You're reading: Inputs shortage menaces Russian spring grains

MOSCOW, Nov. 26 (Reuters) - A shortage of fertiliser and equipment could defeat Russian government plans to increase the area sown with spring crops in 2011, Russian Grain Union lobby group president Arkady Zlochevsky said on Friday.

"There may be no increase in the (spring) sowing," Zlochevsky told an agricultural conference.

"Taking into account that we have less fertilisers than a year ago and we have stopped buying new machinery…this will inevitably affect next year’s crop."

The Russian government has announced a plan to increase the spring sowing area to compensate for a loss of winter grain area caused by severe drought — the worst in more than a century.

The drought was a major factor in cutting Russia’s grain output to 60.3 million tonnes from 97 million in 2009.

"We have lost 35-40 million tonnes of grain. But not only due to drought," Zlochevsky said. "Some 60 percent resulted from lack of inputs. Losses have been inevitable for lack of the necessary investment."

He said to keep the crop volumes unchanged farmers should have a profit yield of 40 percent. "If it is above 40 percent output rises, if it is below, it falls," he said, adding that this year the average profit yield was below 40 percent.

After the drought, the south of Russia has a surplus of grain of 14 million tonnes and Siberia 6 million tonnes, while regions along the Volga region, in the centre and northwest of Russia have a deficit of 18-19 million tonnes, Zlochevsky said.

"We should understand that it is technically impossible to ship the surplus from the south until the end of the season," he said. "Physically, 5 or even 6 million tonnes of southern grain will not be shipped out."

He added that another obstacle to grain shipments were outbreaks of highly contagious African Swine Fever disease in southern Russia. Equipment to disinfect grain there was scarce.

"This means that the regions hit by the drought will soon eat their grain up," he said. "The situation is such that even the government intervention stocks, despite being huge, may prove to be insufficient to cover the acute demand."

MASS SLAUGHTER OF LIVESTOCK

He said imports were not feasible at present due to high international prices and demand would decline as farmers — unwilling to pay high prices for feed grain — had started mass slaughter of domestic animals.

Zlochevsky said the Rosstat state statistics office had recalculated the country’s demand for grain last season.

"It was believed that the consumption was 75.6 million tonnes but in fact it proved to be no more than 72 million. We estimate consumption in the current season at no more than 70 million tonnes."

Earlier on Friday the head of agricultural analysts SovEcon told Reuters Insider TV that prices may rise sharply in January, giving a push to imports mainly from neighbouring Ukraine and Kazakhstan.

Zlochevsky said that the government should act fast if it wanted to implement its grain plans.

He proposed setting floating export tariffs on fertilisers, to guarantee the necessary volumes for domestic consumption, curbing prices of oil and lubricants and changing the intervention purchases scheme.

"The government should guarantee minimum prices based on production costs like in Europe and in the United States, where the state guarantees it will buy any quantity of grain at these minimal prices," he said.
"This will stimulate investments and (bring in) technologies."