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By John Helmer, Moscow

The war and US war sanctions have reversed the destruction of the Russian farm economy forced during the 1990s by the US “reformers” in the Yeltsin administration led by the recently exiled Anatoly Chubais.  

Now, however, under government orders for self-sufficiency in food production, protection from US biochemical warfare against the Russian food chain, and revival of Soviet seed breeding centres, the American, German, French and Dutch agro-industry exporters which have profited in Russia for thirty years are being locked out.

Not only in Russia and in the Ukraine – the Axis faces long-term competition in Europe, Asia and Africa in the future.

“We are defeating the Americans and Germans on the battlefield,” observes a veteran farm industry source in Moscow. “We are going to do the same on the farm field. Do you remember what Nikita Sergeyevich [Khrushchev] said a long time ago – ‘we will bury you’. And you have been saying that’s what you are going to do to us.”  

This week Russian grain and berry producers went public with a warning that new regulations proposed by the federal Ministry of Agriculture to implement new legislation on seed production, due to come into effect in September, will lessen competition in the domestic market, raise seed and farm product prices, reduce crop yields, and lower production volumes.

“The draft regulation, On the approval of the rules for the localization of the production of seeds of agricultural plants on the territory of the Russian Federation — allows foreign companies to do business on the territory of our country only if they work jointly with Russia’s scientific institutes. The share of the latter in joint ventures must be at least 51%, otherwise the foreign seed producers will not be able to work on the Russian market and supply products.”

This statement was authored by the Russian Grain Union and the Berry Union, and leaked to Vedomosti, a Moscow business newspaper.  With imported seeds accounting for 97% of commercial beet plantings, 72% for sunflowers, 69% for potatoes, 56% for corn, and between 75% and 100% for berries, forcing the exit of foreign companies from the Russian market will cause scarcity, price inflation, and consumer protest.

Source: https://news.agropages.com/ 
In 2018 Bayer took over Monsanto in a $63 billion transaction subsequently reported by US business media to have been “one of the most worst corporate deals”.

The newspaper asked Bayer, Syngenta, BASF, and Limagrain for comment; they refused.

The domestication or localization regulation, as the Russians are calling it, is due to be finalized in a month, following the domestic comment period, the deputy agriculture minister in charge, Oksana Lut, has announced.

The new rule is backed by the grain producers. They told the Moscow press the situation is already that the foreign  companies can leave at any time they choose, or their governments decide for them, and they have been threatening this for a year now. “The  moment may be chosen that will cause maximum damage to the Russian agro-industry,” said a spokesman for the Grain Union. “The new rules will not restrict the rights of bona fide foreign seed growers, but will give them the economic incentive for their continuing presence and development in the Russian market.”  

“The fact is that our seed production in Russia was destroyed back in the 90s,” tomato breeder Tatiana Tereshkova told an industry publication a year ago. “Once we had specialized farms with special equipment and people. But since they completely switched to import, the farms were overturne, and the specialists went to other areas. Now all this needs to be revived from scratch. If the state considers that this is really necessary, then everything can be resuscitated.  There are the people; there is also the will.  The main thing is that there should be no indulgence towards foreign manufacturers. It seems to me that in two to three years we will cope if necessary.”

After President Yeltsin and his US proxies, acting prime minister Yegor Gaidar and Kremlin chief of staff Anatoly Chubais had destroyed the Soviet seed research and development centres,   Russian agriculture lagged far behind other countries. The commercial incentives were also transformed in favour of  imports of foreign seeds, plant stock, and insecticides and herbicides.  According to Vitaly Barakhtenko, founder of the Museum of Seeds and Plant Protection Products in St. Petersburg, “across the world seeds are usually harvested from the equatorial zone, because there are the most favourable conditions on the planet: constant sun, stable temperature. Imagine, in winter and summer about 28 degrees! Under these conditions, the seeds develop much better. Plus, you can grow three to four crops. No greenhouse in Russia will give such a result. But you can approach it.”

“Today we are buying seeds abroad, because during Yeltsin’s time all the seed banks were destroyed, and the seed breeding stations were closed,” Arkady Dudov, a Leningrad region farmer told an agro-industry website. “It takes decades to revive all this. Here in Leningrad we kept the seed bank for the country safely underground . Above, during the Great Patriotic War, the city population under the blockade were dying of hunger, but they did not eat the seeds. And then Yeltsin blew it all. As a result, all the seeds we have now are Dutch and American. They sell us the hybrids that we grow. But we cannot immediately cultivate a clean line from these fruits, it takes five years to do this. I took care of this problem for myself seven years ago, got the first seeds, the first results. But at the local level, this is not supported in any way;  on the contrary, they are strangling the farmers by all sorts of checks.”

In 2017 the US Department of Agriculture (USDA) took note of the shift in Kremlin priority,  reporting on the new government programme for stimulating seed production and food self-sufficiency. The official papers were issued in Moscow in August 2017 entitled the “Federal Scientific and Technical Program for Agricultural Development in 2017-2025”.  The plan calls for financing from the federal budget of Rb26.1 billion ($438 million) until 2025. Another Rb25 billion ($419 million) is to be provided by provincial budgets and non-budget, commercial sources. The efficacity of the plan is to be measured by annual performance against target indicators for investment in agriculture, growing production of new domestic seed varieties, livestock genetics, feeds and feed additives.

Source: https://apps.fas.usda.gov/

The USDA report was skeptical of the Russian capability to achieve the plan’s objectives. “If one of Russia’s biggest agricultural exhibitions, Golden Autumn, is any indication, business has been conspicuous by its absence at the key events of the forum’s agenda devoted to the Program.”   That was late 2017.

The USDA data show Russia started introducing field crop seeds from the US in 1994 with $13.2 million worth of imports.  The total annual value peaked at $37 million in 2018 when Russia was one of the top-10 markets in the world for US seed exporters. It then dropped to $22.7 million in 2020; it is zero now.   As the latest tabulation from the USDA’s Foreign Agricultural Service (FAS) shows, Russia is no longer in the top-10.  

Click to enlarge and read.

As a direct response to US economic warfare and sanctions, Russia’s Food Security Doctrine of 2010 was revised. On January 21, 2020, the Kremlin issued new targets for self-sufficiency, and also for combatting the new risks of US and German (Monsanto and Bayer) warfare using genetically modified crop seeds and related products to poison Russia’s food chain.  

A translation into English has been published by the Foreign Agricultural Service (FAS) of the USDA here.  Note the date – the Covid-19 virus pandemic had not yet been recognized, and Russian Defense Ministry reporting of US biochemical warfare plans against Russia had yet to be made public.  

According to the USDA report, “the new section of the January 2020 strategy devoted to national interests related to food security aims to prevent the import and distribution of genetically modified organisms for planting, and prohibits raising and breeding animals whose genetic code has been engineered or that carry genetic material of artificial origin as key provisions. The only exception to the ban is the import and sowing of genetically modified organisms for examination and research purposes, as well as the growing of such plants and breeding of such animals for examination and research purposes, according to the Doctrine. Additionally, the new doctrine expanded the list of self-sufficiency indicators to include vegetables, melons and gourds with a value of 90 percent, fruit and berries at 60 percent, and seeds at 75 percent.”

Source: https://apps.fas.usda.gov/

The practical and financial effect of the war sanctions subsequently imposed by Washington in 2022 on US corporations operating in Russia has been to cancel the Yeltsin, Gaidar and Chubais “reform” once and for all. This has hit the Corteva corporation, one of the world’s largest seed and herbicide producers, with losses on its income, earnings and profit lines, as well as in its share price on the New York Stock Exchange.

Source: https://www.corteva.com/

Source: https://markets.ft.com/

In the years ending 2021 and 2022, Corteva, whose global sales revenue exceeded $17 billion, reported that seed sales to Europe amounted to between 18% and 20% of the group’s worldwide seed sale revenues. Corteva’s financial reports indicate that corn seed is the principal one worldwide, followed by soybean; sunflower seeds (under the Pioneer brand) have been the biggest seller to Russia, and also the Ukraine.  Herbicides and other crop protection chemicals are the second largest source of Corteva’s revenues

In the company’s financial reports and investor briefings, sales to Russia (and Ukraine) of Corteva seeds have been aggregated in a single Europe, Middle East and Africa (EMEA) total. The market wasn’t misled. After Corteva’s announcement a year ago of its war sanction exit from Russia, the company’s share price dropped 13% on the New York Stock Exchange, but it has recovered most of the loss. Payroll cuts, job and other losses were recorded at the company’s California unit.  The losses which Corteva recorded for 2022 in income and profit in its European (EMEA) operations have been more significant than the media have noticed.  

Bayer, the leading seed producer and exporter in the global table, and also in the Russian import market, initially threatened to close down and withdraw from Russia last March, but it didn’t follow through. Instead, at the beginning of this month, the German management  announced Bayer’s increased support for the Ukraine, plus a stop to “all spending in Russia and Belarus that is not related to supplying essential products in health and agriculture”,  adding “we will continue to monitor developments and evolve or adjust our response as necessary.”   Bayer’s seed sales have continued;  the company refuses to answer questions from Russian reporters.  

The Germans are afraid — Moscow sources report off the record —  that if Bayer stops selling seeds to Russia, it will be locked out of the Russian market forever; make next to no gain from the partitioned Ukraine; and in the longer term face competition globally from Russian seed exporters.

Because of the war conditions, and the damage the US, German and French governments are  aiming to inflict on Russian agriculture, Russian seed industry sources are reluctant to speak to or be quoted by non-Russian reporters. Instead, the sources discuss openly government and commercial policy-making and their debates with government officials in the Russian agro-industry media and the Moscow business press.

Alexander Olson, who directs the Dutch Rijk Zwaan company’s   operations in eastern Europe and CIS (Commonwealth of Independent States), has told Kommersant that over the past fifty years, Russia has accumulated great experience in seed selection. This, he says, is reflected in that the country is home to one of the world’s largest and most unique seed collections located at the Vavilov Institute, also in St. Petersburg. Vavilov remains  the world’s most important repository of seed genetic material, according to Olson. ‘Despite the existence of such a centre, most seed selection programs in Russia closed after the collapse of the USSR,’ Olson explains. “Seed selection is a long and complicated process. ‘For example, a commercially successful white cabbage hybrid requires about 20 years to create.’ To restore this sector of agriculture in Russia, Olson says large investments and state support are needed.”

Without the sanctions war, this Russian restoration would not have occurred.

“Viktor Yakushev, who serves as director of the Agrophysical Research Institute within the Russian Academy of Sciences, told SeedWorld.com in 2019 that seed material for most of Russia’s agricultural crops are primarily purchased abroad. “In the case of oil-bearing and some industrial crops, the volume of imports of seed material is currently estimated at 50 percent to 70 percent of the market,” Yakushev says. “At the same time, in the case of potatoes, vegetables and greens, these figures are lower … in the range of 40 percent to 50 percent. “It is important to provide the Russian seed market with varieties and hybrids of domestic selection that are not inferior to … the best imported analogues. For these purposes, it’s necessary to radically change the methodology of [the] entire selection process and create a large-scale center to specialize in these activities.”  

Source: https://www.kommersant.ru/doc/5493536 

Source: https://www.zol.ru/n/386fc 

The Russian seed producers, both the state funded centres and the commercial enterprises, have joined the lobbying of deputy minister Lut with a call for more comprehensive import substitution, especially for sugar beet and potatoes.  According to Academician Salis Karakotov, chief executive of Schelkovo Agrochem, “ it is remarkable that we, the world’s leader in grain, have  set ourselves the task of import substitution of grain crops, spring and winter wheat. Is it  worth keeping them out of the market?  I think we have practically no equal in varietal crops in the world, and therefore spring and winter wheat had to be protected by some special actions for the purpose of preventing them from entering our market.” At present Karakotov estimates that Russia’s dependence on imported spring wheat seeds is 23%.

“We cannot continue with the appearance of foreign varieties in our registers. It would be best to do it [substitution] where we most need it. [For example] the government’s plan for potatoes and sugar beets is weak.”

Schelkovo’s principal line of business is the production of pesticide and other crop control agents.    It is also leading the domestic commercial race to produce beet seeds to end the foreign imports from Germany and France.  With investment from Rusagro, the land bank and beet producer owned by Vadim Moshkovich,  Schelkovo is working to develop beet seed supplies to overcome the reasons for the serious deficit in that crop. Disease resistance, yield and cost effectiveness have been the chief reasons Russian beet growers have preferred imports.

“Since 2017,” Schelkovo’s website reports,    “Rusagro in cooperation with Shchelkovo AGROCHEM has been participating in the development of increased yields for sugar beet. The SoyuzSemSvekla breeding and genetic center was opened in the Voronezh Region in 2019. Key objectives: the creation of new highly productive and disease-resistant sugar beet hybrid with uniformity of biological and morphological characteristics. The first hybrids were registered in 2019. As of the end of 2020, 21 self-breeding sugar beet hybrids were registered in the State Register of Breeding Achievements approved for use in the Russian Federation. The Company is going to sell about 40 thousand seeding units in 2021. The work of the selection and genetic center SoyuzSemSvekla [Union of Beet Seeds]  is carried out within the Federal Scientific and Technical Program for the Development of Agriculture for 2017-2025, the subprogram ‘Development of selection and seed production of sugar beet in the Russian Federation’, according to the developed complex scientific and technical project ‘Creation of highly competitive hybrids of sugar beets and the organization of their seed production system’. In 2019, the project was selected by the commission of the Ministry of Agriculture of Russia to receive state support. It was supported with state in 2020.”

Source: https://eng.betaren.ru/about/ 

According to Karakotov,  seed breeding is accelerating in Russia. “By itself Schelkovo Agrochem is already offering for sale 16 varieties of wheat, 11 varieties of soybeans, 27 sugar beet hybrids, 13 sunflower hybrids,  and 10 corn hybrids with competitive yield indicators. Karakotov noted that dependence on imported seed material for soybeans is high, but Russian institutes and businesses are actively developing in this direction and already have varieties on the market with yield indicators of 23-28 quintals per hectare, and protein — 41.0–44.4%. For soybeans, I think we need to implement a more active plan, said the head of the company, commenting on the government decree of December 23, 2022 on plans for self—sufficiency with seeds of major crops in the Russian Federation.

“Referring to sunflower, Karakotov noted there are already domestic hybrids on the market that have shown yields from 21 to 32.7 quintals per hectare. According to him, by 2030 Schelkovo will be ready to produce 1 million sunflower seeds on hybridization plots of 14,500 hectares, which will make up 25% of the demand. Speaking about sugar beet, Karakotov noted that together with the Sugar Beet Institute, the company is ready to supply 120,000 sowing units in 2023 (13% of the demand), and by 2027 to close 75% of the market needs by supplying 675,000 seeds.”  

The Russian problem is that although it leads the world in volume of the sugar beet harvest, it manages to do so on double the area sown – 1.1 million hectares — with a 48 kilogram yield per hectare that is half that of France (85.1 kg/ha) and almost that of Germany (77.2 kg/ha). By going to war against Russia, they will have lost their productivity advantage within five to ten years.  The Russian advantage in land and other cost of production factors will then drive the French and Germans out of the global market.


To enlarge and read, click on source.

In the  policy debate this month in Moscow, some government officials are opposed to the state mobilization approach. The Ministry of Economic Development, for example, a surviving redoubt of US “liberalism”, is arguing the old Chubais line against “provisions introducing excessive duties, prohibitions and restrictions for individuals and legal entities in the field of entrepreneurial and other economic activities or contributing to their introduction, as well as provisions leading to unreasonable expenses of individuals and legal entities in the field of entrepreneurial and other economic activities.”

Another relic of US corporate and government intervention and the old oligarch incentive schemes remains the  Higher School of Economics (HSE). HSE academics advocate “privatization” and oppose state planning on the ground that the import ban  “would dramatically weaken the competitiveness of the Russian agro-industrial complex and stop the further development of seed production. An alternative is an approach to the problem of import dependence from a business point of view. The demand for seeds should be created by the agricultural producer, the customer for whom the breeders will work. Such a scheme will reduce the dependence of breeding on government subsidies. Farmers will be able to pay for the seed material, and the funds will be directed to the development of domestic seed production.”   

The oligarchs who once used Chubais to promote this line to advantage their businesses have been forced by the war to switch, like Moshkovich at Rusagro. How much money the state is contributing to Schelkovo and how much Moshkovich, and what share of the profits they are drawing, is not disclosed by either Schelkovo or Rusagro. Schelkovo is not currently listed on the top-10 table of Russian seed producers.


The rating includes the top-15 Russian producers and the top-10 foreign companies in the Russian market. Click on source for the complete listings: Source: https://vestnikapk.ru/

There is a risk that the “non-competitive” seed producers, that is the state seed research institutes, will win out in the lobbying for the final Kremlin decision. According to Natalia Shagaida, head of the RANiGS Agri-Food Policy Center, a commercial consultant, “many Soviet varieties remain uncompetitive. It is necessary to take into account the long-term underfunding of breeders. Many Russian breeders do not know how (or they do not have the strength and means) to promote their products among agricultural producers in the way that foreign giant companies have done. We have practically no breeding business. There is no breeding as a business for making money. You can give public money, but it is scarely appropriate to give to those structures which cannot function as a business – they are not aimed at development. There they can bring out a variety and make a hybrid, enter it into the register, but go no further. As for imports, they will limit themselves when the Russian growers see there is a competitive Russian product.”  

Deputy Agriculture Minister Lut pointed out in parliament last month, “we are not against working with foreign companies. But we want foreign companies to be normally localized in our country. We want everything from germplasm to be in the country simultaneously, so that they will transfer technologies to us, train our people. Our market is a good one;  it is interesting to work with us. If they want to work, then we will ask them to do so. Otherwise, they will not work in our market.”

During the transition period required to reach the new 2030 targets  — 50% for beets and potatoes, 75% for sunflowers, 77% for corn – the government and its supporters propose to introduce import quotas. According to Igor Lobach, chairman of the National Seed Alliance, “It was necessary to quota the import of seeds five to seven years ago. We must protect our market. Now it is necessary to introduce them for each crop separately, first of all, for sunflower seeds, corn and sugar beet, and to reduce the quotas in stages, as the volume of domestic seeds increases.” Lobach said at a conference on seed production in Krasnodar.  

“The quotas should be introduced based on calculations of the capabilities of domestic producers to replace the vacant niche. At the same time, the quota size should be adjusted downward annually. We have experience in introducing quotas and it is positive. You will remember about poultry meat — we imported it at 1.2 million tonnes per year, and now we have reached full security (after the introduction of an import quota). It is necessary to go this way in seed production. At the same time, Lobach says it is not necessary to completely abandon the services of foreign companies. Foreign companies are needed for two reasons: firstly, it is difficult to expect a significant breakthrough in breeding if genetic material is not exchanged; and secondly, it is necessary to maintain competition in the Russian market, ensuring the level of our breeding is not lower than that of advanced seed-growing countries. At the same time, the presence of foreign companies in the Russian market should not exceed the share determined by the country’s food security doctrine, and they should work on it according to the rules that take into account the interests of the state.”  

Lut’s ministry is proposing to introduce quotas for the import of seeds of nine crops in 2024. These are seeds of potatoes, wheat, rye, barley, corn, soybeans, rapeseed, sunflower,  and sugar beet. The quota period will run from January 1 to December 31, 2024 inclusive. The size of quotas will gradually decrease. In addition, the ministry plan calls for reserving the seed import quotas only to those foreign companies which have committed to localizing their operations in Russia with a plan submitted to and approved by the government.

Through the Russian think tanks, the foreign lobby is fighting the quota plan. “Restrictive administrative measures over the  long term show, as a rule, a negative result, and they should not be abused, according to Alexei Ivanov of the Higher School of Economics (HSE) where he runs the International Centre for Competition Law and Policy of the BRICS. He reminds us that we have already had unsuccessful examples of using the quota tool, for example, in the automotive industry – this did not lead to an improvement in Russian cars. If we are trying to help Russian farmers use Russian seeds more, we need to introduce measures to support, not to close or restrict the market. And now we want to avoid stress for the market by creating stress artificially. To remedy the situation, it is necessary to create a fully-fledged private breeding in the country…Commercialization has already proved its effectiveness in the agro-industrial complex itself – this has led to a significant increase in labour productivity, and Russia has turned from a net importer country into a net exporter of agricultural products. And in order for private breeding in Russia to work, it is necessary to provide companies with a return on investment and receive royalties for their intellectual property.”  

Since the US and European Union have intensified economic warfare, and Moscow has reacted by making illegal donations, subsidies, and other forms of foreign financial sponsorship, HSE has attempted to create new ties with the friendly states – India, Vietnam, Brazil and the BRICS organization.  

Top: left, Vitaly Barakhtenko, founder of the Museum of Seeds and Plant Protection Products of St. Petersburg; right,  Leningrad region farmer Arkady Dudov. Bottom: First Deputy Agriculture Minister Oksana Lut; Academician Salis Karakotov, chief executive of Schelkovo Agrochem;  National Seed Alliance chairman Igor Lobach.  

President Vladimir Putin and the Kremlin have yet to make public their decision between the state and privatization options of the seed plan.

None of the sources identified in this story and then contacted for direct comment and answers to questions would agree to speak to the foreign press on the telephone; all requested emails of the questions and then refused to answer.

NOTE: the left lead image is one of two posters created by James Montgomery Flagg  to stimulate domestic food production in the US during World War I. The poster was commissioned by a US  government agency, the National War Garden Commission, in 1917. The right image is a cartoon of April 1920 by John McCutcheon, published in the Chicago Tribune,   mocking the members of the League of Nations for sowing the seeds of war instead of promoting the League of Nations mandate for world peace. The US is shown behind the Monroe Doctrine, its self-proclaimed protectorate of the Americas.  As the contrasting examples of Corteva and Bayer reveal since February 2022, the new fence erected by the US and its NATO allies has attempted to extended the protectorate eastwards until the war began. The fence now permanently excludes the US from Europe’s largest agro-industry market.

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