The geopolitics and growth of Russian agriculture

Image Credit: USDA, accessed via Wikimedia Commons

Russian agriculture is continuing to undergo immense changes in structure and productivity that began with the collapse of the Soviet command economy. Noel Bardon reports.

Domestic food sources have taken an increasingly important role in Russia with import
substitution and changed export dynamics strengthening the sector since 2014. March 2014
saw the first ‘restrictive measures’ taken by the Council of the European Union against
Russian political and economic interests. This move was the first in response to the
Federations’ destabilisation efforts in Eastern Ukraine, which would culminate in the
annexation of the Crimean peninsula and Russian military support for separatists in the
Donbas. The Russian Federation retaliated to the restrictions with import bans in August of
that year effective over a range of products and commodities on the countries supportive of
the Ukrainian position. These measures continually extended, remaining in place today.

Whilst only an estimated 4.2% of the Union’s agri-food exports were affected by the initial
embargo, member states on the Eastern flank of the Union were harder hit. The Russian
market accounted for 60-70% of the Baltics’ agri-food exports in 2013, according to the
European Parliament’s briefing on the issue, and certain enterprises were significantly
affected. Dairy products, fruit, and vegetables were among the foodstuffs most reliant on
Russia for export. The Union responded by providing alternative markets to producers and
by introducing market support measures for commodities which were now in oversupply.

One of the main contributing factors in the 2015 reopening of EU dairy intervention was the surplus supply of dairy products in Europe post-sanctions. A 25% cut to farm gate milk prices across the Union resulted from the import ban.

Russia had been dependent on the EU’s agricultural sector for the import of foods
approximating €11.8 billion in value. Also included in the embargo were the US, Australia,
and other non-member Western European nations. A large supply deficit had to be filled
domestically to feed Russian consumers. The import of many products, mainly wheat and
meat, were successfully substituted. The Russian Federal State Statistics Service puts the
proportion of food consumed by citizens coming from imports as having fallen from 43% in
2013 to 25% in 2017, a claim apparently supported by metrics relating to food exports. The
Federation remains a net importer of food.The wheat industry, which accounts for two-thirds of the cereal output, has moved from reliance on outside markets for the commodity, to becoming a net exporter in the early 2000s. This growth has come from increased yields, with lower numbers of livestock helping to reduce domestic demand for the grain.

This drop in livestock numbers has been somewhat reversed in recent years, with the sector
gaining more importance in the post-EU import era. Poultry and swine have been the
industries regaining the most strength, relative to Soviet output. An expansion of pig
production has occurred mainly in the East, in response to the pork-hungry consumers of
South East Asia. The country has yet to gain access to the Chinese pork market, being
blocked after ASF hit Russian producers, but negotiations are ongoing. The swine industry
that has emerged in recent years is one of immense conglomeration, with the top 20
producers controlling 70% of production. This will undoubtedly be an asset to the nation in
responding to future biosecurity hazards and in tailoring production to the uniformity
demands of modern markets.

The acreage farmed in the country has yet to return to the peaks reached during the Soviet
era, however, Russian agriculture still owes many of the opportunities presented solely to
the vastness of the nation’s geography. The sheer area of land available for expansion is
also increasing due to warming in Siberia. Without a significant change in the rate of global
temperature change, up to 4 million square kilometres of the far North and East of the
country will thaw and expose lands of suitable enough grade to grow cereals. Although,
these gains will be offset by increasing moisture deficit pressure in the semi-arid plains to the
South. 94 million hectares of productive agricultural lands, either those abandoned or those
requiring only minor development, are also estimated to be currently lying vacant. Some of
these areas, however, such as the Tuva Republic, the region that saw the greatest decline in
area farmed since Soviet times, have majorly underdeveloped infrastructure and are likely to
yield lower than the current land base, meaning the relationship between land area and
output may have diminishing returns.