Russian farmers enter harvest season without diesel reserves

Russia is facing a worsening diesel supply situation for farmers ahead of the start of the harvest campaign. According to Russia’s Forbes, most agricultural producers do not hold significant diesel reserves. Small and medium-sized farms typically have fuel stocks sufficient for only 2–4 weeks of operation, while even large agricultural holdings rarely build long-term reserves due to the high cost of constructing and maintaining dedicated fuel storage facilities. Farmers in southern Russia, where the harvest campaign has already begun, are being forced to purchase diesel fuel outside their home regions, particularly in the Volga region. At the same time, suppliers are increasingly unable to guarantee either fuel volumes or delivery schedules.

The situation is being aggravated by rapidly rising prices. Forbes reports that diesel fuel has become more than 40% more expensive since the end of April (the publication’s estimate does not include the sharp price increases of recent days — editor’s note), while exchange prices have already surpassed the record levels seen in 2023. Analysts say the crisis is only beginning to intensify, as peak seasonal demand is expected in July–August, when harvesting expands to Russia’s northern regions.

Another problem for the Russian market is the economics of fuel production. Experts believe diesel production is largely geared toward export sales, while supplying only the domestic market remains unprofitable for refineries. As a result, even potential export restrictions would not necessarily solve the shortage problem without further significant increases in domestic fuel prices.

Amid the fuel shortage, the Russian government has extended permission for some refineries to produce fuel meeting Euro-3 environmental standards instead of Euro-5. Officially, the measure is intended to increase market supply. However, industry insiders say this practice has already been used for some time and that such fuel has been sold on the domestic market as regular product. Therefore, the latest decision is expected to have only a limited effect.

Market participants believe Russia is approaching the beginning of a physical fuel shortage just as consumption is entering its peak period. The situation may improve only if damaged refining capacity is restored and no new Ukrainian strikes hit refineries in the coming months. For now, risks to fuel supplies for the agricultural sector remain elevated.

Tags: Russia, harvesting, fuel