(KYIV, Ukraine) – Russia’s agricultural sector is facing a deepening crisis that is severely undermining its harvest campaign. A combination of funding cuts, acute fuel shortages, and collapsing export logistics is placing extreme strain on farmers across the country.
The Foreign Intelligence Service of Ukraine reported that the Kremlin has driven its own agricultural sector into crisis and is now making the situation worse. Instead of supporting farmers, the Ministry of Agriculture has reduced subsidised lending precisely when many farms are already operating at the edge of loss. Growers who were ordered to deliver record harvests received not assistance but a reduction in financing, the agency stated.
The sector’s problems extend well beyond a lack of funds. The fuel deficit on Russia’s domestic market has reached around 20 percent of requirements. Nearly ten of the largest oil refineries have been damaged. A few months ago, the shortage involved only high octane petrol. Now, diesel is also in short supply, a fuel Russia traditionally produced with a surplus. The Kremlin has already banned diesel exports until the end of July. The Foreign Intelligence Service assesses that this ban will almost certainly be extended given the harvest situation.
The consequences are being felt most sharply in Siberia. The Irkutsk region and Altai Krai were the first to report fuel shortages. Following an attack on the Omsk refinery, part of the available resources were redirected to the south, where the harvest campaign is already underway. The Rostov region, Krasnodar Krai, the Volga region and Stavropol are also complaining of shortages. Small farms are suffering most. They lack the funds to purchase fuel in advance and the infrastructure to store it, leaving them the first to run out of diesel.
At the same time, Russia is losing the ability to export grain normally. Strikes on logistics in the Sea of Azov have sharply complicated the operation of a route that handles roughly a quarter of grain exports. Analysts have already cut the export forecast by 20 percent. Over the past week, wheat prices fell by 2.8 percent and barley by 6.5 percent. Compared with last year, prices have dropped by 12.6 percent. The Russian Ministry of Transport proposes shifting cargo to the railway, but this scheme cannot quickly replace sea shipments and only increases costs.
Attempts to find fuel abroad have also failed. Belarus and Kazakhstan have no spare volumes available. India has refused to supply finished oil products. The three largest Indian state refineries stated they have no surplus for export. Russia now finds itself in a situation where it sells crude oil to India but cannot obtain even diesel fuel in return.
The final distribution of resources is being dictated by the war. The military is already consuming 3 to 5 percent more fuel than planned, and its requirements will only grow. In any deficit scenario, the armed forces will receive fuel first. Whatever remains will go to the agricultural sector, if anything remains at all, the Foreign Intelligence Service concluded.