Corn and soy in Russia: the latest fad or a new cash cow?

Transcription

1 Corn and soy in Russia: the latest fad or a new cash cow? Sergey Chetvertakov Thünen Institute of Farm Economics Seite November 1 12 th Vorname 2015 Nachname Datum Agritechnica, Hannover Titel der Veranstaltung

2 Let s grow together. 1. Understanding growers needs and constraints enables you to improve products and services. 2. Understanding trends in global crop production allows you to adjust strategies. 3. Understanding agronomical and economic drivers of current production systems is the basis for innovations. 4. Understanding strengths and weaknesses of production systems from a global perspective makes it possible to take profitable decisions. Seite 2 Datum Page 2 Vorname Nachname Titel der Veranstaltung

3 Who we are and what we do 1. agri benchmark is a global, non-profit network of agricultural economists, advisors, producers and specialists in key sectors of the value chains. 2. We use internationally standardized methods to analyze farms, production systems and their profitability. 3. We combine our farm-level knowledge with our expertise in international commodity markets and value chains. 4. Thereby we are able to provide scientifically consistent and soundly based answers on strategic issues to decision makers in agribusiness, policy and farming. Seite 3 Datum Page 3 Vorname Nachname Titel der Veranstaltung

4 Present in all major countries and crops Crop coverage : Corn Soybeans Wheat Sugar beet Rice Rapeseed Oats Rye (Malting) barley Sunflower Sorghum Cotton Peas Beans Palm oil Sugar cane Countries participating in agri benchmark Cash Crop Countries to come online 2014/15 Priorities for new partnerships Seite 4 Datum Page 4 Vorname Nachname Titel der Veranstaltung

5 Major clients and research partners Seite 5 Datum Page 5 Vorname Nachname Titel der Veranstaltung

6 Agenda 1. Background 2. Survey 3. Conclusions Page 6

7 Corn and soybean production in Russia key parameters (2000 vs. 2013) Crop Federal districts Increase in acreage (% per year) Increase in yield (% per year) Share in national output (2000) Share in national output (2013) The Russian Federation % 100 % Central Federal District % 32.7 % Corn Soybeans Southern Federal District % 37.8 % Volga Federal District % 5.3 % Far Eastern Federal District % 1.3 % Other % 22.9 % The Russian Federation % 100 % Central Federal District % 30.9 % Southern Federal District % 20.9 % Volga Federal District % 4.4 % Siberian Federal District % 1.2 % Far Eastern Federal District % 39.5 % Other % 3.1 % Page 7

8 Central Black Soil Region (CBSR) Source of the map: google.com/maps Page 8

9 Crop acreage trends in CBSR Page 9

10 Yield trends in CBSR Page 10

11 Who is producing corn, soy and wheat in CBSR? Because corn is a demanding crop, hence it s more popular for well positioned enterprises Source: Page 11

12 Agenda 1. Background 2. Survey 3. Conclusions Page 12

13 Overview of the study Aims of the study are: a) identification of drivers for a crop pattern change: market vs. non-market; b) determination of opportunities of further corn and soy expansion. How? conduct a survey. Why? - to get economic data for crop net-return comparison; investigate farmers experience and their impression of growing corn and soybeans; plans for growing in the near future. Page 13

14 Survey details Where? Voronezh region, the total crop acreage in 2013 reached 2.6 million hectares (27% of the CBSR acreage). When? from March 27 to April 12, Who? 15 decision makers or farmers growing corn and/or soybeans for three years or more. Selected from a list provided by the local authority. How? face to face structured interviews. How long? each interview lasted for about 1 hour. The total acreage of participating farmers is 391 thousand hectares, which represents 15% of the total Voronezh region acreage. Questions represent a combination of open and closed questions. Page 14

15 Box-and-whisker plot of profit Wheat Corn Soybeans USD per hectare Coefficients of variation: 40% - wheat, 46% - corn, 23% - soybeans Page 15

16 Profit of corn, soy and wheat in the surveyed farms Average corrected profit: wheat $468 per ha, corn - $609 per ha, soybeans - $545 per ha Page 16

17 Cost per ha ratio for surveys farms Page 17

18 Framework conditions for corn and soybean expansion 1) Storage - lack of storage facilities is not an issue. Only 1 farmer marked this as a problem. 2) Drying capacity most of the farmers have own drying equipment (12 out of 15 corn growers). 2 more farmers expressed their willingness to purchase such equipment in the near future. 3) Transport transport is not an issue as contractors provide a high supply. 4) Market distortion (political influence, subsidies) does not have an effect. Page 18

19 Future prospects according to farmers No respondent had the specific intent to increase land for corn production. Most of the respondents mentioned that they make plans for the next season according to the outcome of the previous one. 7 out of 15 farmers grow soybeans and 3 of them expressed intention to increase the crop acreage. The remaining 4 in the short term will keep the amount of crops at the same level. In addition to this, out of the 8 respondents who had never grown soybeans, 4 intend to plant it in the coming season. Page 19

20 Agenda 1. Background 2. Survey 3. Conclusions Page 20

21 Conclusions 1. Findings indicated that corn and soy acreage expansion is rooted to economic reasons. Neither administrative levers nor subsidies specifically promote the growing of corn and soybeans. 2. Most farmers reap more profit per hectare from corn and soybeans in comparison to winter wheat. 3. Corn costs are greater than for winter wheat that issues liquidity. 4. The introduction of soybeans requires less cost and can generate higher returns than wheat. Such a superior condition of soy encourages farmers to invest in this crop. 5. The likelihood of expanding the soybean acreage rather than that of corn is higher in this region due to the lower production cost. Page 21

22 A lot of room for growth - crop shares in CBSR (2014) Source: Page 22

23 Knowledge is our Business Thank you for your interest Sergey Chetvertakov Member of agri benchmark Cash Crop team Thünen Institute of Farm Economics Bundesallee 50, Braunschweig Germany phone mobile internet page 23

24 Farm-gate prices in 2013 (USD/t) Page 24

25 Typical on farm yields in (t/ha) Page 25

26 Production costs in 2013 (USD/t) Page 26