Russia’s Top Farm Machinery Maker Halts Production as Farmers Face Financial Crisis

Rostselmash, Russia’s largest agricultural machinery manufacturer, announced it will suspend production in June due to a collapse in demand, as farmers grapple with crippling loan rates, high export taxes, and soaring input costs. The move threatens Russia’s ambitions to dominate global grain markets and highlights the deepening crisis in its agricultural sector.

Key Points:

• Production Shutdown: Rostselmash will send all workers on mandatory leave starting June—months earlier than usual—amid a 76% drop in harvester sales vs. 2021 levels.
• Farmer Financial Crisis:
  • 30% loan rates make equipment purchases unaffordable.
  • High export duties and rising fuel/fertilizer costs squeeze profits.
• Layoffs & Industry Woes: The company has already cut 2,000 jobs since late 2024, with tractor and forage harvester sales down ~50%.

Broader Implications:

• Food Security Risk: Outdated machinery could reduce crop yields, especially in poor weather.
• Policy Failures: Despite farmer protests, the government refuses to cut export duties, prioritizing short-term revenue over sector stability.
• Sanctions Fallout: Rostselmash’s struggles undermine Russia’s “import substitution” strategy, which aimed to replace Western equipment.