Russia’s resurgent wheat farmers squeeze U.S.
U.S. wheat farmers are losing out to an old rival: Russia, The Wall Street Journal writes.
The 83 million tons of wheat Russian farmers are forecast to have reaped this season has cemented the country’s resurgence as an agricultural superpower and ratcheted up the pressure on U.S. farmers, who sowed fewer acres of wheat in 2017 than ever before. Wheat prices at the Chicago Board of Trade hit $4.19 a bushel this week, down almost 25% since Russia began a record wheat harvest in July.
Large investments and a weaker ruble have helped Russia surpass the U.S. as the world’s top wheat exporter. A decade ago, for instance, U.S. farmers supplied a large portion of North Africa’s grain. The U.S. Wheat Associates trade group said it would close its office in Egypt, the world’s largest wheat importer, in December.
“We literally can’t compete on the price of wheat in those markets compared to Russia,” said Steve Mercer, the trade group’s spokesman.
Poor weather this year added to the trouble facing American farmers. Russia enjoyed a cool, wet growing season, while the U.S. Great Plains were hit by drought and a late-season snowstorm. U.S. wheat output is expected to fall by a quarter from the previous season.
Other countries are also chipping away at U.S. dominance in wheat. Farmers are growing more grain in Europe and India. The U.S. Department of Agriculture expects American wheat to make up 15% of global exports this year, down from half in the mid-1970s.
Russian wheat yields have increased 70% in the past five years. The USDA expects output from Russian farms stretching outward from the Black Sea to nearly double that of American farms this season.
“Yields are growing every year and Russia still has a lot to do,” said Maxim Basov, chief executive of Rusagro Group LLC. The agricultural conglomerate, one of the country’s largest, harvested 40% more winter wheat this season than a year earlier.