Russia loses over $1b after drought hits crops

Russia’s agriculture industry faces losses of over one billion dollars after a record drought destroyed over a quarter of its crops, an official said Monday.

“The losses amount to about 32.7 billion rubles (1.07 billion dollars),” Deputy Agriculture Minister Alexander Petrikov was quoted by the Interfax news agency as saying.

He said the drought had destroyed some 11 million hectares (27 million acres) of crops or 26 percent of the total harvest.

Before the drought and a blistering heatwave, Russia was one of the world’s top wheat exporters, but Prime Minister Vladimir Putin announced a ban on foreign grain exports earlier this month as the harvest forecast was slashed.

The export ban, which runs at least to the end of the year, helped drive wheat prices to multi-year highs, sparking fears that food costs could soar and boost inflation.

Russia’s harvest is expected to be sharply lower at 60-65 million tonnes of grain compared with 97.1 million tonnes in 2009.

So far, Russian farmers have harvested 40.7 million tonnes of grain, a drop of 17.8 million tonnes from the same time last year, according to the agriculture ministry.

Despite the export ban, consumers are likely to see some staggering price hikes, such as on buckwheat, a staple in Russian diets.

“Reserves from last year are not large, the forecasts for the harvest this year are down, that is why we expect it to have the sharpest hike in prices to hit buckwheat, from 40 to 60 percent,” Mikhail Sussov of the X5 Retail Group distributor told Interfax.

Sussov said he expects the prices of dairy products to rise by 20 to 30 percent due to lower production.

Source: AFP