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29 Aug, 2008 04:40

Russian harvest up as Russian agriculture looks to transform

As food prices become a greater source of concern around the world, Russia will enjoy a record harvest this year. But industry experts say improving the productivity of Russian agriculture and dealing with rising fertilizer prices are the challenges whi

Russia's agriculture ministry has raised its estimate this years harvest to 95 million tons, up 15% on 2007. That's good news for a government fighting to limit inflation with food costs rising in Russia and internationally over the past year.

With this in mind the agriculture ministry is aiming at a further jump in agricultural output next year. But Andrey Sizov, analyst at Sovecon, doubt if its possible, saying more investment is needed to make agriculture in Russia more intensive

“We can increase the production the intensive way – increase productivity which is currently lower than in Europe, and the extensive way – restore of cultivation land, which has decreased since 1990 from 100 to 70 mln ga. The more effective way is intensification of agriculture production with investment.”

Russia's grain exports will reach 3.9 million tonnes in this year, up 60% on 2007. However the Russian agriculture minister says that the conflict with Georgia, means that imports of chicken and pork meat will be significantly cut and that wheat will be used to feed cattle.

To increase wheat production, fertilizer producers are proposing that prices be kept below market prices.  Dmitry Stregnev, President of Eurochem says they could then be increased gradually over the longer term.

“As a fertilizer producer we hold talks with other companies in the sector to create a system of special prices for Russian agriculture producers, with prices lower than market prices until 2011, producers can agree on reduced prices period, but the rest – transport, distribution is a common work.”

Analyst say that agriculture in Russia is an attractive investment opportunity, with agricultural products attracting prices on global markets that haven't been seen in a generation. And they add that with large areas of under used land Russia should be looking to cash in.