Russia’s economy continues to sink like a stone because of low oil prices and the West’s economic sanctions. The situation will not be any better this year, says a new report from the renowned Moscow School of Economics.
Most sectors are struggling, including the construction sector, trade and industry, but there is one bright spot: agriculture .
Import prohibition gave upturn
After Russia annexed the Ukrainian peninsula of Crimea spring 2014 introduced Westerners economic sanctions against Russia, and Moscow responded in kind. Among other things, Russia stopped imports of agricultural products from the West.
President Vladimir Putin has launched a campaign that Russia will become self-sufficient. Large companies have invested billions of rubles in agriculture. Agriculture has become “big business” in the east.
Biggest in history
Putin’s commitment to agriculture is beginning to yield results. Russia is likely to get the largest corn crop in history, bigger than the record harvests of Tsarist Russia a century ago, writes the Russian magazine Expert.
The Russian farmers also benefit from the ruble has depreciated sharply because of the crisis, which has given them a much better competitiveness. In addition, weather conditions were particularly good in the east with a mild winter and a hot and wet summer.
Greater than EU-US
A report from the US Department of Agriculture (USADA) states that Russia in the agricultural year that runs from July 2016 to July 2017, is likely to get history’s greatest wheat crop. USADA estimates that production will reach 72 million tons of wheat, an increase of 7 million tons last year.
“Never before in history has Russia had such high production, even in the 1960s and 1970s when one grown much larger areas, “writes USADA.
Also the production of corn, rye and oats are record high.
Russia is this year set to be the world’s largest exporter of wheat with 30 million tons, an increase of 5 million tonnes from the previous year. Russia beating the US and EU who have previously rockers tried to be greatest.
Killed large farmers
Russia were among the biggest grain exporters – the largest wheat exporter – before the communist revolution in 1917, but was a net importer throughout the Soviet era. For several years to Moscow to buy grain from archenemy the United States.
After the revolution was farmland expropriated, and big farmers, the so-called bullet creases, were declared enemies of the people. In the late 1920s began Stalin a brutal kollektiviseringsprosess, where millions lost their lives.
Even more millions died in the famine that followed in 1932-33. Collectivization brought about mechanization and large user benefits, but the system matured beyond the 70s and was very inefficient. Often rotted crops on root.
Agriculture collapsed
In 1991 broke agriculture closest together. The former collective farms had major problems paying bills and salaries. In 1998, 84 per cent of farms went bankrupt, and a third of the agricultural land is lying fallow.
In 2000 the bear to the east for the first time in over 80 years self-sufficient, and gradually began farmers to stack themselves up , aided by large investments.
the potential for growth is still enormous. Experts estimate that Russia has 40 million hectares of agricultural land that lies fallow. It’s an area the size of Iraq.
Steep fall continues
According to the Moscow School of Economics, the Russian economy has fallen by 5.5 percent since 2014, the researchers estimate that it will fall by a further 1.5 percent this year.
“We do not expect much economic growth in the near term”, said economists.
They also warns that the Russian government can running out of money. The government budget deficit is larger ennn during the financial crisis a few years ago, and the state depends on transferring rubles from a reserve fund built up when oil prices were sky high.
The report from Moscow college estimated that the reserve fund could be emptied of money already this year.
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