MOSCOW — I'm going to share my own observations about myself, yes, but also about my neighbors in the countryside.
I spent last summer in a 100-year-old house outside of Moscow. In between writing articles, I maintained two beehives and pruned old apple, cherry and currant trees. I harvested. I made jam and extracted honey. I went to the store to get canning jars, a store that used to have just a small jar selection but now features a huge display with a wide selection of canning options.
The saleswoman said demand is booming. Buyers are mostly city people who inherited a house in the area. We're buying for more or less the same reasons: Some people raise cows and are selling milk; others are making goose, duck and chicken meat conserves. My neighbor to the left has a huge apiary, my neighbor to the right sells quail eggs. Both of them are city people I've known for more than 30 years.
But it was just in the past two years that they've started these businesses. Basically everyone I've met tells me that they got the idea to enter the agriculture business more or less two years ago.
There are two reasons for this. Toward the end of 2012, the economy started to tank and companies began laying people off. Second, and no less important, it was the time when mobile Internet arrived. It became possible to work "in the countryside" as an accountant, an architect, a lawyer or an engineer. Once you live in the country, you end up growing stuff — whether you want it or not. Then it will become a burning need, first for yourself, then for your city friends. No need to go sell your products at the market: People come from the city themselves and buy everything, for the simple reason that all these fresh goods are unbelievably delicious!
Six months ago, Russian President Vladimir Putin signed an order blocking food imports from our former "Western partners," as a reaction to the sanctions imposed by those countries on Russia. What happened then? The imports from Europe, the U.S. and Australia were replaced by imports from Belarus, Kazakhstan, North and Central Africa, Southeast Asia, Turkey and other countries — about 40 in total. To give credit where credit is due, our shelves are not empty. Instead, one importer has been replaced by another.
The president's order also included a provision to increase the country's domestic output of agricultural products. But here's the thing: Half a year since the order was issued, prices have increased exponentially. Even basic goods that are produced locally, like potatoes, eggs and oil, have gone up in price.
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Photo: Pavel Grabalov
Part of this is because Russian agriculture is, to a large extent, assembled from foreign components. Seeds, pedigree cattle and poultry, and equipment all come from abroad, and the devaluation of the ruble led their prices to rise.
The second reason has to do with supermarket chains and the way they advertise, displaying large signs touting "local products," and selling Russian jam that is even more expensive than imported jam.
Cheap seeds
The prosecutor's office has been told to find culprits in the massive food inflation, but they don't have clear criteria. What are valid reasons? Can you blame a miller for the increase in flour prices when he's paying 30% interest on the credit he takes out to buy grains? But then the increase in flour prices drives up the price of bread. The average price of buckwheat was 10 rubles per kilo in 2014, and what we see now on the market is outrageous.
But who is in charge of controlling the prices? In Europe, there are clear rules that have to be followed, not merely those of the so-called "invisible hand."
People say that the biggest risk for the 2015 harvest is the simple lack of available cash. The credit market has shrunk, and banks will no longer take real estate as collateral at realistic prices. The lack of credit means that farmers bought less expensive seeds, which often offer less protection from weather variations and diseases. As a result, the agriculture ministry's projections for this year's grain harvest span a huge range of possible harvest amounts: anywhere between 68 million tons and 100 million tons.
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Photo: Olga Pavlovsky
Our yearly grain consumption is around 73 million tons. After crunching the numbers, the market for everything that is based on grains and feed — milk, meat and bread — is reacting with price increases. The agricultural ministry, in its joy over last year's record harvests, missed the chance to buy up grain reserves at low prices last summer and then release the grain onto the market when the prices increased.
The speaker of the Council of the Federation said that these price increases and potential deficits should be countered by eliminating grain exports. Yet, just in February, the agricultural ministry announced the possibility of a record year for grain exports, of up to 30 million tons.
There is a new but obvious risk: the lack of a light at the end of the tunnel that this current economic crisis may represent. That risk is no less important than the financial risk everyone has been talking about recently. There has been no serious discussion of the modernization of the infrastructure in the agriculture industry. Most of the production is still controlled by private agro-holdings, which have played a role in providing the country with meat but only provide about half of the country's milk.
Talks about providing support for building cooperative businesses for the farmers, former collective farms and other private owners that provide the other half of the country's milk supply remain nothing more than words.
Personally, come spring, I'm going to be expanding my vegetable garden.
