Russia does not know what to do with grain surpluses

If last year the government of the Russian Federation had to decide how to prevent a shortage of grain in the domestic market, now it faces the exact opposite task.

The harvest in 2021 in Russia was, albeit not bad, but not a record one, since there were problems with drought in a number of regions.

In addition, grain prices have risen sharply on the world market, so that farmers and exporters have an interest in exporting as many products as possible from the country.

This threatened with a deficit, so the government severely limited exports: first with the help of quotas, and then with duties.

Moreover, the duties became «floating», so no matter how much the price of grain on the world market rises, this would not help farmers increase their profits.

Despite the turmoil associated with the sudden introduction of all these measures, the Russian market has more or less adapted to them.

And everything would be fine, but the situation has changed dramatically, so now the agenda is a completely different task.

Is there anything you can do about excess grain?


This year’s high harvest of over 150 million tons of grain, of which about 100 million tons of wheat, was a record.

At the same time, that much is definitely not needed for domestic consumption: you can safely export up to 65 million tons of grain, of which 51 million tons of wheat.

It’s just not possible to do this:

World grain prices are far from being as high as they were a year ago.

Because of the sanctions, Russian exporters have problems, including with logistics and receiving payments.

As a result, one cannot even dream of the declared export volumes.

It would be good if we managed to export at least 53 million tons of grain, including 44 million tons of wheat, said Dmitry Rylko, director general of the Institute for Agricultural Market Studies.

And in this case, Russia will still have huge reserves: up to 25 million tons of grain. This is also a record.

How to solve the problem?


The obvious solution is to increase exports.

The second option is to increase the volume of interventions carried out by the Ministry of Agriculture.

He plans to buy up to 3 million tons of grain by the end of the year, but this is not enough, experts say.

In order to stabilize the market at least a little, it needs to reach the level of 20-30 tons. And this is a conditional measure: in the end, the grain bought by the Ministry of Agriculture does not leave the country and is not processed.

Maybe abolish the duty?


Farmers have been asking for this for a long time, but the abolition of the duty is not a panacea either.

After all, it will not increase world grain prices and will not lift sanctions from Russia. In addition, this is an additional destabilization of the market.

At the same time, a reduction in the duty in conditions that are directly opposite to those in which it was introduced would still be a logical step.