Experts note that the profitability of agricultural producers has decreased almost threefold compared to previous years.
Experts claim that in some years, net profit margins for some agricultural producers were as high as 45%, but today, it has fallen to just 15%.
Meanwhile, the Ministry of Agriculture’s harvest volume plan for Russia is being met in virtually all regions of the country and for all crops.
However, this trend is not particularly encouraging for farmers themselves, as growing large volumes of crops does little to generate profits. This is due to the significant decline in profitability currently being experienced.
In turn, the decline in profitability is directly related to price changes.
For example, wheat currently costs approximately $230 per ton. This is a very low figure, as in previous years it reached up to $430 per ton, analysts note.
At the same time, farmers admit that this price can nevertheless be considered fair. It is in line with global wheat prices, which have declined due to the fact that production in most exporting countries is currently at high levels.
Therefore, there is no compelling reason to expect wheat prices to rise in the foreseeable future. However, if this does not happen, this means that farmers’ incomes will remain not only low, but sometimes even negative.
This makes one pessimistic about the prospects for further agricultural development in the country, experts note.
Nevertheless, given the state’s support, which has consistently supported farmers for several decades, experts believe that opportunities for development still remain.
Among the most significant support measures are preferential loans, which allow companies to borrow money on more favorable terms than the market offers.
At the same time, it’s worth noting that many companies are unable to withstand competition and pricing pressure in the current situation, and are therefore deciding to sell their assets, including land.
However, potential buyers are faced with the fact that sellers often inflate land prices, making the effectiveness of such investments questionable.
