EAST AFRICA - East African nations are facing the likelihood of increased wheat prices in 2025 due to a projected sharp decline in Russia's wheat crop, a critical supplier for the region. 

The anticipated downturn in Russian wheat production has sparked concerns, particularly for countries like Kenya, which imports as much as 75% of its wheat from Russia and Ukraine.

The latest forecasts from Sovecon, a prominent agricultural consultancy, indicate that Russia's wheat production could drop to its lowest level in 11 years. This decline is attributed to severely reduced sowing rates and ongoing drought conditions, with winter crops expected to be significantly affected.

As the world's top wheat exporter, Russia’s wheat harvest plays a crucial role in global supply chains. 

Dmitry Rylko, Head of the Moscow-based consultancy IKAR, warned during an agricultural investors' conference that the outlook for the winter crops is increasingly bleak, particularly in key grain-producing areas such as Volgograd and Saratov.

“We are closely monitoring the situation with the winter crops. It appears to be extremely difficult, potentially turning into some kind of dramatic scenario,” Rylko stated, pointing to the critical conditions in these regions, which are among Russia’s largest grain producers.

Drought devastates sowing rates

The drought affecting Russia's agricultural regions has led to significantly lower sowing rates, which could drastically reduce yields for the 2025 season. 

Kirill Yershov, Head of Aeon Agro, which oversees vast farming operations in the Penza and Saratov regions, echoed the severity of the situation.

“There will be problems with the wheat harvest next year. The situation is critical, with everything planted in dry soil. We have planted less than last year, and many others have done the same,” Yershov said in remarks reported by Reuters.

This drop in sowing rates and the overall reduction in wheat production add to the downward trend in Russia's agricultural output, which has been in decline since a record harvest of 158 million tonnes in 2022. 

Last year, wheat production fell to 148 million tonnes, and this year’s estimates have been further reduced to 132 million tonnes. IKAR has also cut its forecast for wheat production in 2024 to 81.8 million tonnes, down slightly from earlier estimates of 82.2 million tonnes.

Impact on global wheat prices

The warnings about Russia’s poor crop prospects briefly pushed Chicago wheat prices to a two-week high, though they later dipped amid concerns about global demand. However, the potential for a sustained price increase looms large, especially for import-dependent regions like East Africa.

Countries such as Kenya, which rely heavily on wheat imports from Russia and Ukraine, are particularly vulnerable to any disruptions in supply or price hikes. The situation is likely to exacerbate food security concerns, especially as the region grapples with inflation and currency volatility.

With wheat production declining in Russia, East African nations may have to seek alternative suppliers or face increased costs, which could have significant ramifications for consumers and businesses alike.