Despite the «draconian» quotas and duties on grain exports, set by the Russian government, it was not possible to achieve its surplus and reduce prices on the domestic market.
According to Vladimir Petrichenko, general director of the analytical company ProZerno, domestic grain consumption in Russia is not growing: it remains at the level of 80 million tons per year.
At the same time, according to him:
— production of cereals is at the same level.
— the production of flour and animal feed is declining.
As for flour, in July-November last year, 4 million tons of wheat and 255 thousand tons of rye were used for it.
This is 2.4% and 11%, respectively, less than in 2019.
The production of compound feed in the indicated period also fell to 3.8 million tons. The fall was 2.1%.
Why is grain consumption not growing?
It would seem that the government’s plan was aimed at the opposite: we introduce duties and quotas, the lion’s share of grain remains in the Russian Federation, producers will have to sell it domestically at low prices.
In reality, the situation is slightly different:
- A significant part of last year’s harvest has already been sold abroad in the first two months of 2021. In April, the stock level in warehouses is the same as it is usually in May. That is, there is a slight deficit. And it is hardly worth waiting for a decrease in domestic prices.
- Plant breeders are in depression, many are thinking about reducing the acreage and / or replacing grain crops with others, the export of which has not yet been taxed.
- The volume of animal husbandry is also not growing: the number of poultry has fallen, the number of pigs is stagnating.
The low activity of livestock breeders is connected with the fact that the real cost of grain in the domestic market has not decreased due to the very depletion of stocks, and with the fact that against the background of all that is happening, business is losing confidence in the future.
What will be the situation in 1-2 years, how much will the dollar cost, what other restrictions will the government invent? It is completely unclear.
As a result, export (external) grain prices are falling faster than domestic ones.
The reason is that in the first months of this year, Russian exporters sent abroad the maximum volume of grain. And there is not so much of it left in the country, which prevents it from falling in price.
Perhaps the situation will change after the new harvest.
But experts are worried about the long-term prospects : if agricultural enterprises really reduce the sown areas, then in a few years this may come back to haunt with a grain shortage, large losses of finances and leadership in the world market.
