Inability to export grain via the Black Sea threatens Russian farmers with losses

Problems with grain exports through the Black Sea are increasingly affecting Russia’s domestic market. Large volumes of the new crop remain within the country, adding pressure on prices. In the Rostov and Krasnodar regions, grain is already being sold at prices 33–44% below the full break-even level, leaving farmers with losses on every ton sold.

The situation is aggravated by the high production costs of the 2026 crop. Wheat production costs are estimated at RUB 12,000–13,500/t (around $137–154/t), barley at RUB 11,200–12,800/t ($128–146/t), and corn at RUB 13,500–15,200/t ($154–173/t). The widest gap between production costs and revenues is being recorded in southern regions, which traditionally depend heavily on Black Sea exports.

Higher logistics costs are adding further pressure. The cost of transporting grain from fields to elevators in southern Russia has risen by 25–36%, while farms without their own storage facilities face additional costs of RUB 1,500–2,000/t ($17–23/t). At the same time, expenses for fuel, mineral fertilizers and debt servicing are increasing, pushing the break-even threshold even higher.

The deterioration in market conditions is already affecting the financial performance of Russia’s agricultural sector. In January-May 2026, profits of agricultural enterprises fell by 17.4% to RUB 142.8 bln, while the share of loss-making agricultural companies reached 28.5%, up 6.2 percentage points year-on-year. Meanwhile, debt levels in the grain sector have risen to 3.8–4.2 times EBITDA, and debt-servicing costs already exceed operating cash flow at 45% of medium-sized farms.

Against this backdrop, Russian farmers warn that falling domestic prices and difficulties selling grain could threaten the autumn sowing of winter crops. Insufficient revenues may leave farms unable to repay existing loans and secure new financing for the planting campaign. Among the key anti-crisis measures proposed by producers are large-scale government grain purchases for intervention stocks and extensions of all agricultural loans, rather than only subsidized loans, which farmers consider insufficient.

Prolonged restrictions on Black Sea exports and the inability to quickly redirect substantial grain volumes to alternative routes are therefore creating more than just a problem with selling the current crop. Further price declines and shortages of working capital could increase the number of loss-making farms and make it more difficult to finance the next production cycle.

Tags: corn, export, barley, wheat, margin, restrictions, war, Russia