This week's Black Sea agribusiness news in brief

Russia’s Deputy Minister of Agriculture spoke with representatives from Russia’s freight and rail transportation business this week and told them that this year’s grain exports would be over 45MMT.

He also said the strategy now is not to buy up and store, but to create conditions for the export of surplus, you have been warned.

He pointed out that domestic consumption, which stands at 72MMT, is increasing at about 1MMT per year, all the rest is export potential, but the number of grain-wagons is insufficient to ensure the uninterrupted transportation of grain by rail.

To support exports the Russian Ministry of Agriculture implemented financial support on grain rail transport and have currently agreed reduced tariffs on 756KMT of grain.

In the current Marketing Year, as of February 21, Russia had exported 33.5MMT of grain, up 40% on the same period last year (24.0MMT), including 26.2MMT of wheat (+ 41%).

Low temperatures continue to make the news across the Black Sea and Europe and will undoubtedly have an impact on yield prospects, the question is by how much?

I had a phone call earlier this week with George Auger, an UK independent agricultural advisor, who had just returned from southern Russia, he said in the Stavropol region it was noticeable how wheat looked thin, burnt and was suffering with the low temperatures and lack of snow although further north into Rostov things didn’t look too bad.

I also received updates from central Russia this week that showed wheat nicely tucked up under a recent blanket of snow, although we have some concerns that beneath the snow wheat is locked up in a layer of ice from the previous thaw.  While only 400km further south in Ukraine, there is no snow and wheat is fully exposed to the elements.

Clearly the impact of weather across the Black Sea region is variable and is continuing to develop but we will have a fuller picture once we complete or annual crop tour later in March.

Elsewhere, Russian farmers have purchased 7.5% more fertiliser January and February this year than the same period in 2017 and probably would have started applying it by now if weather conditions had improved.

Last week we reported Ukraine farmers had started applying fertiliser to overwintered crops, this week it's official with the Ministry of Agriculture reporting the first 592KHA of fertiliser had gone on in 16 regions of Ukraine.

Russia’s Ministry of Agriculture report January 2018 pig live weight production amounted to 308.4KMT, 12.6% more than a year earlier.

They also report January live weight production of poultry was 521KMT which is 8.9% more than in the previous year and the production of eggs was 3.1 billion, up 1.5% on last year.

On Monday China’s General Administration for Quality Supervision, Inspection and Quarantine (GAQSIQ) lifted a ban on wheat imports from six Russian regions which had been in force since 2016.

The ban was lifted for wheat supplies from Novosibirsk, Amur, Chelyabinsk, Omsk, Krasnoyarsk and Altai regions of Russia.

EU announced a project to support cross-border cooperation between agricultural producers in Ukraine and Moldova to promote innovative farming methods and to improve quality of products.

I’m off to Moldova next week (no blog update), I’ll let you know about the quality of products and any innovative farming methods I see.

Cold weather elevates risk to Black Sea wheat

Russia’s Minister from Nizhny Novgorod region reports the condition of winter crops do not give him any cause for concern and they are good and satisfactory.

Over in Ukraine and the Ministry of Agriculture report 87% of winter crops in good or satisfactory condition and give a cautious prediction that winter dormancy was without significant losses.

The French Agricultural office reported that 84% of winter wheat was in good or excellent condition compared to 95% in early December and 92% last year.

This might all be about to change next week as very low temperatures are forecast for Europe and the Black Sea. 

Parts of Black Sea farmland currently has little or no snow and plants had broken dormancy earlier this month so it’s safe to assume some crops will now be at elevated risk of damage from the cold.

I don’t think we will see wholesale crop death, but I do believe it will put a dent in yield prospects which had been running high after a good planting season and easy winter up to this point.

Our first crop tour of the 2018 season kicks off 19^th March, so we will be well placed to assess the condition of Black Sea wheat, see if there is any cold damage and what the implications might be (sign up to the crop tour service to receive copies of our findings).

Ukraine farmers in the south of the country had started applying fertilizer to over wintered crops, which is about 2-3 weeks early than usual but then stopped due to wet weather.

We have no reports or sightings of farmers applying fertiliser in southern Russia, recent rain there made land unfit to travel but crops are actively growing in Krasnodar and Stavropol so given a dry spell (which is forecast) we anticipate any time in the next week which will be about a week earlier than last year.

This week's Black Sea agribusiness news in brief

Russian wheat exports hit their highest weekly total since before Christmas because, they say, weather issues subsided.

My information tells me the weather in January was pretty good, so it was more likely the annual winter holidays that covers most of the month that was to blame for sluggish trade.

Preferential rail subsidies for grain transportation continue to gain traction in Russia with rates now agreed on 656KMT of grain.

EcoFarming LLC have signed agreement with Moscow authorities to build a new 8,000 head goat dairy and processing complex to eventually produce 4,000 tons of milk, 400 tons of cheese and 100 tons of meat.

Agrokultura Group will receive a 25% subsidy for the construction of the third stage of a greenhouse complex in Kashira near Moscow which will be used for the production of tomatoes, peppers and eggplants.

Ukraine’ Min of Ag report on spring sowing preliminary data; the 2018 crop area is comparable to last year and is expected to reach 27.2MHA including 14.6MAH (54%) of grain crops which they say "corresponds to the norm of the optimal ratio of crops in crop rotations" (what the heck is the norm of the optimal ratio?).

The European Bank for Reconstruction and Development (EBRD) is promoting Ukraine grain logistics with a $50M loan to support Nibulon Group’s ongoing investment programme which includes three new river terminals; expansion of fleet (floating crane, tugboats, barges, dredging vessel); 42KMT storage facility; barge quay and a new railway at Mykolaiv.

Ukraine's Odessa region is to develop green tourism by offering visitors tours to authentic Ukrainian villages and farms, as well as sightseeing in grain and lavender fields.

Apparently Ukraine has lavender fields although none of us have ever seen any.

UK National Farmers Union elect new President

This week the UK National Farmers Union (NFU) held their annual conference and elected Minette Batters as their new President, with Stuart Roberts Vice President and Guy Smith Deputy President.

At the same conference the Secretary of State for Environment, Food and Rural Affairs, Michael Gove gave a well-polished speech that essentially reiterated what he said at the Oxford Farming Conference in January; that he had farmers backs through the forthcoming difficult EU exit transition period and you could trust him.

Considering he was a leading champion for Brexit it was odd he now said he wanted to solve the shortage of labour to pick fruit and veg created by Brexit by allowing foreign farm workers to stay.  It was even odder the delegates applauded him when he said this. 

I will never understand politics.

This week's Black Sea agribusiness news in brief

According to Reuters, Chinese corn buyers are cancelling orders from the US and are switching to Ukraine as Beijing tightens controls on processing GM varieties.  

It was unclear how many shipments had been affected, but one source said up to four cargoes totalling 210KMT and worth about $40 million had been cancelled last month.

The World Bank announced it is rolling out crop receipts across Ukraine to expand access to finance for small scale farmers.  

Crop receipts are a pre-harvest financial instrument which allows farmers to use future harvests as collateral allowing them to purchase seeds, fertiliser and chemicals.

The European Bank for Reconstruction and Development (EBRD) have also agreed to provide financial assistance in Ukraine, this time for the construction of the first stage of a 72MW solar plant on the site of a former chemical plant in Lviv, Ukraine.  

I’m sure solar power makes sense in Ukraine but if it was me, I’d fund the development of biomass production around each major conurbation which could then provide power and central heating.

Russia has presented a new doctrine on food security to the Public Council at the Ministry of Agriculture with the Chair of Council saying, "This is a strategic document that will determine the development of agriculture for the next 10 years, which will make it possible to take agriculture to a new level."

The Director who presented the doctrine said it includes measures to stimulate development of exports, improve quality of food, increase volume of grain processing, formation of production clusters, development of agricultural cooperation and a network of wholesale distribution. 

It sounds like it could be significant, and we should all endeavour to get a copy, translate it and read it.

One point of interest I did spot was an apparent U turn to previous announcements that Russia wanted to extend import substitution policy to include seeds when the Director of Department of Plant Production spoke about measures to improve the regulatory framework and procedure for importing seeds into Russia.

New Zealand’s Fonterra cooperative is to expand its business in Russia by acquiring a 49% stake in a St Petersburg-based joint venture with Foodline.  

The investment is not without controversy as it appears to indicate a change in trade policy by New Zealand after previously standing with the EU, US and others who had imposed sanctions on Russia in response to the annexation of Crimea and conflict in Ukraine.

Remote sensing of Russian and Ukraine snow conditions showed thawing across major winter wheat growing regions last week, it’s unlikely to have much impact on yield prospects at this stage as temperatures are relatively mild but we will know more in March when we kick off our first Crop Tour of the 2018 season.

Finally, on a sad and sobering note, there are no reported survivors from the Russian passenger plane, believed to be carrying 71 people, that crashed Sunday afternoon shortly after taking off from Moscow.

Why Russian wheat might not break records this year

The Institute for Agricultural Market Studies (IKAR) pegged their latest Russian wheat forecast at a broad 73-82MMT with 32-36MMT exports in 2018/19.

To be fair, until we get an indication of spring wheat plantings when the season gets underway, none of us really have a scooby doo, but there are a couple of interesting things I heard on the grapevine this week that might make those forecasts on the optimistic side.

A group of Russian agronomists based in the south have been overheard complaining about a lack of soil moisture saying that when they dig down a metre or so the soil is bone dry.  

It was dry in the south in the late autumn and early winter and snow fall has been limited which makes me think there might be something in this but then again, a Russian agronomist digging a hole?

The other snippet I’m hearing is a lack of cash might limit how much farmers can plant; exporting wheat at competitive prices is all well and good but if it leaves you short to pay for diesel and seed for the following season it could turn out to be a short-term benefit.

I’m reliably informed of a couple of farms in Russia who have been asking around to see if anyone wants to crop some of their land this season as they are short on roubles and finance from Russian banks is all but none existent so there might be something in this.  

Watch this space.

This week's Black Sea agribusiness news in brief

Ukraine’s Ministry of Agriculture reported that as of February 7 grain exports stood at 24.7MMT including 12.5MMT of wheat, 4.0MMT of barley, 8.1MMT of corn.

Last year exports reached 43.9MMT of grain, the ministry currently forecast slightly less for this year at 41.0MMT.

Ukraine‘s Prime Minister Volodymyr Groysman, announced this week that the government will allocate UAH 1 billion to promote the production of domestic agriculture machinery in 2018.

The PM also said that 25% of the cost of agriculture machinery would be compensated to those who buy Ukrainian manufactured equipment.

Sounds great but these schemes rarely result in cash being returned to farmers, usually so many hoops to jump through it becomes unworkable, but the intention to support domestic machinery manufacturing is there.

Also, this week (take a deep breath), Russia’s Director of the Department of Economics, Investments and Regulation of the Agroindustrial Complex Markets of the Ministry of Agriculture of Russia said, 134MMT of grain grown by the country this year is not the limit and he estimate the potential to be 150 million and above.

He went on to say that given increasing yields and favourable market conditions the export potential will increase to 60MMT by the year 2025.

According to Russian Ministry of Agriculture 2018 planting forecasts, canola will increase by 20% (to 1.2 million hectares) and soybean by 6.5% (to 2.7 million ha).

Last week’s snow fall thawed across Russia's southern regions of Krasnodar & Stavropol which shouldn’t be a problem as it's generally milder there that far south. 

Further north and snow thawed in Kursk and Belgorod regions (see picture) which could pose a problem as we are starting to see some superficial cold damage to forward, exposed crops which is unlikely to result in wholesale crop death but could put a dent in final yield prospects.