FAO/GIEWS - Foodcrops & Shortages 02/99 - RUSSIAN FEDERATION (8 February)

Drought and economic problems reduced the 1998 aggregate grain (cereal and pulse) output to an estimated 55 million tonnes, compared to 88.6 million tonnes in 1997. FAO's estimate is 15 percent higher than the official 47.8 million tonnes, as farmers this year have underreported wheat output by 5 million tonnes according to the Minister of Agriculture and by up to 20 million tonnes according to the trade and other informed sources. The overall grain supply situation is tight but not critical, owing to the availability of large carryover stocks (in excess of 25 million tonnes) from last year's good harvest and the relatively high proportion of food quality grain in this year's crop. However, the overall situation masks significant disparity in the supply situation between regions. This disparity is exacerbated by local restrictions on the movement of grain, uncompetitive official purchase prices (US$45 per ton for 3rd class wheat incl. taxes), and the impact of the deteriorating economic and financial situation. In addition, the large differential between domestic and international grain prices has stimulated exports of 0.9 million tonnes of cereals up to November 1997. The remote and most disadvantaged areas are particularly at risk as mobilizing and stockpiling reserves for the harsh winter months was impeded by the financial crisis in the autumn. The most vulnerable socio-economic groups, pensioners, orphans, the unemployed and households dependent on public salaries are also experiencing difficulties, especially in the large, depressed industrial cities.

Despite the poor harvest, cereal imports in 1998/99 are currently estimated at just over 4 million tonnes, compared to 3.5 million tonnes in 1997/98. Against this requirement, the country has received food aid pledges amounting to 3.8 million tonnes of cereals (including 2.8 million tonnes of wheat) as well as significant quantities of meat, oilseeds and meal. Virtually no food aid has been delivered to date, and the bulk of the shipments (not rolled over to 1999/2000) should arrive towards the end of the current marketing year, when the aggregate supply situation is expected to tighten.

Following the large expected stock drawdown this year, a significantly better harvest is needed next year but the outlook remains uncertain. The 1999 agricultural year is expected to be difficult. Budget allocations for agriculture have been halved, agricultural credit remains scarce and in addition, two-thirds of the revolving soft credit fund for agriculture is still outstanding. Nearly 90 percent of farmers reportedly made losses in 1998. The availability of fuel, operational machinery and agrochemicals on farm is currently tighter than last year and there is a substantial backlog of autumn ploughing. Nevertheless, the spring grain planting target is 38 million hectares. Winter grains were planted on 13.15 million hectares, only 3 percent less than in the preceding year but crop condition on over 2 million hectares is poor.

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