The so-called Beast from the East roared out a stark warning to all Irish and European farmers when it hit the continent a fortnight ago. The warning was this: if Russian farmers can farm and thrive under such hostile weather conditions every winter, how can Irish and European farmers ever compete with them? The simple answer is that they can’t.

Every year, Russian farmers have to cope with their own homebred blizzards that rival Storm Emma. The recent extreme snows brought on by the Beast from the East really put things in perspective about the difference between farming in Russia and farming in Ireland. This was a timely warning of the capacity and the power of Russian farmers. Specifically, Russian farmers now present a massive threat to our dairy, beef, pork and poultry exports to all international markets. This threat gives a whole new emphasis to the meaning of the term “red alert”.

Arctic winters

Extreme weather events such as this turn up in Ireland once every 40 years. But in Russia, snow storms like Storm Emma can last for four to five months of the year, as opposed to four or five days we had in Ireland.

Winter temperatures in Russia can typically plunge below -400C, with blizzards blowing in non-stop from the North Pole. During January, February and March, arctic blizzards dump several metres of snow on Russia’s 40m hectares of winter grain crops, which is 270 times bigger than the area of winter cereals grown in Ireland.

However, average yields of winter cereals in Russia are less than 3t/ha. That’s less than a third of what they are in Ireland, where average yields for winter wheat are over 10t/ha. Despite this disadvantage, Russia is forecast to produce another record grain harvest in 2018. Last week, the forecast for Russian winter wheat production in 2018 was raised to 78m tonnes.

If realised, 2018 will be the fifth year in a row that Russian farmers have produced a bumper crop that is increasingly setting the world price for wheat and barley. But as Brian Cody and Mick O’Dwyer could tell you, there is some kind of a taboo about the five in a row.

Furthermore, accurately forecasting anything in Russia can be very fraught. When it comes to winter wheat in particular, forecasting Russian production is very far from being an exact science.

So how do Russian farmers tame the extreme winter weather and produce bumper crops that are setting the agenda on world grain markets?

Largest wheat exporter

Russia is the world’s largest wheat exporter today shipping 35m tonnes on to the world market this season. However, it is less than 30 years ago since Russia was the world’s largest wheat importer, buying in more than 20m tonnes of wheat every year to feed its people.

If the country can rapidly increase its grain production over such a short period, how long will it be until Russian farmers begin to dominate in global dairy, beef, pork and poultry markets?

A recent study by the Australian Wheat Exporters Association gives us no reason for either optimism or complacency. To produce a tonne of wheat in Australia, transport it to the port and load it on to the ship for export costs €242. In Russia, grain farmers can produce a tonne of winter wheat at a farmgate price of €76, almost half of what Irish wheat growers received in 2017. Some of the key competitive advantages enjoyed by Russia farmers over their counterparts in Europe, Australia, the US and Canada include:

  • The cost of land in the Russian wheat belt is minimal, if anything at all. The price of the best arable land in Russia, known for its fertile black soils, can be as little as €300/ha to €500/ha. Large agribusiness conglomerates are buying up blocks of agricultural land in Russia at 50,000 to 100,000ha at a time. Many of these conglomerates are Russian-owned and well-connected to the Kremlin. Others are American, European, Chinese, Vietnamese and Malaysian.
  • Agricultural labour costs in Russia are only a small fraction of what they are in the EU, the US, Canada or Australia.
  • Farm machinery operating costs are also less than half of what they are in Ireland and the EU. Specifically, fuel costs in Russia for running tractors, combines and grain driers are only a fraction of what they are in Europe.
  • Russian winter wheat crops are grown on some of the most fertile soils in the world. Farms are also of an enormous scale. This allows growers to skimp on, or skip altogether, fertilisers, certified seeds and agrochemical inputs. This low-input, low-output strategy partially explains why Russian winter wheat yields are so low at less than 3t/ha. However, the sheer scale of farms allows Russian growers to live with this system.
  • Russia has a large and fast-growing domestic market for all homegrown wheat, particularly for baking. In addition, Russian livestock farmers with high-input systems are expanding their cattle and pig enterprises, which is increasing the demand for feed wheat. This growing domestic demand, coupled with a large wheat export market, has increased incomes for Russian grain farmers and created a very vibrant winter wheat industry.
  • For the last five years, Moscow has imposed trade sanctions on food imports from the EU and the US. This has boosted Russian farmers. These sanctions have also led to a 50% to 60% devaluation of the Russian currency (Rouble) against the US dollar and the euro. This currency devaluation continues to be a major competitive advantage for Russian winter wheat being exported to the world market.
  • Finally, Russian president Vladimir Putin has prioritised expanding the country’s agriculture sector. Kremlin funding is now flowing into Russian agriculture to modernise agricultural production systems and improve export logistics from the Black Sea.
  • Brendan Dunleavy has over 25 years’ practical project management experience in Russian farming and agribusiness enterprises.