The growth of production and export of agricultural products broke all records and promises to do so in the future. But whether we are talking about a temporary success that will go in the past with sanctions? The more that agriculture and the food industry remains the single largest segment of the Russian export, which continued to grow against the background of falling total volumes of foreign trade.
“Products of agriculture demonstrates fantastic results: after four months, we have five-percent growth of exports of agricultural products in the strictest dollar bill and an increase of 30.5% in physical volumes of supplies of agricultural products abroad” – such an assessment was expressed recently by the first Deputy Minister of economic development of Russia Alexei Likhachev.
“Greater activity of the Russian manufacturers show and in this segment, as the products are Halal, i.e. permissible for consumption of Muslims”
Moreover, prospects for further growth in key niches – grain and meat – are very encouraging. This year in the country can be harvested a record grain harvest, and the Russian manufacturers of meat one after another claim about entering the growing markets of Asia. For the period from January to April, the total value of food exports and agricultural raw materials from Russia was $ 5.11 billion (including 3,95 billion dollars of exports to the CIS countries and 1.16 billion to the CIS countries), exceeding by 5.4% the same period last year.
However, from the point of view of the economy as a whole in this ointment is the fly in the ointment. As follows from the data of Rosstat, in the first quarter, food products and agricultural raw materials were the only export item, showed an increase in comparison with the same period of the previous year (plus 3.3 per cent). Other groups of products went down, including those that have benefited from the devaluation of the ruble in the past year (metals, machinery, fertilizers). Overall, in January-April, the Federal customs service recorded a decrease in domestic exports 32.2%, and its primary industry – mineral products and fuel and energy goods – the decline exceeded 38%. That is, when we say that agricultural products were able to significantly increase its share in the Russian export (far-abroad countries in January-April by 5.4% at 3.4 percent a year earlier, according to the CIS countries – 10.7% vs 8,4%), it is necessary to take into account that it is superimposed on the decline in most other areas.
The first wheat
The most significant share of Russian agricultural exports continue to fall on grain, while the unconditional leadership belongs to the wheat. For the first four months of this year the volume of its supplies to foreign markets reached 7 million tons, and the total value of exports reached $ 1.2 billion (previous year the same figures were, respectively, 3.6 million tons and 825 million dollars). And in may, according to analysts of the portal Agro2b, wheat exports from Russia exceeded the figure for may of last year, more than 86% (1,11 million tons, against 591 million tonnes). Then the largest deliveries were made to Nigeria, and from the beginning of the export season unconditional first place is Egypt – more than 5.9 million tons, or 25.3% of the total volume.
What are the plans for the replacement of imported goods resistibility grain exports for the next season no less optimistic. According to the Institute for agricultural market studies (IKAR) made in the course of the 17th International grain round in Gelendzhik, Russia this year may collect 108,8 million tons of grain, including 64.5 million tonnes of wheat, surpassing the record of 2008 (108 million tonnes), while exports in the next season, which begins July 1 could reach 34.8 million tonnes. The forecast of the Ministry of agriculture, delivered at the same time, more cautious: total grain crop of 106 million tons, exports – 33 million tons, but it is in any case more than in the previous two years (to 105.3 million tonnes in 2014 and to 104.8 million tonnes a year ago).
In this case, the Department did not make allowances for heavy rains and hail, which in early June swept across the southern regions of Russia, though analysts IKAR earlier said that abundant spring precipitation in the South, the Center and the Volga region can lead to njegosevo 150-300 thousand hectares of grain and the continuation of rain to complicate the harvest. According to Rosstat, as of 1 June in the agricultural organizations of the country killed more than 200 thousand hectares of winter crops. But even despite this, according to authorities statistics, the sown area of grain and leguminous crops in comparison with last year increased by 2.2% (30 million hectares), and crops of spring for the year increased by 3.4% – to 27.8 million hectares.
“Success in the export of wheat really is, and the results of the 2015/2016 season of the world Russia’s leadership in this segment is likely to continue,” – said the head of the portal Agro2b Leonid Sobolev. But the wheat, he adds, is not all grain. For example, the export of Russian corn, although grown in recent years several times, does not exceed 4.5 million tons. This is only the fifth place among world exporters, and to the leaders, we are still very far: the US export per year 50 million tons of corn, Brazil and Argentina – 23 million tons, Ukraine – 17 million tons.
Meat for the East
According to the National meat Association, last year the export of Russian meat and by-products increased by 10.4% from 77 to 85 thousand tons, and according to the Ministry of agriculture, the growth in the segment of pork and poultry accounted for 20%. Within the total production of 13.5 million tons of meat of cattle and poultry in live weight) export occupies a very small proportion, but the potential to further increase its volumes are very high. In particular, in the first quarter of FCS recorded a growth of exports of poultry meat by a quarter (compared with the first quarter of 2015, when it amounted to more than 16 thousand tons).
The Ministry of agriculture the most promising external market for the Russian meat think Asia. As reported in one of recent speeches, the head of the Ministry Alexander Tkachev, this year the aim is to increase the supply of meat products in the Gulf States, China and several countries in the Asia-Pacific region. Certain agreements on increasing Russian exports in this direction has been achieved since the beginning of the year, during the big food exhibition – Gulfood Dubai, SIAL Shanghai, and several others. In September, the topic of exports to Asia will continue East economic forum which will pass in Vladivostok.
Greater activity of the Russian manufacturers show and in this segment, as the products are Halal, i.e. permissible for consumption of Muslims. According to the world Halal forum in the coming years, its share of global food consumption may grow from 16 to 20%, and the total volume of this market now stands at 1.4 trillion dollars a year. The readiness to supply Halal products to Islamic countries with the beginning of the year, said such leaders of the domestic food industry, as “agribusiness” (Iran), Cherkizovo (UAE), poultry Tatarstan “Chelny-broiler” (Bahrain) and others, and it is the first similar precedent.
In recent months, many leaders of the domestic meat market was informed not only about the readiness fold increase meat exports to Asia, but also to implement in Russia new projects are largely focused on external supply. In particular, the company “Rusagro-Primorye” and “mercy trade” are going to build on the territory of priority development in the Primorsky Krai new pig complexes with total capacity of about 1.2 million heads, the potential investment of these two holdings in agriculture of Primorye is estimated at least 40 billion rubles. Despite the fact that Russian exports of pork to China is closed, manufacturers expect that this issue will be resolved in the foreseeable future, as has already happened with grain (export permit from a number of regions of Russia in China managed to at the end of last year).
Interest in Russian products exists in the dairy segment where domestic manufacturers have not achieved such success, as in the grain, poultry and pork. According to the National Union of milk producers (Association “Soyuzmoloko”), the self-sufficiency of the country’s dairy products last year accounted for only 77%, but this does not prevent Asian partners to offer Russian companies for cooperation. In particular, at a meeting held a few days ago a meeting with the leadership of the Vologda oblast with a delegation from the Chinese province of Shandong were discussed the issues of supply in the PRC. The theme of dairy exports rose and in the recently held in St. Petersburg, the first Russian-Chinese business forum.
The phantom menace
According to experts of the market, in different segments of the agricultural exports of Russian manufacturers promoting their own specific factors. For example, the export of wheat from Russia, according to Leonid Sobolev, strongly help the ruble to the dollar and the situation on the commodity markets in General. “The dollar is expensive relative to traded on the stock exchanges of commodities, including grain. This both helps the Russian export of wheat, and “presses” export from the United States. While the dollar remains expensive, Russian wheat will remain more competitive,” predicts analyst. At the same time, the world corn market, where the success of Russia much lower, depends on the exchange rate of the dollar is weak and American volumes just here to replace nobody. Therefore, if we take the total grain exports, Russia for the past four to five years fighting only for third place with Argentina, after the USA (80-90 million tons) and the EU (45-50 MT).
In the meat segment, the producers pay attention to exports under pressure from falling domestic demand, while the growth of production. According to Rosstat, domestic production of cattle and poultry in live weight last year grew by 4.2%, and meat consumption, according to various expert estimates, at the same time decreased by 3-7% (and this is not the limit). To compensate for the growing gap, many manufacturers calculate exactly due to the export of excess products.
“Pork in the country is sufficient, there is no deficit, the increase in livestock is very significant. For poultry there are certain seasonal fluctuations, but in any case, large producers would be interested to export”, – commented the analyst IKAR Anna Kudryakova. According to her, in recent years positive dynamics is observed in the supply of poultry in countries like Thailand, Tajikistan, Vietnam, and Ukraine – at the expense of Donbass. The list of countries which exported to the Russian bird, constantly updated: the last time it appeared Bahrain, Mozambique, UAE, Serbia and even one EU country – Italy.
Of course, all farmers, including export-oriented, concerned about how long the regime of state support to agriculture, which, in fact, a situation arose when in certain segments of agriculture were surplus. A year ago at a meeting in Rostov-na-Donu food safety Forum, the head of Executive Committee of National meat Association Sergey Yushin said that in the pig, for example, the volume of accumulated investments is that the sole reason for further investment in this segment is the export.
On the reduction of investment in the agricultural sector is not yet mentioned. As stressed Tkachev, at the end of 2015, the total investment portfolio in agriculture amounted to about 1.5 trillion rubles and by 2020 it is planned to attract 1 trillion rubles. For its part, the government plans to spend on agriculture 250 billion roubles (for comparison: last year the volume of support of the industry was 200 billion). And yet, farmers fear that with the lifting of Western sanctions, the amount of support will decrease and they will again have to compete domestically with cheaper imports. In recent months, Federal government officials have repeatedly stated that farmers worry about. However, during the recent St. Petersburg economic forum, Deputy Prime Minister Arkady Dvorkovich (in the recent past – one of the lobbyists of Russia’s accession to the WTO) clearly mentioned that “if sanctions will be lifted, and we also will adjust, change”. However, Dvorkovich said the government already have an understanding of what measures must be implemented to the Russian producers were left in a favourable situation for them.
For its part, the experts do not see a direct connection between the subject of the lifting of sanctions and the dynamics of Russian food exports. “SEL in the country, which impose sanctions on Russia – the EU and the USA, and before not too flourished,” says Sobolev. – There is grain enough of their own, the same situation with pork and poultry, where we see an exportable surplus. So you can count on exports to these countries only some unconscious products.”Related posts: