Agriculture in Russia
Agriculture in Russia is an important part of the economy of the Russian Federation. The agricultural sector survived a severe transition decline in the early 1990s as it struggled to transform from a command economy to a market-oriented system.[1] Following the breakup of the Soviet Union in 1991, large collective and state farms – the backbone of Soviet agriculture – had to contend with the sudden loss of state-guaranteed marketing and supply channels and a changing legal environment that created pressure for reorganization and restructuring. In less than ten years, livestock inventories declined by half, pulling down demand for feed grains, and the area planted to grains dropped by 25%.
For the period before 1989, see Agriculture in the Soviet Union and Agriculture in the Russian Empire.
The use of mineral fertilizer and other purchased inputs plummeted, driving yields down. Most farms could no longer afford to purchase new machinery and other capital investments. Following a nearly ten-year period of decline, Russian agriculture has experienced gradual ongoing improvement.[2] The 2014 devaluation of the rouble and imposition of sanctions spurred domestic production; in 2016 Russia exceeded Soviet Russia's grain production levels, and in that year became the world's largest exporter of wheat.[3] In the last years Russia has emerged as a big agricultural power again,[3][4] despite also facing various challenges.[4]
Geopolitical analyses of climate change adaptation foresee large opportunities for Russian agriculture during the rest of the 21st century as Siberia's arability increases.[5] Managing migration flows, internal and international, is expected to be a central aspect of the process.[5]
In addition to smaller productions of other agricultural products, production statistics in 2018 include the following:[6]
Climate[edit]
Russia experiences extreme temperatures in winter and summer, and summer precipitation is low. Many regions of Russia experience six months of snow cover each year and in these places the subsoil can often be frozen permanently. The most fertile regions are in the southern parts of the country between Kazakhstan and Ukraine called chernozem ("black earth") in Russian. Just over 7% of the country's total land is arable, 60% of which is used for cropland and the remainder for pasture.[7]
Geopolitical analyses of climate change adaptation foresee large opportunities for Russian agriculture during the rest of the 21st century as Siberia's arability increases.[5] Managing migration flows, internal and international, is expected to be a central aspect of the process.[5]
Farm credit[edit]
While agricultural policy in Russia had been poorly structured and largely unsuccessful, some basic trends have helped to create forces for change. The first is that state tax revenues have been falling, and hence the spending capacity for agricultural policy has been falling. Total federal transfers to agriculture fell from 10% to 4% of GDP from 1992 to 1993, and budgeted transfers for 1994 are about 5% of GDP.
There has been improvement in the agricultural credit situation in Russia over the past five years – for some farms, at least – due largely to subsidies from the federal government. The national project for agriculture has given impetus to the growth of small farms. During 2006, 36 billion rubles in credit were given to more than 100,000 recipients (as compared to 3.4 billion rubles in credit to 2,500 borrowers in 2005). Traditional farms and personal plots play an important role in the sector, providing more than 87 percent of all production.
The State offers in-kind credits, whereby seed, fertilizer, and other inputs are provided in exchange for grain harvested at the end of the season, though the use of in-kind credit is reportedly decreasing. The government also provides subsidies for the purchase of plant-protection chemicals and fertilizers, and subsidizes two-thirds of the interest rate on loans from commercial banks, which provide the majority of farm credit. Banks remain cautious and insist on certain farm management practices and minimum levels of input use before granting loans (a policy which, according to some observers, has had a significant positive effect on overall efficiency in the agricultural sector), but banks' confidence is boosted by increasingly reliable guarantees from regional administrations who see stability of food production as a high priority. Banks recognize the inherent risk in agricultural financing but also see agriculture as less risky than other industries and are generally willing to lend money to solvent, well-managed farms.
Over fifty percent of Russia's farms, however, are already saddled with considerable debt, due in part to the disparity between grain prices and production costs, and few farms are able to offer sufficient collateral to secure a loan. As a result, many farms are forced to rely on outside investors to guarantee loans. These investors, frequently referred to as holding companies, typically are large, cash-rich, traditionally non-agricultural companies that became involved in agriculture over the past five years. Some viewed crop production as a potentially highly profitable venture, and others were working to guarantee raw materials for vertically integrated food-processing operations.
Holding companies possess assets that satisfy banks' demand for collateral, and a farm that receives a commercial loan with the help of a holding company is still eligible for the federal interest subsidy. Many holding companies, particularly those who were attracted to agriculture by the high grain prices during 2000, have lost interest in crop production following two years of low prices and are bailing out. Investments in crop production don't pay off quickly, in contrast to investments in trade. Although some holding companies remain comfortable with the variable profitability of agriculture and will continue to work with farms, several prominent commodity analysts feel that the overall involvement of big companies in agriculture is declining.
This means that current prospects for significant, long-term investment in agriculture – particularly the purchase of agricultural machinery and grain-storage facilities – are somewhat dim. Land reform has been evolving in Russia since the basic right to own farmland was established in 1993, but "landowners" are still unable to use land as collateral in securing a loan. The situation, however, is not one that can be resolved quickly or easily through legislation alone.
There is no mechanism currently in place to enable banks to evaluate the value of land based on its productivity before issuing loans, and banks likely would be reluctant to use land as collateral regardless of legislation. Furthermore, there are restrictions against non-agricultural use of land that is currently used for agriculture: if land is used for other purposes, the owner loses the title to the land. This imposes a limit on the land's "re-sellability," and, in turn, its value. The use of land as collateral appears to be a remote prospect.[30]
Governance and economy of Russian agriculture[edit]
As non-agricultural sectors grew more rapidly after the collapse of the Soviet Union, the share of agriculture in total GDP in Russia decreased from 14.3% in 1991 to 4% in 2011. The agricultural sector accounted for 6.71% of total employment in 2015.[31]
The importance of Russia's grain exports in the global market, especially related to oilseeds and wheat, meant that during the 2022 Russian invasion of Ukraine sanctions and disruptions to trade from Ukraine caused a significant increase in global grain prices, with some commentators suggesting that the war would precipitate a 2022 food crises.[32][33][34][35]
Pests[edit]
Fusaria[edit]
The Luxembourg Microbial Culture Collection's European Fusarium Database has information on Fusaria found in the country by sample date, species, chemotype, and host (and previous crop if known).[36][37]