If you think Australian farmers are worried about the availability of spare parts, then spare a thought for Russian farmers who are suffering under the impact of ever tightening sanctions as a direct result of Putin’s invasion of Ukraine.

Within days of the start of the war, each of the globes top five farm machinery manufacturers had pulled the plug on the export of tractors, headers, sprayers etc along with supporting parts.

The end result is their farmers, which include some of the largest privately-owned operations in the world, have been facing growing shortages of parts along with difficulties in getting upgrades to software.

This is not to say that Russian agriculture does not have friends in high places, connected people like  Igor Khudokormov who owns the largest farm in Russia cropping over 2 million acres, producing 4.7 million tonnes of sugar beet and a million tonnes of grain and is a personal friend of Putin.

Then there is Aleksandr Tkachyov, who only decided to get into agriculture when he became the Governor for the Krasnodar region and was then elevated to become Minister for Agriculture in Putin’s government. His farm now exceeds 1.5 million acres of cropping county.

These grain barons are no doubt not happy with the impact of sanctions on their businesses, but are unlikely to complain publicly, as without Putin they would not be the size and scale that they are.

These big growers primarily buy imported machines, with the German made Claas being the most popular brand, which in part might help explain the German reluctance to be overly critical of Putin’s actions.

Overall imports account for 30-40 per cent of the entire farm equipment fleet for a country that crops over 70 million hectares. On average they are spending around A$2 billion a year to import around 3000 tractors and 1000 headers. That’s a lot of machinery that now needs to be replaced by their domestic manufacturers or is at risk of not turning a wheel if it breaks down.

As for domestic manufacturing, even Russia and Belarus’s (their neighbour in crime) own large, sophisticated farm machinery sector, with brands like Rostselmash, Desna-Polesye, Agromash, Kirovets, Balarus and Gomselmash, are running into problems as they need sophisticated hydraulic and electronic components from the West to complete the last 5-10 per cent of the build.

About 60 per cent of imported parts are difficult or impossible to find replacements for and parts in stock have increased in cost by 30-100 per cent.

The end result is that mass cannibalism of foreign equipment is well underway for both its imported and domestic equipment, along with a thriving trade sourcing parts and shipping them through the back door into Russia via the few remaining friendly countries. 

Russian dealers are looking for alternative ways of sourcing parts but it is proving difficult to buy the necessary goods directly since many countries, for example, Kazakhstan, are afraid of secondary sanctions. However I suspect China won’t be too concerned.

In fact, there has emerged a brisk trade of software ‘cracking’ with China now offering a broad cross section of cracked versions of licenced US and EU farm tech products. Not to mention the ability to fill the gap with counterfeit parts.  Sanctions have a pretty poor track record of shutting down an economy outside of creating short term problems.

Global manufacturers like Claas, Deere and CNH, who have invested in Russian manufacturing plants, are in a bind, needing to keep a presence for the long term but wary of being out of step with western political views on Russia.

They are not the only ones who have an image problem.

Spare a thought for the Australian importers who set themselves up to bring the big Russian Kirovets and Balarus tractors into the country, not that they got much traction with their first shipments. 

I bet they are now worth vastly less on the second hand market than 12 months ago. Mind you, they are probably good buying, as all markets overreact.

Then there is Versatile which are made in Canada but are now owned by Russian manufacturer Rostselmash, a name that won’t be on the top of their western marketing material put out by local dealers, even though the entire tractor is made in Canada, unlike the Versatile header sold in north America which is simply a rebadged Rostselmash. 

Second hand ones in Canada with as little as 500 hours on the clock are going for around $200,000 Australian, making them good buys if you assume the war won’t last years.

The challenge facing the big European, American and Japanese (Kabota) manufacturers with a large market share in Russia is they need to support their customers, but if they are caught knowingly supplying parts via a third party to a Russian buyer they can themselves be slapped with punitive penalties.

While the 2022 harvest and now winter planting has not been unduly impacted, Russian farmers are no doubt concerned about the next harvest and their parts situation.

The one upside is that it just might be the shot in the arm that Russia’s domestic farm machinery sector needs to boost local production.

The downside is that selling into foreign markets outside China and the Central Asian countries is going to be off limits while Putin is attempting to expand his empire, and the long term reputational damage will be severe.

Unfortunately, the more we lock out Russian farm equipment, the less future competition we will have against expensive American and European tractors and headers. 

The latest models of the 420hp Kirovets with a Mercedes Benz OM 460 LA engine were looking like a viable option with an 8000 hour warranty at $250,000. Hopefully the Russian people will say enough is enough and this mad war will soon be over and we can go back to global trade as it should be.

Open the door to Russian ag mechanics

Australia has committed over $400m of support for the Ukrainian war effort, with the biggest contribution being 60 Australian-made Bushmaster armoured carriers costing about $2.5m each.

Unfortunately, the roll out of these units is slow as we refurbish old ones and fly them over three at a time with a delivery to Kiev every couple of weeks.

While I’m sure the Bushmasters are appreciated, I suspect the Ukrainians would far prefer cold hard cash, as the $150m value we placed on these units would be more than enough to rebuild 60 of the the 392 Russian tanks they have captured to date.

Ukraine is well equipped to do this work, having 43 million motivated people, a very large industrial and agricultural sector full of skilled workers and being one of the world’s largest defence equipment manufacturers making everything from planes, tanks and ships to guided missiles.  Their defence industry is real, unlike our own which specialises in planning the next thing they plan to build.

With a qualified Ukrainian heavy diesel mechanic earning between A$10,000 – $15,000, their cost of labour is way below Australia’s, not to mention the fact that they would have the tanks when they need it, not when we get around to shipping the Bushmasters over to them. 

It’s one of the great failings of foreign aid that countries prefer to send their own expensive people and their own domestic produced products as aid rather than sending dollars to be spent locally, getting money and jobs into their domestic economy.

One day I will do an opinion piece on the stupidity of the Americans sending bags of wheat as part of their domestic farm subsidy program to countries like the Sudan, something that ended up smashing the neighbouring Ethiopian grain price and sending their farmers into poverty.  Far better to send cash which would have supported African farmers as well as fed hungry bellies, but that story is for another time.

But along similar lines our military support for Ukraine is equally selfish and stupid.  It is too little, too late and not sophisticated enough, that is, we are sending reinforced trucks not jet fighters, to justify the wait.

This brings me to one of the two other things Australia should be doing. First, we should be banning all Ukrainians who are military age from coming to Australia for work on the logic they need every one of their fighting aged men and women to be on the front line or supporting the war effort.

The other thing we need to do is open the doors to Russia’s skilled farm and petroleum mechanics and technicians by offering them working and emigration visas to come to Australia. 

Now I know this goes against the grain and is certainly not what the Ukrainian government have called for, which is a ban on all tourist visas to Russians and to lock them out of any international travel.

Not every Russian is a supporter of Putin. Mind you, a surprisingly high number profess to support the war, although with conscription kicking in that number is no doubt shrinking.

At the start of the war, Russia lost around 300,000 skilled people, mostly those with good English, loads of cash or who had global skills in the IT sector. That loss, combined with the exodus of global software companies like Microsoft, put a dent into the Russian economy.

As did the economic sanctions, but as we know in our farming operations, it’s not the design of the next bit of software that stops the tractor or header in the paddock but the ability to get hold of spare parts and service technicians to fix them when they break down.

With the shortage of ag parts in Russia, the next thing to target is the skilled JD, CNH, AGCO, Claas etc technicians. 

If Europe, Canada, America and Australia made a concerted effort to offer to relocate and employ their Russian based dealership people while this conflict rages, then Putin’s big farming and mining friends might have a change of attitude and not be so submissive.

We know that Australia is short around 1000 ag mechanics. What better ones to target than those whose time would be better spent fixing a tractor in Australia than a tank in Russia?

Is China a parts risk?

Last point while on the topic of war. All those Australian importers that are bringing in Chinese made loaders etc must be sweating over what will happen if China has a crack at Taiwan. 

They must know sanctions will kick in and the parts supply will dry up. In fact, it will be way worse than what Russia is experiencing, because we are so reliant on components coming from Chinese factories for not just Chinese made equipment but the big green, yellow, blue and black machines we buy. 

This is the problem with the globalised world, it’s all good until one part of the supply chain goes down and then the wheels literally fall off the world’s economy.

Which makes me wonder how many critical components in the American and European farm equipment come out of China.  Before you buy your next big toy, it might pay to explore where the replacement parts are made. 

More than one smart farmer is factoring this into their risk program. They are not only buying chemical, fuel and fertiliser early and storing on farm but they are running two of everything. Better to burn more diesel and keep one set of wheels turning when something goes down than have the biggest kit in the district.

Mind you, they run into the problem of labour… but then didn’t I mention something about Russians, I hear their skilled farm workers are paid half what their mechanics are paid.