Russia Is #1 Grain Superpower and Growing - Helped by Climate Change

Mon, Sep 18, 2017
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Two excellent articles about this appeared recently, one on Bloomberg by arch liberal Russian journalist Leonid Bershidsky, who rarely has anything positive to say about Russia, and a second by the invaluable Anatoly Karlin over at Unz.com.

They both address the phenom of Russia recently becoming the #1 grain exporter in the world, a trend set to continue, partly due to rising global temperatures which allow farmers to reclaim enormous tracts of land which were previously uneconomical.

The Russians can do this so much more inexpensively than the other logical beneficiaries, Canada and the US, that those two just don't bother. Since the 40% ruble devaluation 0f 2014, Russia is the world's lowest cost producer, by a long shot, as it was even before the devaluation.

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Furthermore these rising temperatures are likely to depress crops in the world's largest producers who are more vulnerable to drought than Russia: - India, China, the US, Brazil, Australia, and Canada.

So things are looking good for Russian exports.

Some good excerpts below. Check out both articles for more excellent detail.

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Karlin:

The US Department of Agriculture predicts that Russia will overtake the US and the EU to become the world’s largest single wheat exporter in 2017, accounting for a sixth of the world’s total and recovering its old Tsarist status as one of the world’s great breadbaskets.

Incidentally, if it were to also recover its Tsarist era borders, especially the Ukraine and Kazakhstan, it would account for about a third of world wheat exports.

Few sectors of the Russian economy have gained as much from the ruble devaluation and the sanctions as agriculture.

Bershidsky:

By an ironic quirk, ... Russia appears to be benefiting from the climate change its energy resources are helping to fuel: Its prospects as the world's biggest wheat exporter and a grain superpower are bright, not least because of the rise in global temperatures.

It's also a leading exporter of corn, barley and oats. Along with Ukraine and Kazakhstan, it's part of the force increasingly shaping global grain markets -- RUK, as it is known to market experts.

The growing global population and climate change. Global grain consumption grew, on average, 2.8 percent a year in 2011-2016, and the International Grains Council predicts 1.4 percent annual increases through 2021. At the same time, climate studies show that, compared to the late 1980s, the time of the Soviet Union's demise, which depressed Eurasian agriculture for more than a decade, the temperature in Eurasia's grain-producing areas will increase by up to 1.8 degrees by the 2020s and by up to 3.9 degrees by the 2050s, with the greatest increase in winter. This means a longer growing season and better crop yields. More carbon dioxide in the atmosphere is also good for crops. 

Climate change means Russian farms can expand northward, to lands that were never used to grow grain. But more importantly, it will help Russia, and to a lesser extent Ukraine and Kazakhstan, reclaim cropland that has fallen into disuse in 1991 through 2000 -- some 140 million acres

Russia remains a country of enormous resilience that shouldn't be written off as an economic basket case. Its growing importance in the grain markets is evidence of that.

Karlin:

Russia exported a total of $7.4 billion of crops, which is not only an order of magnitude lower than its $189 billion worth of hydrocarbons and minerals exports, but is not even sufficient to cover its $9.3 billion worth of crop imports (primarily vegetables and tropical crops like coffee and citrus fruits).

Nonetheless, both the global prices for and Russian production of grains is likely to continue soaring in the decades ahead. 

 

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