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The ongoing hot spell and drought in Russia are destroying the harvest of 2012. The Russian Agriculture Ministry reported that the crops have already been destroyed on 1.5 million hectares. Still, the harvesting rate of the grain crops in this year is a third lower than that in the previous year, generally in the country. It is not so bad yet as it was the situation amid a horrible natural disaster in 2010, when a third of harvest had decayed or burnt down. The experts are unanimous that though the situation is quite hard now, but it is far from being critical. There are no reasons to introduce an embargo on grain export as it was done two years ago.
The bad weather had a negative impact on agrarian enterprises in many vital grain-producing regions of the country. The drought has already hit 16 regions. The emergency situation regime was introduced in some districts in nine Russian regions. It was introduced in southern Russia back in June. The emergency situation regime was announced in the Rostov Region first of all, then it was declared in the Stavropol Territory, Kalmykia and Volgograd Region. The emergency situation regime is about to be introduced in Orenburg, Kemerovo, Kurgan and Chelyabinsk regions.
Russia cannot conquer the drought yet. Even in the best years just a little more than four million hectares were irrigated lands in the Soviet times, meanwhile, not only the grain, but also other cultures were cultivated on these croplands. Now the irrigated croplands have even a smaller territory, stretching at about 2.5 million hectares.
Along with the drought other weather factors affected the harvesting campaign. In particular, the cultures were destroyed in heavy rains and hail, which were raging in Lipetsk and Voronezh regions, Ingushetia, Dagestan, Chechnya, Stavropol and Krasnodar territories.
The pests are also damaging a future harvest. The locusts were found on 4.5 million hectares of the croplands in Russia, another dangerous pest – beet webworms contaminated 2.4 million hectares.
The harvesting rate of grain crops and pulse crops 24.9 hundredweights per hectare that is 32.9% lower than in the previous year. The wheat harvesting rate went down to 25.6 hundredweights per hectare from 37.1 hundredweights per hectare (31% down).
The figures of the losses, which the grain industry sustained, are not final yet. The Agriculture Ministry reported that the drought will continue in 16 Russian regions and the losses of agrarian producers will be even more serious. However, the current drought is not the most sweeping one for the last few years, as in 2010 a third of harvest was destroyed amid the drought, and the government even had to introduce a ban on grain export.
However, the current situation made the agrarians revise its harvesting targets. According to the updated forecast of the Agriculture Ministry, the gross grain harvest in Russia will reach 80-85 million tons this year against 94.2 million tons in 2011.
The experts from the National Union of Grain Producers also predict some decline in the gross grain harvest. But they explain this tendency by not only weather conditions, but also economic reasons. The crediting level of the overwhelming majority of agrarian producers in the country has hiked sharply for the last four years, President of the National Union of Grain Producers Pavel Skurikhin told the news agency Rosbalt. The acute shortage of current assets frequently makes the agrarian enterprises sell their produce at the prices lower than the cost price, he noted. Several Russian agrarian enterprises are at various stages of the bankruptcy procedure.
“The debt burden makes the development of the agrarian production less attractive. Moreover, financial and economic capabilities are lost in order to preserve the croplands. All these facts jointly with weather factors result in a lower harvesting rate and the growth of the grain prices in Russian regions,” he pointed out.
However, there are no reasons to introduce an embargo on grain export. Still Russia will be able to export 18-20 million tons of grain, but if the weather remains to be unfavorable, this forecast may go down to 16-18 million tons, according to estimates of the Agriculture Ministry.
Agriculture Minister Nikolai Fedorov noted that the gross wheat harvest will make 45.33 million tons according to the forecast of Russian regions. The export potential of the country amounts to 14 million tons and higher, probably up to 17 million tons. Since July 1, 2012, Russia has already exported a little less than 500,000 tons of grain.
The grain export in the previous agrarian season exceeded 27 million tons. Then Russia reached the second place in the world in this indicator for the first time in the country’s recent history.
However, the drought has already begun to affect negatively the Russian market. Although the current situation cannot be compared with that in 2010, but a ton of wheat has a record high price of about 9,000 roubles as two years ago. At the end of the previous week a ton of wheat cost 2,000 roubles lower.
MOSCOW, July 26