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By John Helmer, Moscow

If you think Russia’s food supply is crashing under the impact of international sanctions because that’s what the Obama Administration is telling its media, think again. This week’s reported panic over the staple buckwheat (Fagopyrum esculentum, groats, grits, гречневая крупа) is a figment.

Russia is the world’s largest producer of buckwheat. Food and Agriculture Organization (FAO) figures indicate that worldwide more than 2.1 million hectares are sown with the cereal plant, about 40% of them in Russia. Annual production of buckwheat in Russia comes to 40% of the global total – 800,380 tonnes, according to the FAO in 2011. China ran second with 720,000 tonnes; Ukraine was third with 281,600 tonnes. Since then Russia has been more stable than China, and remains fractionally ahead in tonnage. Ukraine has been trending downwards, sharply this year. The next three in global output — Poland, the US and France – have been flat, as the table illustrates.


the decade trend

Source: FAO, http://knoema.com

This week national and regional media have been reporting a dramatic jump in buckwheat prices, particularly in eastern Siberia. The headline of one report is “Buckwheat conspiracy”. According to another, the headline is “why are liberals speculating on buckwheat”. A third claims: “The prices of buckwheat will grow almost twice because of a crop failure in the Urals and in Siberia”. In Chelyabinsk the headline is more measured: “In the south of Urals the price of buckwheat will get more expensive again.”

A detailed statement of reassurance has been issued by the federal Ministry of Agriculture: “There is enough for everyone! Russia ranks first in the world in the production of buckwheat. And not for nothing buckwheat enjoys popularity among Russians, because this cereal is rich in macro- and micronutrients (iron, calcium, iodine, zinc, fluorine, phosphorus, cobalt, molybdenum), vitamins (PP, E, B1, B2, B12), and lecithin, digestible proteins, organic acids and oils. Carbohydrates contained in buckwheat, digested slowly, keep the feeling of satiety for a long time and do not lead to rapid changes in blood sugar levels.”

shutterstock“The standard norm of consumption of buckwheat per person is 3.5 kg per year. Consequently, in Russia there is a requirement for production of 550,000 tonnes.”

“According to Rosstat, in the current year in all categories of farms, the [buckwheat] cultivated area of the Russian Federation amounted to 1,014,600 ha or 92.8% of last year’s level. Threshed buckwheat is in an area of of 738,200 ha or 97.3% of the total area. Harvested buckwheat totals 744,600 tonnes , with an average yield of 10.1 t / ha. In the past year on this date the harvest totalled 584,700 tonnes from an area of 521,800 tonnes. This amount is sufficient to cover the population’s entire grain requirement. Taking into account carryover stocks, we have the ability to export. The remaining area is harvested into rolls and is under the snow. Under favourable conditions in the spring, these areas can be threshed. There is experience in Siberia for this.”

The independent agro-industry consultancy Sovecon agrees. According to Andrei Sizov, “there is no deficit of buckwheat . There is a serious discrepancy between temporary price offers at Rb40 per kilo and above in wholesale, and demand prices at about Rb20. I do not see panic demand for buckwheat at the moment.”

Alexander KorbutAlexander Korbut (right), spokesman for the growers’ organization, the National Grain Council, explains what has happened to provoke the media: “Three weeks ago there was snow in Siberia, and part of the sown buckwheat was not harvested. So information on buckwheat went under the snow, too, and it has not been cleared up. But speculation in the media did not realize this. They have not figured out that under the snow disappeared only a [small] part of the area. The differences are not significant. There was an emotional factor first in that farmers seeking to maintain their incomes raised their prices. This went further through the price chain, and then everyone thought this is going to be another dramatic movie.”

“Tentatively speaking, we are gathering 690,000 to 700,000 tonnes of buckwheat in weight after processing. This is less than last year’s total of 840,000 tonnes, but it is double what it was in 2010, when there really was a certain external deficit of buckwheat. The situation began to calm down, but emotionally, people, hearing that this year may be bad for buckwheat, recalled 2010. Although they have not consumed all the reserves which were bought in 2010, people went to the store. Naturally, simple people went to the store; they bought a low grade of buckwheat, and triggered a domino effect. People who do not need buckwheat went to the store, and seeing there is no buckwheat on the shelf in one shop, and only a little in the next, started buying in the third. There is no real deficit of buckwheat in the country, and never will be.”

Philip Owen for Volga Trader confirms there is no buckwheat supply problem in the market. Volga Trader of the UK advises companies in the food supply industries with the means to enter the Russian market; it has an operations centre in Saratov, and a sales office in Bridgend, Wales. “There has been a modest harvest failure of Urals buckwheat. Looking back, buckwheat prices surged after the drought damaged the potato crop in 2010, and they have not really fallen back. It is likely that firms in the supply chain remember this event. They know from experience that demand will not fall significantly when buckwheat prices rise at times of shortage in other products. Some Duma member said that Russia didn’t need imported food—that Russians could live on potatoes and buckwheat. That might have been an atmosphere- setting event.”

An analysis by Daria Isakova of Otkritie Capital, published today, notes that the comprehensive rate of inflation is gaining at almost 1.1% per month, and that as of November 17, it is 8.8% year on year. The spike in buckwheat prices is sharp, she adds, but not comparable to 2010, and unlikely to last.


According to Isakov for Otkritie, “even though this weekly gain is the fastest in modern Russian history, it does not imply a bigger spike in YoY terms vs 2010 as the weekly date on grechka in 2010 does not coincide with the monthly data (which is collected from a much broader set of towns)… From a fundamental standpoint, nevertheless, this year looks much different as there is plenty of buckwheat…Anecdotal evidence suggests that farmers prefer to delay the sale of grain, hoping for higher prices. Some commentators blame the situation on light-fingered wholesale food vendors who deliberately withhold stocks to increase prices in light of a modestly poorer harvest. To sum up, the outlook for headline CPI growth will hardly be undermined by this factor as even a 100% increase in grechka prices would add roughly a mere 0.1ppt to CPI.”

“What is important concerning such an upheaval on the buckwheat market is that it might degrade the social confidence that is running high thanks to patriotic enthusiasm.”

Russia is a global exporter of buckwheat, and is steadily beating the US and Australia out of their positions in the Asian market. Japanese reports suggest that with increasing investment from Japan and South Korea for cultivation of buckwheat in eastern Siberia, Russian buckwheat can defeat the Australian competition decisively.



According to one Moscow industry source, “if there were a domestic shortage of buckwheat – and there isn’t – the government could always impose a ban on exports, starting with Ukraine. I expect they aren’t paying now anyway.”

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