Russian agricultural sector weathers negative effects of pandemic
Growing even in times of turmoil, agriculture remains the cornerstone of the Russian economy. In 2020, private farmers and agricultural enterprises ramped their production levels up, while the share of household farms continued to decrease.
Russia’s agricultural sector enjoyed another year of growth in 2020 despite multiple shocks to the country’s economy, reports bneIntelliNews citing Bank of Finland Institute for Economies in Transition (BOFIT). Grain harvest increased by 10% last year to 133 million tonnes approaching the record harvest of 2017 of 135,4 million tonnes. Overall, agricultural output grew by 1,5%, which was weaker than in previous years, as the sector still suffered from the effects of the pandemic.
The development of the sector has been fuelled by the Kremlin’s ban on all agricultural imports to Russia imposed in 2014 as tit-for-tat sanctions against the European Union. Russia used the ban to pour investment into agriculture to make the country autonomous. As a result, grain exports have become a significant contributor to the budget bringing around $25 billion in 2020. Russia’s key agricultural company Rusagro increased its revenues by 36% year on year in the fourth quarter of 2020 and by 17% for the whole year.
However, production of certain crops such as potatoes declined considerably, while sugar beet production collapsed to levels not seen in many years, reports BOFIT explaining the fall by smaller areas under cultivation and smaller harvests per area.
According to the report, the fastest growth has been posted by private farmers, whose share of total crop production has gradually risen to more than 20%. Agricultural corporations, co-operatives and organisations have also succeeded in rapidly ramping up production. Currently, they account for about 55% of Russia’s crop production and over 60% of livestock production. At the same time, production of household farms has contracted gradually over the past decade, although they still account for nearly a quarter of crop production, about two-thirds of potato production and over half of vegetables.
However, part of Russian agricultural production is literally home-grown, marks bneIntelliNews. Traditionally, Russians have grown a lot of their fruit and vegetables on their own plots of land aka dachas. While in the 1990s, when the majority of Russia’s potato production was dacha-grown, it was a real necessity, now it is more kind of a hobby aimed to maintain 'freshness' and 'naturalness' of the food. In 2020, the COVID-19 pandemic forced many Russians to pass much of their time in the garden, as people moved to their dachas to self-isolate.