One year has passed since Russia banned the importation of food from Europe, America, Australia and Norway. No doubt about it – Russians have paid a very high price for the actions in Crimea. But it is a price the Russians are certainly very willing to pay. President Putin’s popularity rating in the polls has never been higher, nearly at 90% at present.

This year and last were two years in which Russian farmers got lucky. The sun shone brightly and warm on them and the rains also came in abundance at the right times.

Exceptionally mild winters ensured that Russia’s winter cereal crops suffered no setbacks.

As a result, for the second year running, Russia and Ukraine are again bringing in a record grain harvest. This is very good news for Russian and Ukrainian farmers, consumers, agribusinesses and grain traders. Russian politicians, bankers and agricultural policy makers will also be breathing a long sigh of relief at this totally unexpected turn of events.

Russia’s and Ukraine’s second record harvest in a row is good news too for Irish pig and poultry farmers, but not so much our grain growers. It is not particularly good news either for our grass-based dairy and beef farmers, as the cheaper grains and corn will suit the larger and more intensive grain and corn-based dairy and beef farmers in mainland Europe, the US, Canada, and South America.

Silver lining

For all the above reasons, sanctions on food imports, imposed by Putin, are the least of your average Russian’s current concerns. Russia’s biggest problem is that the country is cut off from international financial markets. As a result, the Russian Economy is on the rocks. GDP will be down over 3% for 2015. This is the first drop in Russia’s GDP since 2001.

Most Russians see the embargo on food imports as the silver lining to a passing cloud. Specifically, the sanctions give Russian farmers a long-awaited opportunity to produce and grow their enterprises. This will make Russia, at long last, completely self-sufficient and self-sustaining in their food production.

The last 15 years have seen a complete transformation in Russian crop production. Specifically, Russia has turned itself around from being a major importer of wheat in 2000 to being a major exporter today.

The impact of this on global grain markets is immense and immediate. There are two basic reasons for this:

1. The sheer capacity and scale of Russian and Ukrainian grain, corn and oilseed farms.

2. Russia and Ukraine are the lowest-cost agricultural commodity and food producers in the world.

So, even before half of this year’s bumper Russian wheat harvest was in, international grain traders were slashing prices.

High milk and pig prices

But exporting grain is not the Russian farmers’ main agricultural priority. More-and-more, they are adding value at home, to their grains, corn and oilseed crops. Today, Russian pig, poultry, dairy cow and beef cattle enterprises are growing at a phenomenal rate. With Russian dairy farmers getting the equivalent of 44c/litre, this is likely to continue for a long time. Farmgate pork prices are at the equivalent of €3/kg. Within the next 15 years, Russia could also be a major exporter in dairy, beef, pork and poultry.

Enormous loss

In any event, Russia will never, ever again depend on Europe or the US for its food supplies. This is an enormous loss for farmers from the western world. At current markets, it would represent an annual loss of over €1bn to European dairy farmers.

Russia’s near record harvest this year is contrary to all forecasts made by experts in the field a year ago. Forecasters in the Moscow office of the United States Department of Agriculture (USDA) in particular, have been very badly caught out. A year ago, it was forecasting a 15% reduction in 2015 Russian grain yields compared to last year.

Once again, Russia appeared to be looking into the abyss. But then Mother Nature intervened and, for the second year running, the country is bringing in a record grain harvest.

Of course, the USDA had some very good reasons for their doomsday predictions. A year ago, Russian agricultural credit was fast disappearing: Interest rates on agricultural loans were about to double from 12% to 24%, fertiliser prices were up by 32%, herbicide and fungicide prices were up 44%, food price inflation was about to double to 15% and new certified seeds were not available. So Russian farmers had to save and plant their own seed for the autumn 2014 and 2015 spring sowings.

But Russia’s main grain belt in the Black Earth, Southern and Caucasian regions produces 60% of the country’s total grain harvest of about 100 million tonnes.

A native of Co Cavan, Brendan Dunleavy has over 20 years of agricultural project management experience in Russia and Ukraine.