No Imports and No Money: How Sanctions Are Destroying the rf’s  Agricultural Sector

The russian agricultural machinery market has recorded a significant decline  in sales, despite the fact that farmers feel the need to update their technical fleet. In the first quarter of 2025, sales of agricultural machinery in russia decreased by 32.9 % compared to the same period last year and amounted to USD 473.3 million. A particularly significant decline was observed in the segments of grain and forage harvesters, tractors, plows and cultivators.

The decline concerns not only sales but also production: according to official statistics, in January-February, the volume of manufactured machinery decreased by more than 11 % compared to the same period in 2024.

One of the key reasons for this situation was the toughening  of Western sanctions, which significantly limited russian companies’ access to technology, imported components, software, and financial instruments. As a result, many manufacturers are unable to maintain the level of quality, and consumers are forced to give up updating  their equipment due to rising prices and reduced availability.

Financial pressure on the agricultural sector has also increased. The key policy rate is at  21%, which makes banks cut back on lending to farmers, while  access to preferential programs is effectively disappearing. At the same time, the profitability of the agricultural sector is declining, inflation is rising, and the shortage of staff and wage costs are deepening the crisis.

The situation is further complicated by the introduction of an increased utilization fee for agricultural machinery starting in early 2025. This further increases the cost of both imported and domestic products, making them even less affordable for farmers. In the future, until 2030, the fee will be indexed by 15 % annually.

All of these factors – combined with geopolitical pressure and economic isolation – are leading to a deep stagnation of the agricultural machinery market in russia. There are no prerequisites for the situation to improve  in the near future.