The Urals Federal District is expecting price hikes for agricultural products. The head of the Chelyabinsk region shifted the solution to the problems of farmers to sellers of fuel and lubricants
Ural officials are looking for reasons to refuse state support for agricultural enterprises.
Amid the shutdown of oil refineries for repairs and a reduction in diesel fuel shipments, Ural farmers are talking about a jump in retail prices by at least 30% in just the last month and a half. Experts say that additional costs will ultimately fall on the shoulders of end consumers of agricultural products. Another problem is low yield and problems with harvesting in heavy rains. The situation is most difficult in the Chelyabinsk region, where, due to bad weather conditions, agricultural enterprises cannot go into the fields – today a sixth of the grain has not been threshed. Meanwhile, due to the increased cost of production, fears have arisen on the market that “part of the harvest will simply remain in the fields.” At the same time, participants in the agro-industrial complex market say that they do not know where to get funds to prepare for the 2024 sowing season. The subsidies and preferential loans promised by the state are extremely difficult to obtain; officials reject applications for the slightest shortcomings, without explaining the reasons for refusals. It is determined that “it is especially difficult for small businesses that do not have a staff of highly qualified accountants and lawyers,” and today agricultural producers are forced to attract “expensive loans,” servicing which will become an unbearable burden for many.
At a meeting of the governor of the Chelyabinsk region with the heads of municipalities and the Ministry of Agriculture on harvesting work, it was stated that in 2023 the total harvested area of agricultural crops is 1 million 956 thousand hectares, but currently no more than 300 thousand have been threshed.
Municipal officials claim that the reason for the significant “drawdown in rates” is the rains – in 10 districts of the Southern Urals the average monthly precipitation norm has been exceeded.
According to the press service of the regional government, the situation in the agro-industrial complex is complicated by a significant increase in the cost of fuel and lubricants. At the same time, farmers do not have free funds to pay for the rapidly growing costs of diesel fuel, and Alexey Teksler decided to involve oil workers in solving the problem and instructed the head of the Ministry of Agriculture Alexey Kobylin to “actively work out the issue of fuel with fuel and energy companies represented in the region.”
The relevant ministry clarified to Pravda UrFO that we are talking about the companies Gazprom Neft, LUKOIL and Bashneft (controlled by NK Rosneft) operating in the region.
“A meeting is planned with representatives of vertically integrated companies supplying fuel resources to the region to discuss pricing policy and interaction with agricultural producers. Additionally, work is being carried out with municipalities to clarify the needs of farmers for fuels and lubricants for field work before the final completion of the harvest season“, – The Ministry of Agriculture of the Chelyabinsk Region told the publication.
Meanwhile, according to experts, farmers and fuel suppliers are unlikely to be able to negotiate a discount given the decrease in diesel fuel shipments from refineries.
“Oil refineries are curtailing work due to autumn repairs. Supplies of fuel oil fell by 25%; supplies of diesel fuel and gas oil are also declining,” reports fuel and lubricants market statistics.
The problems faced by the agro-industrial complex of the Chelyabinsk region are typical for the agricultural sector of the Urals and Zapsib. Yields in 2023 were lower than in previous years due to a prolonged period of drought in the spring and summer and subsequent heavy rains. In the Sverdlovsk region they are talking about a whole range of problems that significantly increase the cost of manufactured products.
“Due to the rise in exchange rates, prices for spare parts for agricultural machinery have increased, plus long waiting times for deliveries. The increase in fuel prices is catastrophic – about 30% over the past month and a half. Of course, this will lead to higher prices for the final product.
Harvesting grain is, of course, necessary, but you can forget about margins. There has been a carryover surplus since 2022 – for feed grain and barley, because of this, the price on the market does not increase. Still, we expect positive dynamics for class 3 wheat – due to the rains in the south, the yield is not very high. The above factors will also affect the cost next year – this is due to the post-harvest preparation of fields for the next sowing campaign,” stated the interlocutor of Pravda Ural Federal District.
Already today there are opinions on the market that, against the backdrop of the growing cost of grain and other agricultural crops, producers may leave part of the harvest in the fields – “at present it is unclear whether they will be able to sell it at decent prices, which will be enough to cover costs and make some profit “
Chairman of the Committee on Agrarian Policy and Land Relations of the Legislative Assembly of the Sverdlovsk Region, Mikhail Kopytov, emphasized that it is too early to talk about final grain prices.
“Everything will depend on how much grain the farmers will thresh and how much of last year’s reserves are left in Russia’s grain storage facilities. Today no one will say exactly how much farmers will be able to sell grain for in November. It is not yet clear whether it will be exported abroad and in what quantity. Back in 2021, the price tag remained at a high level. In 2022-2023 the price dropped significantly. Selling is not a problem, what matters is how much. Agricultural producers also cannot work at a loss,” Kopytov outlined the situation.
In addition, weather conditions this year may hit the dairy and beef cattle industry with a further increase in the price of retail products. According to deputy of the Tyumen Regional Duma Tamara Kazantseva, farmers are beginning to get rid of their dairy herds – the reason for this is both low purchasing prices for milk and difficulties in procuring feed.
“In some areas, the grass has grown and hay has been harvested. But there are areas where, due to drought, there was no grass, and livestock will need to be fed with something in winter. I talked with farmers, they confirm that only 50% of the feed has been prepared for today, no more. Due to the wet weather, it’s impossible to collect hay now, and fuel prices are rising. The feed turns out golden,” the deputy emphasized.
According to the agrarian, “people often cannot count on support from the state.”
“Today it is almost impossible to receive a subsidy from the state or a preferential loan from Rosselkhozbank. Officials find fault with every comma. At the same time, no one explains anything, they simply refuse to receive grants. Money can only be raised at huge interest rates. The current situation will affect the cost of goods for the end consumer,” Tamara Kazantseva shared her opinion
It is noteworthy that the courts of the Ural Federal District drew attention to the “nitpicking of the applications of farmers” applying for subsidies. One such example was found in the Chelyabinsk region, where New Agricultural Company LLC (NSHK) was forced through arbitration to seek the cancellation of the decision of the Ministry of Agriculture of the Southern Urals to refuse to provide funds.
The reason for this decision was the argument of officials that “the legal entity has been operating for less than one calendar year, and this indicates that it does not fit the concept of an agricultural producer.”
In court, the company managed to prove that the only type of activity of NSHC that generates income is agriculture.
“The ministry’s arguments that the activity was carried out for less than a year, therefore, the company cannot be classified as an agricultural producer, are presented <...> on a formal basis, and therefore are subject to rejection,” says the decision of the Arbitration Court of the Chelyabinsk Region.
The formal approach of Chelyabinsk officials to the selection of candidates for state support was also confirmed in the appeal.