Russia struggles to export new grain harvest as major agribusiness profit plunges 99%
Grain exports (photo: Getty Images)
Russia is unable to export grain from the new harvest quickly enough due to disrupted port logistics, resulting in a surplus of agricultural products that is driving down the domestic market, according to the Foreign Intelligence Service.
Crisis in figures
From August 1–20, exports fell 2.5-fold to 1.4 million tons, while wheat exports declined 2.6-fold. In September, wheat exports are expected to fall by another 52.1–62.5%, to 1.8–2.3 million tons, the lowest level since 2010.
As a result, the grain surplus is driving down the domestic market: over the course of a week, prices for wheat, barley, sunflower and soybeans in Russia fell by 3.3–8.5%, and by more than 40% over the year.
It is reported that the Rostov region, which accounts for almost 10% of Russia's harvest, declared a state of emergency on August 28 due to the inability to export grain normally.
Moscow wants to save the situation
"In response, the Kremlin is preparing state purchases, preferential loans, subsidies and loans secured by unsold harvests. The abolition of export duties and compensation for expensive transportation to alternative ports are also being considered," the Foreign Intelligence Service reported.
However, this is not expected to solve the problem. Up to 70% of Russian grain exports passed through southern ports, while alternative routes do not have sufficient capacity.
"Transportation to the Baltic Sea adds up to $30–50 per ton, making exports even less profitable," the intelligence service noted.
It is known that Rosagro, one of Russia's largest agricultural holdings, has already seen its net profit for the first half of the year plunge by 99%, from 4.8 billion to 55.88 million rubles.
"The state is effectively paying for grain to remain in warehouses. Preferential loans will not create demand, subsidies will not increase port capacity, and cheap money will not replace broken logistics. If exports do not recover, stocks will grow, prices will fall, and losses will be shifted onto the Russian budget and banks," the Foreign Intelligence Service concluded.
As is known, due to Russian terror in the Black Sea, Ukraine is also experiencing problems with grain exports, so the Cabinet of Ministers has taken certain steps to save the situation.
Due to the situation with attacks on ports, the global price of wheat has risen to a three-year high.
