russia Is Losing the Battle for the Harvest by a Landslide

The kremlin has driven the agricultural sector into a crisis and is now only making the situation worse. Instead of supporting farmers, the ministry of agriculture has cut off preferential loans just when many farms are already operating on the brink of bankruptcy. From the government, which demands record harvests, farmers have received not aid but funding cuts.

The problems aren’t limited to a lack of money. The fuel shortage on the domestic market has already reached about 20% of demand – nearly a dozen of the largest refineries have been damaged. While just a few months ago the issue was limited to a shortage of high-octane petrol, there is now also a shortage of diesel – a fuel that russia has traditionally produced in surplus. The kremlin has already banned its export through the end of July. Given the situation with the harvest, this ban will almost certainly be extended.

siberia is feeling the consequences most acutely. irkutsk region and the altai territory were the first to report fuel shortages. Following the attack on the omsk refinery, some resources were diverted south, where the harvest is already underway. rostov region, the krasnodar territory, volga region, and stavropol territory are also reporting shortages. Small farms are suffering the most: they lack the funds to purchase fuel in advance and do not have the infrastructure to store it. They are the first to run out of diesel.

In parallel, russia is losing the ability to export grain normally. Attacks on logistics in the Sea of Azov have drastically disrupted operations on the route through which about a quarter of grain exports pass. Analysts have already cut their export forecast by 20%. Over the past week, prices for wheat have fallen by 2.8%, for barley – by 6.5%, and compared to last year, prices have dropped by 12.6%. The ministry of transport is proposing to shift cargo to railways, but this approach cannot quickly replace maritime transport and only increases costs.

Attempts to source fuel abroad have also failed. belarus and kazakhstan have no spare capacity, while India has refused to supply refined petroleum products. India’s three largest state-owned refineries have stated that they have no surplus for export. As a result, russia finds itself in a situation where it sells oil to India but can no longer even receive diesel fuel in return.

Ultimately, the war determines how resources are allocated. The army is already consuming by 3–5% more fuel than planned, and its needs will only grow. In case of any shortage, the military will be the first to receive fuel. Farmers will get whatever is left – if anything is left at all.