New grains – Newspaper Kommersant No. 223 (7424) dated 01.12.2022

The growing profitability of the grain trade against the backdrop of a record harvest is attracting new players to this market. The company in this sector was created by the co-owner of the producer of meat and dairy products, Damate Group of Companies, Naum Babaev. Earlier, GAP “Resource” and Agrocomplex named after N.I. Tkachev became interested in this direction. Business depends on the team and reputation, and with a decrease in grain harvest and increased competition, new players can have difficulties.

On November 25, Naum Babayev, co-owner of Damate Group of Companies, established DM Agrotrade LLC in Moscow. The main activity of the new company is the wholesale trade in grain, seeds and feed, follows from the data of the Unified State Register of Legal Entities. Andrey Sedov became the CEO of DM Agrotrade. According to LinkedIn, he has been holding the post of deputy CEO of Damate since the end of 2021, and previously worked at Deloitte. Damate declined to comment.

Damate is the largest turkey producer (Indylight brand) in Russia. According to Agrifood Strategies, in 2021 the group produced 157.8 thousand tons of this meat, occupying 39.46% of the market in physical terms. It also produces duck meat, lamb, and dairy products. The land bank, according to its own data, exceeds 99 thousand hectares, of which about 60 thousand hectares are in the Penza region. There are also assets in the Tyumen, Rostov regions and the North Caucasus.

Kommersant’s interlocutors consider interest in grain trading to be logical, pointing to a general increase in the popularity of this area, including among agricultural holdings.

Kommersant’s sources in two large grain exporters confirm that there are many who want to trade. In September, for example, GAP Resource, one of the largest poultry meat producers in the country, joined the Union of Grain Exporters. The association’s website says that the group considers the export of its own crops one of the promising areas. And before that, the union reported that the Agrocomplex named after N.I. Tkachev began direct sales of grain for export. Eduard Zernin, Chairman of the Board of the Union of Grain Exporters, noted that sanctions and trade barriers have accelerated the consolidation of the industry, which can also explain the activity of large agricultural holdings. The GAP “Resource” declined to comment. In the Agrocomplex named after N.I. Tkachev on Wednesday, they could not answer questions.

A Kommersant source in the grain market notes that Damate’s own grain is unlikely to be enough to supply its enterprises and sales. According to him, taking into account the current record harvest, it is possible to create a company for the purchase of grain in the domestic market and resale to exporters. Naum Babaev, for example, was previously a co-owner of the Russian Dairy Company together with the Singapore-based Olam International, which is also involved in grain exports through Azov Grain Terminal LLC.

The profitability of traders today is higher than in previous seasons, when prices were largely dictated by farmers, continues the interlocutor of Kommersant. But, he clarifies, with a decrease in harvest and increased competition for grain, a new player may face difficulties.

Director General of the Institute for Agricultural Market Studies (IKAR) Dmitry Rylko says that in past seasons, some agricultural holdings could earn good money selling grain to exporters in ports at a premium when they did not have enough goods to fulfill contracts. This season, the margin returned to exporters, he notes. According to IKAR and Sovecon, cited by Reuters, Russian wheat with 12.5% ​​protein costs $315-319 per ton on average (about 19 thousand rubles per ton at the Central Bank exchange rate), the purchase price index of the Union of Grain Exporters in deep-sea ports – 14.7 thousand rubles. per ton.

Andrey Neduzhko, CEO of the Steppe agricultural holding, explains that many exporters have stable pools of buyers, their own terminals in ports, and a fleet, which significantly increases profitability. New players need an experienced team and a first-class reputation with international traders and end consumers to carve out a niche in the market, he says. Director of Sovecon Andrey Sizov agrees that it is extremely difficult to build a global business from Russia today: it is necessary to create a structure in Switzerland, the United Arab Emirates or Singapore, to establish relations with banks, shipowners and buyers.

Anatoly Kostyrev