Russia to export 50-60mn tonnes of grain in 2023 agricultural year

Russia to export 50-60mn tonnes of grain in 2023 agricultural year
Russia had a record-breaking harvest in 2022 and plans to export a record 50-60mn tonnes of grain this year. / bne IntelliNews
By bne IntelliNews February 22, 2023

Russia will increase grain exports to 55-60mn tonnes by the end of the current agricultural year, President Vladimir Putin said during his State of the Nation Address to the Federal Assembly on February 21.

"As regards our agricultural production, it showed the double-digit growth rates last year. Thank you so much; the deepest gratitude to agricultural producers. Russian farmers gathered the record-breaking harvest over 150mn tonnes of grain, including over 100mn tonnes of wheat. We will be able to move grain exports upward to 55-60mn tonnes by the end of the agricultural year; that is, by June 30, 2023," Putin said.

Russia harvested an all-time record 153.8mn tonnes of grain in 2022, smashing the previous record of 135.4 set in 2018. (chart) With storage silos full to bursting the farmers are in trouble unless they can sell more grain abroad, but sanctions and logistical supply chain disruptions are preventing exports.

A series of good harvests means that Russia still has 26mn tonnes of grain in storage from last year’s harvest, including 17mn tonnes of wheat, worth RUB260bn ($3.7bn) stored in elevators – equivalent to about half of Russia's annual export volumes.

Exporting the grain is further complicated by high export duties and the government's inability to reduce them due to concerns of increasing prices in the domestic market, The Bell reports.

Selling the excess grain to the state to add to the national strategic reserve is not an option either, as the strategic reserve is already full and the state has no plans to buy any grain this year at all.

Selling grain abroad remains Russian farmers' only option and with the rest of the world still in danger of suffering from a food crisis, that should be easy. However, sanctions have made exports difficult.

Russia has been having problems exporting its own grain due to restrictions on Russian shipping introduced as part of the fifth package of sanctions in April, but those restrictions were eased somewhat following the renewal of the Istanbul grain deal on November 17, that did not just allow Ukraine to export grain, but made it easier for Russia to step up exports too.

If Russia exports the full 60mn tonnes, then it would set a record for grain exports and make Russia clearly the biggest grain exporter in the world. In previous years Russia competed neck and neck with Ukraine for that title, but after the war started Ukraine’s grain exports in 2022 fell by a third to 27.7mn tonnes as of February 6, according to official data.

The outlook for Russia’s harvest is much poorer. The grain harvest may decrease by 17% year on year in Russia in 2023 and amount to 127.6mn tonnes, ProZerno predicts, on a par with the five-year average.

Russia’s wheat harvest is anticipated to be 80.1mn tonnes, barley 19.5mn tonnes, and corn 15mn tonnes. The total planted area under grains will decrease by 1.3% from 47.573mn hectares in 2022 to 46.96mn ha. The average grain yield will decrease by 16% y/y from 3.23 t/ha to 2.73 t/ha.