Russia chooses a thorny but sure path to agrarian independence

We provide for ourselves

Russian Minister of Agriculture Dmitry Patrushev recently noted that our country has long been fully self-sufficient in all the main types of food – grain, meat, fish, sugar, vegetable oil. Sufficient stocks of products have been formed in warehouses and distribution centers, and deliveries to retail chains are going smoothly.

This is also evidenced by statistics, in 2020 Russia provided itself with grain by 165%, vegetable oil – by 200%, sugar – by 99.9%, meat – by 100%, milk – by 84%, chicken eggs – by 97, 4%, potatoes – by 89%, and fish – by 160%. And the level of self-sufficiency is growing every year.

If we talk about the volume of agricultural production in Russia, then in January-June 2022 it increased by 2.2% compared to the same period in 2021 and amounted to 2 trillion 246.8 billion rubles. This is stated in the materials of Rosstat.

The most successful sectors include the production of grain crops and poultry meat. According to these positions, Russia satisfies both domestic demand and external demand, supplying products for export.

However, despite certain successes, the Russian Federation is still forced to buy part of the crops in other countries. So, for example, we have only seasonal availability for greenhouse crops. Between seasons, you have to resort to imports. As a result, we have a ratio of 50 to 50.

Russia usually buys imported vegetables in winter and early spring, when its own stocks of these products run out, and the new season has not yet begun.

To reduce the volume of imports, it is necessary to solve a number of problems related, in particular, to storage and logistics.

Problematic overproduction

At the same time, there is a problem of overproduction in a number of industries. A huge harvest is fraught with big problems. President Putin said that a record 150 million tons of grain could be harvested in Russia this year. The problem is that domestic consumption is much less, and it is not possible to export wheat for sale: exports are limited, and railway tariffs are too high. As a result, the grain may remain in Russia. This oversupply is expected to drive prices down. It turns out that farmers spend money, grow crops, but cannot earn. A similar story develops with meat.

In order to solve the problems of overproduction, it is important to strengthen export ties and develop new supply chains. Anna Vovk, a member of the Council for Financial, Industrial and Investment Policy of the Chamber of Commerce and Industry of the Russian Federation, told about this to MK.

“It is precisely because of the lack of a developed logistics infrastructure that we cannot always secure an export contract in a quality manner,” she says. — We need to develop export ties. What is happening now does not always take into account the national mentality. For example, our partner, China, could buy almost all the products that we have in excess, but they need a clear, ready-made offer in a form that they can understand. If commercial ties are built between our structures and the structures of the PRC (state or commercial), then a clearer network of distribution and export of our companies’ products is born.

Meanwhile, Russia has successful cases. For example, in the field of chicken meat. Everything that is put up for export by chicken, everything is bought, because the offer is competitive. Why doesn’t this happen with meat? Because the offer is uncompetitive and unstable.

“We need to work on the issue from both sides. Perhaps with the involvement of third-party experts, consultants who have been on the market for a long time. It is necessary to establish ties,” Vovk is convinced.

According to the expert, in addition to China, there are other countries with a different mentality that could buy our products, but the basic rules of the game are the same everywhere: we need negotiable people who take into account the peculiarities of all parties and bring the deal to a final that is convenient for everyone.

Meanwhile, the government allocated an additional 1 billion rubles to support Russian agricultural exporters. “Compensation of transportation costs for the export products of Russian companies is a very popular instrument of state support, which has now become even more relevant,” said Alexei Solodov, Vice President of the Russian Export Center (REC). — Exporters can compensate 25% of the cost of delivering products to the buyer. The allocation of additional funds for this instrument of state support will help Russian agricultural products continue to conquer new markets.”

And yet, in general, Russia’s export opportunities have increased significantly in terms of grain, oilseeds, sugar, soybeans, milk, poultry meat – we not only produce all these products for ourselves, but also sell them abroad (now, however, with restrictions). The main buyers of these products are Turkey, the countries of the Middle East and Africa, as well as the United Arab Emirates and Saudi Arabia. Part of the grain is also sold to Asian countries – Vietnam, Thailand and others.

The root of the problem is in the seeds

Today, Russia is a leading exporter of certain types of agricultural products, but at the same time, we import raw materials, such as seeds and fodder crops.

Recall that after the 1990s, many Soviet developments in the production of grain, root crops, vegetables, as well as in the cultivation of poultry and animals were lost or forgotten. All seed funds were destroyed after the collapse of the USSR. The agro-industrial complex in the country has almost completely switched to seeds from abroad, hatching eggs, breeding pigs, cows, etc. Meanwhile, Russia has its own seeds – varietal ones. Hybrids come to us from other countries. Varietal seeds are cheaper, they are available, but their yield is low.

At the same time, in 2017, the Federal Scientific and Technical Program (FSTP) for the development of agriculture until 2025 was launched. This year it has been extended until 2030. According to it, the state should subsidize the development of several subprograms at once for those types of agricultural products where there were insufficiently strong positions. So, for example, there was a very difficult situation in sugar beet. Two or three years ago, 100% of sugar beet seeds were foreign, imported to us from Germany and the Netherlands. But the Ministry of Agriculture of Russia managed to finance this program, which eventually joined two enterprises. In one of them, under the guidance of Academician of the Russian Academy of Sciences Salis Karakotov, a well-known scientist in the field of plant protection and biotechnology, domestic hybrids were created using modern genetic methods. We started getting seeds from them. This year, seed producers are already predicting to close 12% of the market, and in another year or two to reach 20-30%.

Despite the fact that there are no official bans on the import and export of breeding and seed products, there are indirect obstacles. So, for example, there are problems with payment, with international transactions. There are also challenges with transportation, as logistics flows have changed. Russian farmers are still coping with all the difficulties. According to them, there are enough seeds for spring sowing. So, next season there should be no problems with the harvest.

“We provide about 90% of what we need ourselves, for example, wheat, barley, rye. There is a lot of talk about strengthening our breeding centers, but it’s not easy at all. The work is very delicate. And here the problem is not only in external factors. Foreign seeds are made by the largest firms. They allocate a huge amount of money for this work, for the breeding of new varieties, reproduction and sale. And our state allocates incomparably little funds for these purposes. Hence the low efficiency of the measures taken. Selection requires a lot of money. In the future, this should become an interesting direction for business. If the entrepreneurs took it upon themselves and started producing these seeds for themselves, the situation would change for the better. But business is afraid to invest, ”says Vasily Uzun, chief researcher at the RANEPA Center for Agricultural Policy, economist.

While maintaining the current course for the development of exports, breeding and new technologies, Russia will achieve agrarian independence in 5-7 years, Anna Vovk believes.

“There are even bolder forecasts, according to which Russia for certain types of crops, especially for grain and legumes, will be able to achieve independence in 2-3 years. This became possible because the developments from Soviet times have been preserved,” she says. “We need a constant interactive dialogue with the participation of the state, business, scientists and investors. Then everything is possible. There are already specialized working groups that are organized under the State Duma, the Ministry of Agriculture, and the Ministry of Economic Development. This is a specific task set from above. Finally, the topic was taken seriously.