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15:03 GMT +3 hours22 December 2014
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Russian Grain Harvest to Fall 15% in 2012

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Russia may harvest less than 80 million tons of grain in 2012, compared to the 94.2 million tons brought in last year, Russia's National Union of Grain Producers head Pavel Skurikhin said on Thursday.

Russia may harvest less than 80 million tons of grain in 2012, compared to the 94.2 million tons brought in last year, Russia's National Union of Grain Producers head Pavel Skurikhin said on Thursday.

In late June, the Agriculture Ministry forecast the 2012 harvest at 85 million tons, with exports at 20 million tons. Russia downgraded its grain harvest forecast from 94 million tons to 85 million tons in June, owing to continued rains in the south of the country.

"The harvest seems to be less than 80 million tons but anyway it is enough to meet internal demand [at 73 million tons]. We do not expect any deficit," Skurikhin told reporters, adding the amount of exports for this year was still unknown.

The lower harvest has also been attributed to the farming sector's huge debts, including outstanding loans of 1.7 trillion rubles ($51.8 billion), higher than the industry's overall revenue. "The core problem is a high loan burden on farms which causes problems with access to working capital and hence a fall in technical capability," Skurikhin added.

Grain production costs grew at least four-fold from 2002 to 2009, while wheat prices only grew from 2,000 rubles to 4,300 rubles per ton in the same period, he said.

Lack of fertilizer is also sapping output, with farmers using only 2.2 million tons of fertilizers per year in the past decade, down from 11 million tons a year at the end of the Soviet period.