“Hidden barriers are very dynamic” – Kommersant

The chairman of the board of the Union of Grain Exporters told Kommersant about the advantages of Russia as the world’s largest exporter of wheat, about adapting to trade barriers and competition Edward Zernin.

— What do you attribute the results of grain exports in the 2022/23 season to?

— This is the result of focusing on priority markets and grain diplomacy. Having found ourselves in a certain isolation at the beginning of the season, caused by the refusal of a number of international players to work with us, we directed all our efforts to strengthening direct contacts with the main buyers of Russian grain, in which the Ministry of Agriculture helped a lot. The strategy worked, we dominated the entire season in the Middle East and North Africa, and these are the largest grain importers in the world.

– The first analyst estimates for the 2023/24 season are quite optimistic, some even allow a new record export. Do you agree with this?

I think they are close to reality. It is important to understand that optimistic forecasts sound not only for our harvest, but also for the harvest in other countries. This means increased competition in the world market and low prices.

— What factors restraining Russian exports remain? Are the hidden trade barriers that have been talked about a lot still in place?

— As it turned out, we are not only ready for many difficulties, but also able to quickly adapt to the new reality. But the hidden barriers are also very dynamic. We are constantly looking for optimal solutions.

This season, we lost a number of countries whose banks were unable to make payments for grain of Russian origin, but increased the volume of deliveries to countries that coped with the problem of settlements. I hope that in the new season we will find a variant of a systematic solution to the problem of payments and return the markets of the fallen countries.

– According to forecasts, Russia will remain the largest exporter of wheat in the world next season. Does a large share of the world market give Russian wheat exporters any advantages?

— We are known and trusted almost all over the world. Both in terms of the market reputation of the players and the quality of our product. Today, the argument “the quality of our grain suits other buyers” has real weight in negotiations, which is backed up by sales volumes. It helps in opening up new markets and acquiring new customers.

– Russian officials continue to discuss the terms of the grain deal, in particular, to demand the connection of the Russian Agricultural Bank to SWIFT. Can these agreements affect domestic grain exports and the business of exporters?

– Of course, the connection of Rosselkhozbank to SWIFT would significantly reduce transaction risks and costs. We would be able to return to the practice of long-term supply planning. When the bank changes every month, it is almost impossible to make a program.

– Before the new season, three global traders announced the termination of grain exports from the Russian Federation at once, at the same time it became known about the plans of new local players to develop this business. Do you expect this to affect competition and the market as a whole?

— Our market is one of the most highly competitive. For the share of those who left, leaders with a capacious infrastructure will fight first of all. As for newcomers, I believe more in the initiatives of agricultural holdings than in the projects of financial investors. Experience tells us that only ambition and money are not enough for success.

— Your Bio-Tone agricultural corporation also joined the Union of Grain Exporters in the fall of 2022. What are your plans for the coming season?

— We have our own strategy, we focus not so much on trading as on building long-term direct supply chains. Having your own crop in the database, it is much easier to do this.

Interviewed by Anatoly Kostyrev