The profitability of wheat production in Russia had dropped 51.8% by the end of 2021, for the first time in five years, Kommersant reports.
While Agriculture Ministry is citing unfavorable weather conditions, farmers note that the current export duties have limited prices in Russia, while consumables and fertilizer prices have surged. That left farmers with nothing to offset the inflationary blow.
To improve efficiency, many market participants will have to switch to alternative crops with higher yields and profits such as oilseeds and legumes.
“Any attempts to intervene in the market equilibrium are fraught with consequences: shortages (a time capsule from the USSR) or overstocking,” notes economist Sergei Khestanov, Associate Professor at RANEPA. “The production cycle in agriculture is long, and replacing one crop with another is slow and difficult. But it’s possible.”