a 7 million tonnes export quota on wheat, maize, barley and rye to the countries outside the Eurasian Economic Union (EAEU) for the period 1 April to 30 June 2020 to ensure adequate availabilities on the national markets and prevent price increases. On 26 April 2020, the quota had been exhausted. In addition, the Board of Ministers of the EAEU has established a ban on exports, to countries outside the EAEU, of various staple food products, including rye, millet, wholemeal grains and sunflower seeds until 30 June 2020.

Export prices of wheat remained stable in May after increasing in April

Export prices of milling quality wheat showed an overall increasing trend since September 2019, despite some declines in February and March. Prices increased particularly in April, while they remained overall stable in May, as downward pressure from weaker demand for imports was mostly offset by the production forecast downgrades.

Prices of domestic wheat have been seasonally increasing since last August and surged in April and May 2020 mainly due to strong consumer demand.

Retail prices of potatoes, another important food staple, seasonally increased from December 2019 and rose particularly in April and May 2020, due to reduced availabilities of high‑quality tubers and strong domestic demand.

On 31 March 2020, in response to the COVID‑19 emergency (see box below), in an effort to avoid price increases, the Government announced the sale on the local markets of 1 million tonnes, later raised to 1.5 million tonnes, of grains from the State‑owned agricultural companies, starting from 13 April 2020.

COVID‑19 and measures adopted by the Government

In response to the COVID‑19 pandemic, the Government has taken a number of measures, including the implementing temperature screening procedures at all airports and checkpoints, closing borders to non‑nationals, imposing quarantine and self‑isolation measures, prohibiting public indoor events.

In addition, the Government implemented measures to support Small and Medium Enterprises (SMEs) by deferring loan payments for up to six months to SMEs in hard‑hit industries (leisure and hospitality, transportation, travel, etc.), providing interest‑free bank loans to SMEs to cover wage payments. Furthermore, a financial reserve for RUB 300 billion (USD 4.3 billion) was established to support the economy and compensate quarantined citizens for the lost income.

It was also decided to reset the import duties and expand the practice of using the customs "green corridor" for certain types of socially important goods.

On 22 April 2020, the Ministry of Agriculture approved the list of system‑forming (strategic) companies of the agro‑industrial complex, including 66 companies entitled to receive special measures of State support. Of these, 14 are crop‑growing, 27 are livestock‑raising, 20 are food and beverage producers and four are fish‑producing companies.

The measures include:

  1. State guarantee for interest‑free loans supporting employment: the company can get a six‑month interest‑free loan in an amount of minimal monthly salary for each employee in case the company does not reduce staff.

  2. Special subsidies for working capital loans: the State subsidizes part of the interest and provides the State guarantee covering 50 percent of the loaned amount.

The Ministry of Agriculture is preparing a package of new benefits for small agri‑business entities that have no place to sell their products due to the closure of the markets and fairs. Farmers, in particular, will be helped to organize on‑line trading. In addition, agricultural cooperatives are entitled to subsidies for providing their own stores with refrigeration equipment.