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Russia's Black Earth Farmers Switch to Corn, Oilseeds for Profit

Bloomberg, 08.02.13


Feb. 8 (Bloomberg) -- Farmers in Russia, the third-biggest wheat exporter last season, will plant more corn and oilseeds in the Black Earth area for 2013-14 in search of higher profits.

Farmers began to focus more on feed-type grains in the central Black Earth regions because wheat yields there are lower and transportation to export ports more expensive than in southern regions, according to Oleg Sukhanov, an analyst at the Moscow-based Institute for Agricultural Market Studies, or Ikar.

Corn typically gives bigger yields in the area's fertile soils than in the south, and has a ready market in the livestock farms that are clustered in the vicinity, Sukhanov said yesterday by phone in Moscow. Corn yields in the Belgorod region were 6.2 metric tons a hectare (2.47 acres) this season, compared with about 5 tons a hectare in the southern Stavropol region, according to the regions' agricultural ministries.

"It's a trend in central Russia," Sukhanov said. "That is why we have had record corn harvests in the past two years."

Russia's corn crop was 8 million tons in 2012, beating the previous record of 7 million tons in 2011, according to state statistics data. Russia may be the seventh-largest corn exporter in the 2012-13 season, after the U.S., Argentina, Brazil, Ukraine, India and South Africa, shipping 2.3 million tons, 13 percent more than the previous year, according to U.S. Department of Agriculture estimates. The country produced 37.7 million tons of wheat in 2012-13, a 33 percent plunge to a nine-year low, after drought curbed production.

Sowing Structure

Corn futures gained 8 percent on the Chicago Board of Trade last year, reaching a record $8.49 a bushel in August. Global corn production may total 845 million tons in the 2012-13 season, the London-based International Grains Council said Jan. 17, some 3.6 percent less than a year earlier. Inventories may drop to 113 million tons by the end of the season, the lowest in nine years, according to the IGC.

"We are changing the sowing structure in general this year toward more energy effective grains like corn and soybeans and will expand their fields further," YevgenySavchenko, Belgorod governor, told Prime Minister Dmitry Medvedev during a video-conference on Feb. 5. Tambov, another Black Earth region, will double its corn plantings for the 2013-14 crop, Governor Oleg Betin said at the same meeting, without giving specific figures. Sowing typically starts in April in the Black Earth area.

Wheat added 19 percent in 2012, climbing to the highest in almost four years in July, as drought damaged crops from the U.S. to Europe. World production of wheat may be 656 million tons in 2012-13, less than the previous year's harvest at 696 million tons, according to the IGC, which forecast inventories to fall 22 million tons from the previous year to 174 million tons.

The Black Earth area accounted for 20 percent of Russia's national grains crop after harvesting about 14 million tons of grains this season, according to state statistics data. The area includes the regions of Belgorod, Voronezh, Kursk, Lipetsk, Oryol and Tambov.Feb. 8 (Bloomberg) -- Farmers in Russia, the third-biggest wheat exporter last season, will plant more corn and oilseeds in the Black Earth area for 2013-14 in search of higher profits.

Farmers began to focus more on feed-type grains in the central Black Earth regions because wheat yields there are lower and transportation to export ports more expensive than in southern regions, according to Oleg Sukhanov, an analyst at the Moscow-based Institute for Agricultural Market Studies, or Ikar.

Corn typically gives bigger yields in the area's fertile soils than in the south, and has a ready market in the livestock farms that are clustered in the vicinity, Sukhanov said yesterday by phone in Moscow. Corn yields in the Belgorod region were 6.2 metric tons a hectare (2.47 acres) this season, compared with about 5 tons a hectare in the southern Stavropol region, according to the regions' agricultural ministries.

"It's a trend in central Russia," Sukhanov said. "That is why we have had record corn harvests in the past two years."

Russia's corn crop was 8 million tons in 2012, beating the previous record of 7 million tons in 2011, according to state statistics data. Russia may be the seventh-largest corn exporter in the 2012-13 season, after the U.S., Argentina, Brazil, Ukraine, India and South Africa, shipping 2.3 million tons, 13 percent more than the previous year, according to U.S. Department of Agriculture estimates. The country produced 37.7 million tons of wheat in 2012-13, a 33 percent plunge to a nine-year low, after drought curbed production.

Sowing Structure

Corn futures gained 8 percent on the Chicago Board of Trade last year, reaching a record $8.49 a bushel in August. Global corn production may total 845 million tons in the 2012-13 season, the London-based International Grains Council said Jan. 17, some 3.6 percent less than a year earlier. Inventories may drop to 113 million tons by the end of the season, the lowest in nine years, according to the IGC.

"We are changing the sowing structure in general this year toward more energy effective grains like corn and soybeans and will expand their fields further," YevgenySavchenko, Belgorod governor, told Prime Minister Dmitry Medvedev during a video-conference on Feb. 5. Tambov, another Black Earth region, will double its corn plantings for the 2013-14 crop, Governor Oleg Betin said at the same meeting, without giving specific figures. Sowing typically starts in April in the Black Earth area.

Wheat added 19 percent in 2012, climbing to the highest in almost four years in July, as drought damaged crops from the U.S. to Europe. World production of wheat may be 656 million tons in 2012-13, less than the previous year's harvest at 696 million tons, according to the IGC, which forecast inventories to fall 22 million tons from the previous year to 174 million tons.

The Black Earth area accounted for 20 percent of Russia's national grains crop after harvesting about 14 million tons of grains this season, according to state statistics data. The area includes the regions of Belgorod, Voronezh, Kursk, Lipetsk, Oryol and Tambov.



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