MOSCOW: Vladimir Putin is determined to make sure that Russians don’t run out of affordable bread, even if it means a few bankrupt farmers and a disrupted grain market.

The country that last year was the fourth-largest wheat exporter is now taxing all overseas sales of the grain. Shipments dropped by more than half, and the loss of income is squeezing already thin profits for growers. While Putin’s move kept more wheat at home, farmers have cut back spending to stay solvent, including using less fertiliser and pesticide.

Russia’s energy-driven economy slipped into its first recession in six years after a slump in oil prices and the pinch of international sanctions sparked a plunge in the rouble. That made imports, including many food items, more costly. For now, reduced shipments of Russian grain haven’t affected global wheat prices much because of bumper harvests almost everywhere else, though that could change if exports keep falling.

“You have some farmers that are selling crops today below the cost of production, but they need cash to plant the next crop,” said Mike Lee, founder of Agronomy Ukraine, a farm adviser based in Kursk, Russia.

“Everybody is cutting back to save cash,” he said by phone on Monday, after completing a 12-day tour of fields around the Black Sea region, where winter-wheat harvesting starts in July.

Agrobiznes Group of Cos, which manages 14,000 hectares (34,600 acres) in western Russia, may dedicate about 20 per cent less land to winter wheat if the tax isn’t lifted, according to Director General Alexander Chil-Akopov. Winter wheat, the variety that accounts for two-thirds of Russia’s output, is sown beginning in August and harvested the following year. Spring wheat is usually planted starting in March and collected in September.

By arrangement with Washington Post-Bloomberg News Service

Published in Dawn, April 26th, 2015

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