AEGIC reports on rising Russian export tide

Photo of harvester

Russian wheat exports are on the rise, with potential to grow a further 50 per cent by 2030.

PHOTO: AgroInfo

Russia was the world’s largest exporter of wheat in 2015-16, with analysis of the Russian grains industry suggesting exports will grow a further 50 per cent by 2030.

This is one of the findings of the Australian Export Grains Innovation Centre’s (AEGIC) report released late last year, Russia’s wheat industry: Implications for Australia. It followed a similar analysis of Ukraine's grain industry, also released last year.

The report’s lead author, Professor Ross Kingwell, says Russia’s rapidly growing export grains industry and relatively low supply chain costs are of concern to Australia. His report found that Russian exports were expected to increase from 21.7 million tonnes in 2015 to 32.5 million tonnes in 2030.

Other findings include:

  • Russia has prioritised its grains sector as an economic growth opportunity;
  • organisational reform is underway to improve the efficiency and effectiveness of Russia’s agricultural research and development;
  • continued farm productivity gains and upgrades to local grain supply chains underpin the country’s export competitiveness; and
  • Russia has a production emphasis on food self-sufficiency, supported by wheat breeding focused on yield rather than grain functionality and quality.

In mid-2016 Russian farm production costs were estimated at about $121 a tonne, and supply chain costs were about $56/t, compared with $216/t farm production and $85/t supply chain costs respectively for Australian growers. Total export costs for Russian wheat were estimated at $177/t and $301/t for Australian wheat.

Professor Kingwell says to remain competitive Australia needs to keep innovating to ensure higher productivity and efficiencies on-farm and throughout the Australianw supply chain.

He also expects Australian wheat exporters to face more intense competition from North American organisations funded to service their Asian customers. “Australia’s North American competitors are already better at funding and coordinating their servicing of Asian customers and we need to address this,” he says.

“If we know what our customers want and value, we can better serve their needs.

“The Australian grains industry is endowed with an enviable R&D and crop breeding funding system. By contrast, wheat variety improvement and grains R&D in the Black Sea is less well-funded, less organised and less focused on efficient outcomes. Knowing more about what wheat quality traits are most valued by end-users in key Asian markets will help better target wheat breeding in Australia.”

 

Graphic comparing export grain supply chains of Russia and Australia

Comparison of the export grain supply chains of Russia and Australia.

Note: Million metric tonnes (mmt); metric  tonnes (mt)

SOURCE: AEGIC

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Russia's wheat industry: implications for Australia

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GRDC Project Code US00083

Region National, Overseas