In the context of climatic changes, the regions of the Central Black Earth Region, Central Russia and even the Northwest Federal District are beginning to play an increasingly significant role in the development of the Russian agro-industrial complex. Due to the increasing harvests in these territories, the all-Russian indicators for grain harvest (already more than 130 million tons) exceeded the level of 2019 (about 120 million tons), even despite the damage from drought and frost in the Southern Federal District. Experts of the company "August", the largest producer of chemical plant protection products in Russia, predict an increase in acreage for grain and oilseeds. This is also facilitated by high prices for crop production in world markets.
As noted in the company "August", on a national scale, crop failures in the southern regions were compensated by increased yields in the regions of the Central Black Earth Region and in Central Russia as a whole - for example, in the Voronezh, Tambov, Lipetsk, Moscow, Bryansk, Smolensk, Tula regions.
“Yield expectations were not met in the Stavropol, Krasnodar Territories, and partly in the Rostov Region, although in terms of grain harvest it still turned out to be the country's leader (11,7 million tons of grain in 2020 against more than 12 million tons in 2019). Leadership will be maintained at the expense of a large territory; in addition, by 2020 the sown area was increased here - in particular, under winter crops, - comments Dmitry Belov, head of the product development department of the "August" company. - In general, we have been observing the tendency of "displacement" of harvests for several years. Traditionally, the black earth regions stood out against the general background, in particular, the southern ones - due to more fertile soils. However, following climate change, we see an increase in productivity, for example, in the Bryansk, Moscow, Tver and Yaroslavl regions, in the North-West. This is facilitated by the introduction of modern agricultural technologies - with the use of fertilizers and plant protection products, re-equipment of the technical park, the use of new business models. Among the holdings that initially worked primarily in the granaries of Russia, there is now a tendency to enter such territories as well. And the Stavropol Territory and neighboring regions, we will eventually begin to perceive, relatively speaking, as Spain, that is, as an area where technologies of intensive farming will be associated primarily with artificial irrigation. "
An additional caution among agrarians regarding the next harvest in the Southern Federal District today is caused by the fact that the drought continues during the sowing of winter crops. However, the situation may still improve, and the amount of moisture in the spring should play a key role. But in Central Russia, due to climate change, the risk of poor overwintering of winter crops due to too low temperatures was minimized. According to the forecasts of "August" experts, the development of abandoned territories will increase in these regions. Additionally, this is facilitated by fines from the Rosselkhoznadzor for non-use of agricultural land. So, the amount of such fines is now determined based on the cadastral value of the site, and if after three years from the date of discovery on the abandoned land nothing has changed, the current legislation allows them to be withdrawn.
At the same time, prices for a number of agricultural products may rise during the year or have already increased significantly. In the domestic market, for example, in 2020, we can again expect an increase in the cost of buckwheat: experts note that this is not associated with either a poor harvest, or with increased demand, or with prices on world markets. The role here is played by the usual for a given culture "swing": when buckwheat is well ground and the product is presented in abundance on the market, prices for it fall, in response to this, farmers reduce their acreage, the volume of production on the market decreases, and prices rise again. A similar situation, although not so noticeable for the end consumer, is developing in the Russian pea market. Compared to the values of 2019, the selling prices of agricultural producers for these crops can grow quite noticeably - by 20-30%. This indicator should be distinguished from possible retail prices, where a packaging company, wholesalers and retail chains can set their own mark-up, and a much higher one.
Also, due to the general poor harvest, the cost of potatoes rises, onions, carrots and beets may rise in price. In addition to not the most favorable weather conditions for open field vegetable growing in 2020, the labor shortage, which the farms experienced during the cultivation, and most importantly, during the harvesting of products, should also affect the price. An additional factor influencing prices can be the construction of modern warehouses by agricultural producers, which allow storing high-quality crops and waiting for the price increase for it - after the end of mass trade "from the field" and from outdated warehouses, which do not allow providing high-quality storage.
A special situation develops in 2020 with sugar beets: due to a decrease in crops and yields, wholesale prices for sugar have more than doubled compared to the level of 2019. At the same time, due to a long period of sugar overproduction, there is still a tendency to reduce areas, which is often accompanied by the closure of sugar factories or their underutilization.
As for the world markets, due to the poor grain harvest in Western Europe, a high price was established for Russian wheat. In addition, rapeseed and sunflower are consistently becoming more expensive.
“Prices for oilseeds and, in particular, sunflower on world markets are pushed upward by an increase in consumption and a constant expansion of their scope: this is not only food, but also the paint and varnish industry, and biofuel as an alternative to petrochemicals. Agricultural producers are largely export-oriented, but at the same time, enterprises for the internal processing of these crops are intensively developing in Russia. The owners of these facilities, making sure that they are fully loaded with affordable raw materials, are in favor of export quotas. If we have already observed the application of such a measure in relation to grain exports, then in the case of sunflower this may happen for the first time, says Dmitry Belov. - It is interesting that the opposite situation is with potatoes: we hardly export them, but our internal processing is almost undeveloped, so that a significant part of french fries and chips in the country is made from imported raw materials. At the same time, potato growers are looking forward to the development of enterprises operating on domestic raw materials. "
Within the framework of these trends in Russia, experts predict a further increase in the area under grain crops, as well as under soybeans (an increase of about 30% over the past 5 years) and under rapeseed (about one and a half times over the same period). The area under sunflower crops, according to experts, will also increase, but not so intensively - by 3-5% per year. There are not so many lands where this crop can be cultivated, and in the total crop rotation its share should not be too high in order to avoid problems with the agrocenosis. Also, on the part of farmers, there is an increased interest in the development of horticulture and viticulture, which is facilitated by subsidizing programs for these areas, as well as in the cultivation of rice - also due to subsidizing programs for irrigated agriculture.
“Honestly, no matter what the farmer grows, he ultimately“ grows ”income and profit per hectare. Therefore, from the point of view of agricultural development, it is not the volume of the harvest itself that is interesting, but the product of this volume by the market price, - says Mikhail Danilov, Marketing and Sales Director of the August company. - And it's very good when this work exceeds the cost. If we evaluate the harvest from this very position and do not take into account some individual regions or districts significantly affected by frost or drought, then on average 2020 was a very successful year for crop production. If we talk about mass crops, then this year we observe both a significant volume of the harvest and decent prices. Therefore, for now, it can be considered that the financial situation in crop production is developing favorably, which will contribute to further intensification of production, including in terms of the use of plant protection products. We are preparing for this: the production of both active ingredients and finished formulations at our four plants is proceeding according to the planned schedule, which will meet the growing demand for pesticides in 2021 in our main market - the market of the Russian Federation ”.
Material provided by the press service of the company "August"