American wheat can no longer compete with new agricultural superpower Russia
US Wheat Associates (USW) has announced the closing of its Moscow office on October 1 due to lack of demand for American wheat in Russia. Since 2016, Russia has been the global leader in grain exports.
“With much more public information available about Russia’s wheat supply, we believe it is time to end our mission there and continue allocating more resources in markets where our export volume is growing,” said USW Vice President of Overseas Operations Mark Fowler.
According to him, “Russian wheat is obviously very competitive in certain markets, but it is important to point out that our marketing and technical teams based in Rotterdam, The Netherlands, and Casablanca, Morocco, will continue competing for export business in the Middle East and North Africa.”
USW opened its Moscow office in 1992 for “closer cooperation with the Russian government and representatives of the country’s agrarian sector.” The organization said in a report that “over the next ten years, Russia imported a total of about 400,000 metric tons of wheat from the United States, including through a program of assistance in conditions of poor harvest and economic difficulties in Russia in 1998-1999.”
Since then, Russian agriculture has changed to be more market oriented, USW noted, adding that the organization thus had to switch to quality monitoring and price policy in the industry.
“The Russian Federation has shifted from being a net importer of wheat to become the largest single wheat exporting country in the world.”
Russia has managed to capture more than half of the wheat market in recent years, becoming the world’s biggest exporter of grain, thanks to bumper harvests and attractive pricing.
In 2016, Russia became the world leader in wheat exports. Since the early 2000s, its share of the world wheat market has quadrupled.
Russia’s agriculture exports have surged by almost a third in the first five months of 2018. The country exported 29.5 percent more agriculture and food products, worth $9.5 billion, than in the same period last year. In particular, the export of wheat through May surged to 17.1 million tons worth $3.1 billion.
According to the director of the SovEcon analytical center, Andrey Sizov, Russia’s agricultural export market is actively expanding. It supplies grain to Algeria, Jordan, Egypt, Lebanon, Turkey, and Iran, and Saudi Arabia has announced plans to become a major hub for Russian agricultural products in the Middle East.
Overall, agricultural production in Russia is projected to grow three percent this year, from last year’s 120.7 million tons. That would be the best-ever harvest for Russia, even counting the Soviet era.
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