World Grain - December 2021 - 24

SOSLAND PUBLISHING
years
state-owned agriculture. The only way of solving
this fundamental contradiction was to enter
the import market. "
The Great Grain Robbery
With domestic grain production trending downward
and severe drought conditions in the early
1970s hindering output even further, the Soviet
Union quietly changed course from its self-sufficiency
strategy by brokering a secret deal to
import grain from its arch-political enemy, the
Vogel
United States.
In July 1973, the Soviet Union purchased 10 million
tonnes of mainly wheat and corn from the United States
at subsidized prices, which caused global grain prices
to soar. Soviet negotiators worked out a deal to buy the
grain on credit but quickly exceeded their credit limit.
American negotiators did not realize that both the Soviets
and the world grain market had suffered shortfalls, and
thus subsidized the purchase, leading it to be dubbed the
" Great Grain Robbery. " The strategy backfired and intensified
the crisis as global food prices rose at least 30% and
global grain stockpiles were decimated.
" The farmers were happy, but the rest of the world was
wondering what the heck was going on, " Liefert said.
" What people may not know is the Great Grain Robbery
coincided with a change in Russian policy regarding the
expansion of the livestock sector. "
Liefert said the motivation for the sudden influx of imported
grain wasn't only to ensure low food prices and
food security for the Russian people.
" Beginning in 1970, the Soviet regime decided to exRUSSIA'S
TWO BIGGEST
ADVANTAGES IN WHEAT
PRODUCTION
When it comes to wheat production, Russia has several
advantages over many of its competitors.
" One of the real advantages is an abundance of nutrients
in the soil, which is enormous, " said Russian Grain
Union President Arkadiy Zlochevskiy. " We have the largest
reserves of black earth - the most fertile type of soil.
We have territories like the Kulunda steppe in Altai Territory,
with potassium reserves large enough for 1,000
years. This is not taking into account that this reserve is
being replenished each year. This means that for us, nutrients
appear to be cheaper than for our competitors. "
A second advantage is cheap agricultural labor, which
drives down production costs, Zlochevskiy said.
But the labor cost advantage is a bit of a doubleedged
sword, he concedes.
" The government targets to raise the incomes in rural
settlements from the current 53% to 57% of the city
dwellers' incomes, " Zlochevskiy said. " This is not much,
especially if we compare these figures with other countries.
This (low incomes in Russian rural areas) is not good,
but it is one of the factors of our competitiveness. "
He said there is a perception that Russian agriculture
has a third advantage - access to large amounts of
freshwater - but there are logistical problems.
" Indeed, we have large reserves of freshwater, but it
is mainly concentrated in Baikal, " he said. " In order to
bring it to a field, you'd waste time, and transportation
costs would be tremendous. "
24
pand the livestock sector, " Liefert said. " They saw increasing
meat and dairy production as the most direct way
to increase the standard of living. It was actually kind of
a benevolent policy. They began offering huge subsidies
to the agricultural economy, mostly to the livestock sector.
They succeeded in increasing the amount of meat and
dairy products, but it came at a huge cost. Huge resources
were thrown at that sector. "
From 1970 to 1990, the Soviet Union was a large importer
of not only grain but soybeans and soybean meal
as it attempted to bolster its livestock industry. However,
when the Soviet Union dissolved in 1991, and Russia
returned to being a singular country transitioning from
a planned to more of a market-oriented economy, the
government could no longer afford the subsidies, so they
were eliminated.
" Without those subsidies, input prices rose significantly
relative to output prices, " Liefert recalled. " Farmers could
no longer afford all those inputs, and with the decline in
inputs, outputs also fell considerably. "
He noted that Russia's annual grain production fell
from 95 million tonnes to 63 million tonnes during that
10-year period. But it wasn't just the unfavorable grain
prices versus high input costs that led to the slump in grain
output. The Russian livestock sector contracted by about
half in the 1990s, with annual meat production falling
from 7.2 million tonnes in 1991 to 3.6 million tonnes per
year in the final four years of the 20th century, Liefert said.
" The contraction of the livestock sector meant they
didn't have to import all that feed grain or produce so
much domestically, " he said.
A golden era of Russian agriculture
After a difficult decade of transitioning to a more marketoriented
economy, Russian agriculture began to reap the
benefits of the new system and the shift from grain importer
to exporter began.
December 2021 / World Grain / World-Grain.com
http://www.World-Grain.com
World Grain - December 2021

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