“Relations with China are rarely a one-way street” – Kommersant

The head of the Center for Industry Expertise of Rosselkhozbank told Kommersant about the development of Russian agricultural exports, trade with China and new sales markets. Andrey Dalnov.

— Are there any changes in the geography and structure of Russian agricultural exports?

— The main change will be an increase in the value of exports. It is expected that by the end of the year the figure will reach $45 billion, plus 8–10% by 2022. This result was achieved against the backdrop of lower prices for most products on world markets.

Exports are diversified through livestock products – almost all types of meat and offal; dairy products. The export of value-added products, such as fish fillets and vegetable oil, is growing at a rapid pace.

— China is one of the leading consumers of Russian products. Are there any risks of over-dependence on this country?

— A reasonable strategy is to diversify exports across geographic areas. In global food trade, barriers can be introduced for various reasons, but in most cases we are not talking about the simultaneous closure of all markets. Countries may also assess security risks differently.

In the long term, diversification for the Russian Federation can occur through supplies to countries in Africa, Latin America, and Southeast Asia. Africa is a promising market for vegetable oils. Supply volumes will be determined by the ability to compete with palm oil producers.

— Do you see any difficulties in developing trade with China for Russian business in the home market? When opening certain market segments for products from the Russian Federation, China will strive for equivalent access to the Russian market.

— As Russian poultry farmers can see, trade relations with China are rarely a “one-way street.” The PRC willingly buys chicken feet from Russia and exports chicken fillets in return.

A similar situation may arise with pork. In line with the tastes of Chinese consumers, China may import high-fat cuts (brisket) and export relatively lean items to Russia, such as carb. Russian pig farmers expect that the opening of China will help maintain profitability by increasing exports of offal and individual cuts.

But this does not mean that the effect for Russian producers will be exclusively positive.

— Are there Russian products that may be in demand on export markets, but are still undervalued?

— Sausages, meat, vegetable and fish products with long shelf life may have untapped potential in non-CIS markets. Increasing supplies requires investment – studying foreign consumers, working with recipes, etc.

— Which markets remain inaccessible but could be interesting?

— Russia is adjacent to large markets that are partially closed primarily for political reasons—Japan and the European Union. If the political situation normalizes and the appropriate permits are obtained, Russian producers could, among other things, increase meat supplies to Japan.

Russian greenhouses are quite competitive in the EU market – especially in the Baltic states close to us. Therefore, in the future, Russian exports may diversify through the supply of greenhouse vegetables.

If we talk about more distant markets, a number of countries in Latin America, Africa, and Southeast Asia remain promising. Colombia is one of the world’s top 20 importers, importing approximately $3 billion worth of grain annually, but does not purchase these products from Russia. Indonesia is one of the world’s top 30 meat importers. Similar examples include India and Malaysia, which also do not yet purchase meat from Russia.

Interview conducted by Anatoly Kostyrev