World Grain - October 2016 - 6

FROM THE EDITOR-IN-CHIEF

How Russia became
first in wheat

n the many unexpected developments in
grain trade this season, hardly anything
equals the astounding projection that
Russia will end 2016-17 as the No. 1 exporter of wheat. According to the latest forecast
by the Foreign Agricultural Service of the
U.S. Department of Agriculture, which is
also in line with International Grains Council expectations, Russia in 2016-17 is heading to export 30 million tonnes of wheat.
This is well ahead of second-place European
Union with an outgo of 27 million tonnes.
Russia's position came after prospects for
E.U. exports dropped 7 million tonnes on
account of a precipitous fall in France's harvest due to rains this summer.
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in 2015-16, 2014-15 and 2013-14, clearing
a peak 35,418,000 tonnes in the second of
those three seasons. Treating the E.U. as
a single exporter when its membership is
made up of 28 nations, of which France is
the major grain exporter, has been done for
many years. Prior to these three years, the
United States usually led wheat exporting.
America's wheat exports in 2016-17 are
forecast at 25,500,000 tonnes, lagging both
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nearly half a century that U.S. outgo has
been less than 1 billion bushels. The U.S.
export peak was 47 million tonnes in 198182, when Russia imported huge quantities in
response to domestic shortages.
Beginning with the 1972-73 crop season, the Soviet Union imported more wheat
than any nation had ever taken. In 1984-85,
takings were 55.5 million tonnes of both
wheat and corn, a record for a single country to take in one year. It was not until the
late 1990s that Former Soviet Union (FSU)
imports shrunk to single digits. Along with
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FSU until the new century dominated as the
top importer.
Telling the story of Russia's transformation from massive dependence on grain
imports to sustain its basic food needs to
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something never before witnessed, at least

in the current era. Overriding is the way
Russia increased its production of wheat
and other grains not just to satisfy domestic needs freed from the yoke of disastrous
government but by setting up production and
marketing in ways not much different from
the market economy of the western world.
Like other recent aspects of the Russian
economy where entrepreneurs have reaped
rich returns, much the same has occurred in
agriculture, including aggregating vast crop
acreage and stimulating capital spending
meant to improve domestic marketing and
export facilities.
Not to be overlooked in marveling at
what has been accomplished in Russia's
wheat production and marketing system is
how the government, directed by Vladimir
Putin as premier, has been willing to put a
brake on exports to guard against run-away
domestic prices. It was in a fairly recent
period that the government in Moscow imposed a tax on exports of wheat at a level
that brought shipments to a near halt. This
season's supply is obviously large enough
to allow assurances that no limits are being
contemplated on grain exports. After all,
Russia has an urgent need to earn foreign
exchange to pay for large-scale capital imports, a situation obviously worsened by the
oil price collapse.
As the global leader in exporting wheat
and as a major shipper of oil and gas, Russia emerges as a contender for global importance in these two vast commodity markets.
Even when the FSU bought millions of
tonnes of grain due to shortfalls in domestic crops, attention in the West often focused
on wondering what was going on in a nation
that seemed to have some of the best weather and soil as well as geography for grain
crops. After all, prior to World War I and the
Revolution, Russia did rank as major wheat
shipper. Its re-emergence as the top wheat
exporter is an incredible story of the great
global grain industry.
Morton I. Sosland
Editor-in-chief

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