Widespread expectations that Russia is to emerge as the world's top wheat exporter may prove misplaced unless it backs its ambitions with cash, US officials have said.
The comments come two days after Russia shared, with Kazakhstan, victory in the latest Egyptian wheat tender.
The spurt in Russia's wheat exports, which have surged by two thirds to 17.5m tonnes over the last four years, is to come to a halt, leaving them "under 20.0m tonnes in the coming years", a report from US Department of Agriculture staff in Moscow said.
While politicians have huge expectations for shipments - prompting many observers, including other USDA officials, to predict Russia will overtake the US to top of the world exporters' league – financing growth has been threatened by economic crisis, and the focus of what agricultural funds there are to promote livestock farming.
"Federal funds for developing crop production are not significant," the US bureau said, noting that while the government has the ability to back grain exports with 10bn roubles ($325m) in subsidies, the resolution freeing up the cash has yet to be signed.
"Russia will not be able to become the number one wheat exporter in this decade unless large sums of money are invested in the recovery of agricultural land, [and] construction and maintenance of wheat export chains from Siberia to the Far East."
Lost land
Indeed, while Russia potentially had further arable land to bring back into production, with the total employed in crop production slumping by 32% or 37m hectares since 1992, expansion of wheat into these areas was "unlikely".
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Russia's slowing growth in wheat exports
2010-11: 17.5m tonnes
2009-10: 17.5m tonnes
2008-09: 18.4m tonnes
2007-08: 12.6m tonnes
2006-07: 10.6m tonnes
Source: USDA |
"Most of this land is in the northern, severe climates and scarcely populated regions of Russia," the report said.
"Having been withdrawn from cultivation for more than 15 years, these lands are covered with shrubs and bushes, or have turned to non-agricultural use."
"Immense investment to re-cultivate these lands will be needed in order to restore them to their once productive state."
Alternative crops
Even many current areas wheat, planting of which has edged 2.3m hectares higher to 26.6m hectares over the same period, may be switched to other crops as growers get cold feed over the grain's "mono-crop" domination, and examine alternatives suited to the livestock farms the government is encouraging.
"Given low wheat prices, and government incentives for livestock and poultry production, wheat farmers in regions located farther from export ports may convert their fertile land to oilseeds and fodder crops," the report said.
Crops favoured could include rapeseed, flax, legumes and soybeans, and perennial grasses and grains.
Egypt order
The report came as Egypt, the world's biggest wheat buyer, opted for to Kazakh and Russian grain for its latest 120,000-tonne order, after a tender announced late on Friday.
Venus, the grain merchant, scooped the order, with shipments of 60,000 tonnes from both countries, and each priced at $166 a tonne excluding freight.
The cheapest French grain was offered by Nidera, at $178 a tonne.