In All Seeds: What 2025 will be like for the agro-industrial complex
The harvest of 2025 may lead to an acceleration of inflation in the country. This follows from the responses of the Central Bank to the deputies of "United Russia". The document says that the pace of the fall sowing campaign lags behind last year, which may become an additional pro-inflationary factor. Also, overheating of the economy, deterioration of foreign trade conditions due to the unfavorable economic situation, as well as the growth of inflationary expectations of Russians may affect the increase of this indicator. Experts partially agree with this assessment. The Ministry of Agriculture noted that the most important tool to support agrarians is preferential lending, and despite the current key rate, state support for this mechanism is maintained.
Why the harvest of 2025 may not be very good
The pace of the sowing campaign is lagging behind last year, this may become one of the pro-inflationary risks in 2025, along with overheating of the economy, deterioration of foreign trade conditions due to unfavorable economic situation and growth of inflationary expectations of Russians. This is stated in the response of the Bank of Russia to the deputies of the faction "United Russia". The document was familiarized with "Izvestia".
In it, the Central Bank reports that the balance of risks to inflation remains significantly shifted towards pro-inflationary risks. Disinflationary risks, on the contrary, are weakly expressed and are mainly associated with a slowdown in domestic demand under the influence of tightening monetary policy.
The Ministry of Agriculture informed Izvestia that despite the weather anomalies that Russian agrarians faced in 2024, the harvest of the main crops was decent, and, for example, for rice it reached record highs.
- In 2024, winter sowing was complicated by a lack of moisture in the regions of Southern and Central Russia. Nevertheless, about 20 million hectares have been sown, which is an optimal result under the current conditions. About 82% of grain crops are now in good and satisfactory condition," the ministry said.
They also noted that it will be possible to objectively assess the condition of winter crops only in spring, based on the results of their overwintering. At the same time, practical recommendations on improving the condition of winter crops have been sent to the regions in advance.
- If necessary, the affected areas may be reseeded with spring crops. Agrarians are actively using mineral fertilizers to feed the preserved crops," the ministry added.
They also noted that the most important tool to support farmers is preferential lending, and despite the current key rate, state support for this mechanism is preserved.
- In 2025, more than 42 billion rubles are provided for new soft loans. Including at the beginning of the year, more than 28.5 billion will be allocated for new loans directly for the sowing season," the Agriculture Ministry said.
"Izvestia" also sent a request to the Central Bank to comment on the situation with the 2025 harvest.
What hinders the development of agro-industrial complex in Russia
Itis premature to assess the harvest, Vladimir Kashin, head of the State Duma's agrarian committee, told Izvestia. At the same time, he agrees that the high cost of loans prevents the agrarian industry from developing.
Deputy Chairman of the State Duma Committee on Protection of Competition Sergei Lisovsky admits the growth of product inflation. According to him, the reason is the high rate of the Central Bank and the rise in the cost of loans for business.
- This adds 60 percent to the cost of their products. And agrarians are highly indebted. They take a lot of loans for sowing season, and these loans are the most expensive. There are very few loans that are subsidized by the government. Therefore, this will greatly affect the cost of production in 2025," he emphasized.
Analytical Center "ProZerno" earlier with reference to the data of the Hydrometeorological Center reported a record in 2024 the share of bad and failed crops, which amounted to an unprecedented 38%.
- Indeed, according to our estimates, 38% of winter crops are in a bad and unripened state, but this is not their death. They have not sprouted due to the drought, but now the rains will come in the southern regions of Russia, and the crops may become satisfactory or even good," Vladimir Petrichenko, General Director of ProZerno, explained to Izvestia.
At the same time, he noted that there has never been such a bad condition of winter crops at the entrance to winter.
- If the Central Bank says about increased food inflation in 2025, I agree. This will be because the 2024 harvest is about 125 million tons, which is 20 million tons less than 2023. This means that for domestic consumption in the first half of 2025, the availability of grain will be less than in the same period last year," the expert explained.
However, he believes that it is premature to talk about the volume of the future harvest.
- The problems for the agro-industrial complex are common now. This is primarily due to the rising cost of credit, not the weather, which, of course, adds. Next year we may see a mass exit from agriculture, as it becomes completely unprofitable, - explained in the Union of Organic Farming.
Executive Director of the Potato Union Alexei Krasilnikov, on the contrary, said that due to the rise in prices for the vegetable, the situation for producers has begun to equalize. At the same time, agrarians can not afford to take loans and expand sowing areas, which in 2024 decreased by 20 thousand hectares, so the harvest was less by 1.5 million tons.
- The expectations of our union members for next year are somewhere 50/50. Someone stays on the achieved volumes, the smaller part plans to increase the area, - said the business representative.
When the situation in the agro-industrial complex may change
Based on the rhetoric of the Central Bank and the objective situation, it is true that the sowing of crops was not as intensive as in previous years, and some crops have not sprouted, Georgy Ostapkovich, Director of the Center for Conjunctural Studies of the Institute of Economic Research of the National Research University Higher School of Economics, told Izvestia. At the same time, he believes that there will be nothing critical with products in the country, and the population will be provided with them.
- Exports, of course, will be reduced. There won't be a deficit, but the amount of goods on the market will decrease, and in such cases, entrepreneurs always raise prices. That is, this rhetoric of the Central Bank is objective. Therefore, the Ministry of Agriculture should promptly take measures and sow something, take something from imports," the expert explained.
In his opinion, there is a possible situation in which the price rise will be even higher than today's food inflation, which is in the neighborhood of 10%.
- As a rule, food in the inflation component is always slightly higher than non-food products. What will happen in the end, time will tell. Maybe the Ministry of Agriculture will find some opportunities to make the demand match the supply. But in general, I agree with the Central Bank's assessment," said the expert.
He also does not rule out that in February, due to rising inflation, the Central Bank will raise the rate again, but it will depend on the results of January. If Rosstat will show a weekly increase in inflation, then, based on economic theory, the bank will simply be obliged to raise the rate, said Ostapkovich.
Former Deputy Minister of Agriculture Leonid Kholod drew attention to the fact that 38% of winter crops in Russia have not sprouted, which is not a very favorable factor.
- If we take into account that wheat accounts for 70% of the total share of the harvest, this is, of course, a big loss. First of all, it is bad for export, but for the domestic market it will be quite enough. But until spring, such estimates are premature, as winter crops may still rise. Although, undoubtedly, we should expect a poor harvest, and the harvest will be worse than in 2024," he believes.
The main factor affecting food inflation will not be bad winter crops or reduction of sown areas, but the high key rate, as well as rising costs, changes in the ruble exchange rate and the impact of sanctions, summarized the expert.
