The European association of seed market participants Euroseeds informed Prime Minister Mikhail Mishustin about the risks for further work in the Russian Federation

New rules for the localization of seed production in Russia caused concern among European market participants. The Euroseeds Association informed Prime Minister Mikhail Mishustin about the risks for further work in the Russian Federation due to the requirements to create joint ventures under the control of local organizations, carry out full-cycle breeding and report to the Ministry of Agriculture. Experts fear a decrease in yields and an increase in prices due to the withdrawal of some foreign seeds from the market, but the regulator is confident in the need to protect the domestic market.

At the disposal of Kommersant was a letter where the European association of seed market participants Euroseeds (includes Bayer, BASF, Corteva, etc.) warned Prime Minister Mikhail Mishustin about the risks for the further work of member companies in the Russian Federation due to new localization requirements production. Mikhail Mishustin signed the corresponding decree in May, it should come into force on September 1 this year.

Euroseeds writes that its members are concerned about the obligation of foreign producers to create joint ventures with local organizations with a share of non-residents of no more than 49%, carry out full-cycle selection and report on localization to the Ministry of Agriculture. The association also sees risks in linking the localization of production with customs regulation. In April, First Deputy Minister of Agriculture Oksana Lut said that seed imports to the Russian Federation could only be allowed for companies with a localization plan. “Now there are many companies that simply import goods to us, and that’s it. Objectively, this is a consumer attitude, which we are removing, ”Interfax quoted Ms. Loot.

According to Euroseeds, its members “have been committed to the Russian market for decades”, investing in research, production, refinement, marketing, development of supply conditions, which “contributed to the food security of the Russian Federation.” And the new localization rules threaten further activities in Russia, including due to the lack of guarantees for the observance of breeders’ rights and restrictions on the circulation of seeds, Euroseeds points out. The government office did not provide comments.

The doctrine of food security assumes that by 2030 Russia should be provided with seeds of local selection at the level of 75%. At the end of 2022, the average was 60.3%, the Ministry of Agriculture reported. The head of the ministry, Dmitry Patrushev, said in an interview with Kommersant that the Russian Federation is provided with 70-90% of basic grain crops, local seeds occupy about 3% in sugar beet, and 9% in potatoes.

Kommersant’s source on the market notes that the reduction in the number of foreign seed suppliers will free up a niche in the market for local breeders, but threatens to reduce yields. For example, he explains, rye hybrids are being developed in the world, yielding an average yield of 7.5 tons per 1 ha, while Russian counterparts have 4 tons per 1 ha. Andrey Sizov, director of Sovecon, says that the fight against foreign seeds will only lead to a reduction in their supply and an increase in prices, while farmers are already facing a decrease in income and rising costs. According to him, global companies spend a lot of money on seed development, and it’s impossible to force them to localize production in the Russian Federation just like that. Director General of the Institute for Agricultural Market Studies Dmitry Rylko noted that the development of breeding requires reliable protection of intellectual property.

Syngenta, controlled by the Chinese state corporation ChemChina, is already planning to localize seed production according to the new rules. As reported in the government of the Voronezh region, before September 1, Syngenta intends to create a joint venture for the selection of hybrids with the Zolotoy pochatok agricultural holding, having developed a joint work plan until 2030. At Syngenta and other global seed suppliers, Bayer, BASF and Corteva did not promptly respond to Kommersant.

The Ministry of Agriculture told Kommersant that the rules for localizing seed production should encourage foreign players to move from imports to production and scientific activities in the Russian Federation, allow strengthening the positions of local breeders and seed growers and protect the domestic market from possible dishonest actions of foreign companies. They stressed that they do not see the risks of a shortage of seeds in the domestic market.

Ekaterina Rakitina, Anatoly Kostyrev