Russia reports poor harvest, Ukraine bumper crop in 2021

Russia reports poor harvest, Ukraine bumper crop in 2021
Agriculture has become a major export item for both Ukraine and Russia as they vie with each other for the title of "world's biggest grain exporter." / wiki
By bne IntelliNews January 11, 2022

Droughts, death of winter crops and a shortage of migrant workers for seasonal field work hit Russia’s 2021 harvests, which was down to a three-year low, the Russian Ministry of Agriculture reports. By contrast, Ukraine had one of its best harvests ever.

Russia and Ukraine are vying with each other for the title of “world’s biggest grain exporter” and agriculture has become a major money spinner for both countries.

Russian farmers had taken in 120.7mn tonnes of grain at the end of 2021, which was 9.6% more than in 2020, according to RosStat statistics. But the grain harvest was at a 3-year low, less by almost 15mn tonnes from the previous year.

The wheat harvest fell too, by 12%, or 10mn tonnes, and amounted to 75.9mn tonnes, off from the Ministry of Agriculture’s start-of-season forecast of 81mn. The barley harvest fell by 14% to 18mn tonnes but the corn harvest was up by 6% more than a year earlier at 14.6mn tonnes.

“The decrease in the volume of cereals was due to the death of winter crops due to drought in many regions of the country,” analysts told the website.

The US Department of Agriculture predicted a Russian harvest of 85mn tonnes of wheat in Russia, but in August sharply lowered the estimate to 72.5mn tonnes due to bad weather hitting some large producing regions including Tatarstan, Bashkortostan and Orenburg. The yield of harvested wheat in the Central Federal District fell by 24% year on year and in the Volga Federal District by as much as 45%.

Falling crop harvests were experienced in 2021 by most of the largest exporting countries, including Canada, Brazil and the United States, where, according to the Ministry of Agriculture, wheat harvest were at their lowest levels in the past 19 years.

A supply gap, coupled with rising demand and record purchases by China for the state food reserve, pushed the average price of wheat on world markets up 31% y/y, according to an estimate by FAO (the Food and Agriculture Organization of the United Nations).

The FAO Aggregate Food Price Index, which takes into account the prices of 95 staple foods, added 23% last year to its highest level in a decade.

"Not a very good harvest," warned Kirill Tremasov, director of the monetary policy department of the Central Bank of the Russian Federation, which will feed high inflation in 2022, he added. At the end of last year, according to RosStat, food inflation hit a six-year high of 10.6%.

Ukraine has bumper harvest

By contrast, Ukraine had its biggest harvest ever, bringing in 106mn tonnes of cereals, legumes and oilseeds in 2021 thanks to favourable weather conditions in 2021, according to Roman Leshchenko, the Minister of Agriculture.

The record harvest included more than 84mn tonnes of cereals and legumes, as well as 22.6mn tonnes of oilseeds. According to Leshchenko, the harvest exceeded the ministry’s preliminary forecast, estimated at 100mn tonnes for the year.

The successful harvest was also due to this year’s state loans to farmers, accounting for $1.1bn in total to boost the industry. Ukrainians started buying and selling land after the 20-year moratorium on land transactions was officially lifted on July 1, 2021.

With 42mn hectares of farmland covering 70% of the country and about 25% of the world’s reserves of black soil, agriculture is Ukraine’s largest export industry.

Officially, large agro-corporations operate on 6mn hectares; small and medium agro-companies on some 11mn hectares.

The harvest alone will add 0.8% to the country’s gross domestic product (GDP), according to the National Bank’s report released in October 2021. In 2020, Ukraine’s agriculture sector generated roughly 9% of its GDP.

Ukraine exported 17% more agricultural products between January and September 2021 than in the same period of 2020.

The country exported roughly $18bn worth of agricultural products, up by $2.6bn compared to 2020, according to the State Statistic Service of Ukraine.

China was the largest importer of Ukrainian agricultural goods this year, accounting for roughly $3bn of exports, a 36% increase compared to 2020. India imported $1.35bn worth of agricultural goods, followed by the Netherlands with $1.2bn.