June 16, 2004

Sunflowerseed Production in Ukraine and Russia

The USDA estimates 2004/05 Russian sunflowerseed production at 4.2 million tons, against a record 4.85 million last year.  Harvested area is estimated at 4.2 million hectares, down 13 percent from last year.  Sunflowers were planted on a reported 4.5 million hectares; in a typical year, only 90 to 92 percent of sown area is harvested.  The year-to-year reduction in area is attributed to intense competition from grains, as reported by the U.S. agricultural attache, and relatively low winterkill, which resulted in less reseeding with spring crops compared to last year.  For Ukraine, 2004/05 sunflower area is estimated at 3.2 million hectares and production at 3.5 million tons, down 16 and 18 percent, respectively, from last year’s record levels.  Cool weather in Ukraine during late May likely hampered early development of earlier-planted sunflowers, but is unlikely result in significant yield reduction.  Soil-moisture conditions are generally favorable throughout the main sunflower regions in Ukraine and Russia.  

In 2003/04, sunflower area increased by 28 percent in Russia and 40 percent in Ukraine.  The chief reason for the huge year-to-year jump was unusually high losses of winter wheat due to severe winter weather, and the subsequent replanting of these damaged fields with spring-planted crops, including barley, sunflowers, and corn. Russia’s top four winter wheat producing oblasts – Rostov, Krasnodar, Volgograd, and Saratov – are also the country’s top sunflowerseed oblasts.  The combined winter wheat losses in these oblasts totaled 1.6 million hectares, or 34 percent of the sown area, and farmers responded by increasing sunflower area by nearly 700,000 hectares from the previous year.  In Ukraine, meanwhile, a staggering 69 percent of 2003/04 winter grains were destroyed by a combination of December frosts and persistent ice crusting during February and March.  Because April 2003 was unusually cool, many farmers decided not to risk reseeding with spring barley, fearing that the late planting would reduce yield potential, and instead chose corn and sunflowers; planted corn area for 2003/04 increased by 800,000 hectares from the previous year, and sunflower area by nearly one million hectares.  As in Russia, the highest year-to-year increases in sunflower area were recorded in the oblasts with the highest winterkill. 

Because of a combination of high price and low cost of production relative to wheat (with the lower cost of production based in part on less application of fertilizer and chemicals), sunflowers have become one of the most consistently profitable crops.  In recent years, farmers’ planting decisions have become largely market-based, and the profitability of sunflowerseed has fueled a significant expansion in planted area.  Smaller, private farms especially have restructured their crop selections and are growing the most profitable crops like wheat and sunflowerseed.   Even considering the increase in wheat prices relative to sunflowerseed – resulting from the disastrous 2003 wheat harvest and the second consecutive bumper harvest of sunflowerseed – farmers in Ukraine still consistently cite sunflowerseed as the most profitable crop in the rotation. 

The popularity of sunflowerseed stems also from the fact that demand for the crop has traditionally been high.  Five years ago in Ukraine, for example, crushing plants were operating at only 75 percent of capacity and operators were desperately trying to increase procurements of seed for processing.  In response, the government imposed a controversial 17-percent export duty in an effort to reduce sunflowerseed exports and support the domestic vegetable-oil industry.  Since then, crushing capacity in Ukraine has increased by 25 percent, to over 3 million tons, and is slated to increase further with the planned construction of a 600,000-ton facility in the port city of Ilichevsk.   

Oilseed demand is strong in Russia as well.  The U.S.agricultural attaché in Moscow reports that current oilseed-crushing capacity in Russia stands at 4.8 million tons and plants operate at full capacity throughout the year.  And – according to veteran commodity analysts in Moscow – crushing capacity is slated to increase.  Given the forecast expansion in capacity, and the need for a steady and stable supply of oilseed that the new plants will generate, demand for sunflowerseed seems unlikely to diminish in the near future.

Over the past six years, sunflower area averaged 4.5 million hectares in Russia and 2.8 million in Ukraine.  During the previous six years (1992 through 1997, the first six years following independence), area averaged 3.4 million and 1.8 million, respectively.  In order to achieve area increases of 30 percent in Russia and over 50 percent in Ukraine, many farmers have abandoned the crop-rotation practices traditionally recommended by agricultural officials, which called for planting sunflowers no more than once every seven years in the same field.  The 1-in-7 rotation is based on three factors:  

·        Prevention of disease, especially soil-borne fungal diseases.  With most farms facing financial constraints that limit their access to fungicides and disease-resistant hybrids, specialists see crop rotation as the best way – or the only way – to control disease in sunflower fields.  

·        Depletion of soil fertility.  Because of their deep rooting system, sunflowers reportedly extract higher amounts of nutrients from the soil than do other crops in the rotation. 

·        Depletion of soil moisture.  Most of the prime sunflower-growing regions in Russiaand Ukraine are located in the so-called zones of risky agriculture, where drought is a constant threat.  Sunflowers reportedly extract higher amounts of soil moisture than other crops (because of those deep roots) and specialists maintain that their frequency in the rotation should be limited, and that they occupy last place in the rotation prior to the fallow year, in order to replenish soil moisture reserves.  

Prior to the spring planting campaign, Ukraine agricultural officials unsuccessfully urged farmers to scale back sunflower area to 2.5 million hectares, based on Ministry of Agriculture recommendations that sunflower area not exceed 8 percent of the country’s total cultivated area.  But because of the high demand for sunflowerseed, and the crop’s value as an export commodity, farmers are determined to plant sunflowers and specialists’ recommendations have become largely irrelevant.  In fact, the experience of farmers and the observations of commodity analysts suggest that the traditional 1-in-7 rotation may be too conservative and that farmers in most regions can safely plant sunflowers once every four years – with proper management – with no detrimental effect on yield.  (Considering the steady reduction in cultivated area in Russia, from roughly 118 million hectares in 1990 to 85 million in 2003, it would be conceivable for farmers to maintain high sunflower area within1 conventional crop-rotation constraints by expanding sunflower planting into fields that haven’t been tilled for years.  The initial expense of reclaiming idle fields, however, could be prohibitive.  Furthermore, a considerable portion of the area contraction occurred on marginal land with inherently lower productivity.)

Following the breakup of the Soviet Union in 1991, sunflowerseed yields dropped due to a sudden and sharp reduction of heavy State subsidies for agriculture and a 90-percent reduction in fertilizer application rates.  Yields stabilized by the mid-1990’s, however, and during the period of steady sunflower area expansion of the past ten years yields have exhibited no downward trend in either Russia or Ukraine, despite financial constraints that have restricted farmers’ use of fertilizer and plant-protection chemicals.  Indeed, prospects for an increase in sunflowerseed yields could be considered favorable, with producers likely to benefit from the interest of traders and crushers to ensure a supply of product for export and processing.  Although many large agricultural “holding companies” have become disappointed in their agricultural investments and are retreating from involvement in agriculture, the exception has been companies involved in oilseed production and processing.  Companies that have invested large amounts of money in the construction of new crushing plants and the modernization of old facilities are keen to maintain a steady supply of raw materials.   

The long-term yield impact, if any, of increased frequency of sunflowers in the crop rotation is difficult to determine since the explosive growth in sunflower area began only five to ten years ago.  The key to maintaining high area and boosting yield lies chiefly, and not surprisingly, in financing.  Disease problems can be addressed by the use of resistant varieties, prohibitively expensive for most farmers, and soil fertility problems with application of mineral fertilizer.  The moisture problem could be more difficult to overcome, although some farmers -- even in the zones of risky agriculture -- are already “pushing the rotation,” planting up to three consecutive years with, according to them, no deterioration in yield. 

For more information, contact Mark Lindeman
  with the Production Estimates and Crop Assessment Division, at (202) 690-0143