Sharp technological decline in Russian grain/oilseed sector

The country’s 2025 winter grain harvest was forecast at its lowest level in 23 years, with Russian officials attributing the industry’s current predicament to severe weather abnormalities, particularly the summer-autumn drought last year in which there had been no rainfall from April-October in some regions, the 10 January report said.

However, the RGU said the unfavourable weather had diverted attention from the real problem – a sharp technological decline in the Russian grain industry.

“Every time there is turmoil on the market, everyone cites bad weather,” RGU president Arkady Zlochevsky was quoted as saying.

A range of other factors, however, was also expected to impact Russian grain production next year, including a lack of high-quality seeds on the local market, the report said.

In January 2024, the Russian government imposed an import quota on seeds from countries regarded as “unfriendly” and although Western seeds were still available in the country, the move dealt a heavy blow to the Russian grain industry, World Grain wrote.

“I went to different farms, looking at the fields sown with (seeds of) foreign genetics and our domestic seeds,” Zlochevsky said. “It is clear … that domestic ones are losing in terms of yield and productivity.”

Import quotas had also fallen into the hands of companies that had never been involved in seed imports, Zlochevsky added.

As a result, grain seed prices soared in Russia in 2024 with rapeseed prices, for example, jumping by 32% during the 12 months prior to the report to RUB36,900 (US$370)/tonne in July 2024.

World Grain wrote that in recent years, the level of the Russian grain industry’s technology had gradually worsened, a dangerous trend that had a cumulative effect.

Russian farmers were holding back from investing in new equipment and machines, citing uncertain economic conditions and high borrowing costs, the report said.

During the first 10 months of 2024, sales of agricultural machinery in Russia dropped by 16.5% to RUB167.5bn (US$1.6bn), the Russian Association of Agricultural Equipment Manufacturers (Rosspetsmash) reported.

The Russian grain industry had also sustained a sharp drop in business profitability, with the RGU saying profitability had plunged to 4.9% in 2024 from 27.8% in 2020 and the average rate of 17%, the report said.

“In an effort to reduce costs, farmers resorted to simplifying technologies,” Alexander Korbut, an independent Russian grain industry analyst, was quoted as saying.

As well as relying on older machinery, farmers had reduced their use of fertilisers and plant protection agents and switched to cheaper, lower-quality seeds.

“Plants grown using simplified technologies were less resistant to extreme weather conditions,” Korbut said.

In a bid to mitigate losses, Russian farmers were switching to alternative crops, the report said.

In 2024, the wheat planted area declined by 1.2M ha, while the popularity of chickpeas and lentils – untraditional options for Russian grain farmers – increased by 68%.

Against this backdrop, Russian grain production dropped from a record of 153.6M tonnes in 2022 to 143M tonnes in 2023 and 130M tonnes in 2024, World Grain reported.

The country is forecast to produce 15.6M tonnes of sunflowerseed in 2024/25 compared with 18.41M tonnes in 2023/24, according to Fastmarkets.…Read more by