The Government of the Russian Federation canceled the anti-sanction benefit for farmers

The government canceled the exemption for the return of subsidies to the budget by agricultural investors who did not fulfill the terms of the agreements on them until 2024, now they will have to return the funds to the deficit budget on time. The cancellation of the measure, which was introduced after the start of the military operation in Ukraine and worked as a free loan for the agro-industrial complex, is explained by the authorities’ confidence in the stability of the sector, which is supported by data on the growth of grain exports and prospects for the harvest. The trend is confirmed by the refusal of the authorities to take other measures to support the industry, in particular, the expansion of purchases to the state grain fund.

The government is reducing emergency support for industries demonstrating resilience in the face of the Russian military operation in Ukraine. As follows from resolution No. 912 of June 2, 2023, the White House declared invalid one of the clauses of the resolution of April 16, 2022, which allowed agricultural companies that did not fulfill the terms of agreements on subsidizing interest on investment loans to return state funds to the budget until June 1, 2024. In fact, the anti-crisis measure, the introduction of which was explained by the risk of delaying the implementation of subsidy agreements due to sanctions, acted like a free loan for the industry, but now the money will have to be returned to the deficit budget on time: the agro-industrial complex has already demonstrated stability in comparison with other sectors of the economy.

Thus, according to Rosstat, the decline in the financial result (profit minus losses) in crop and livestock production, which account for the main turnover in the agro-industrial complex, in 2022 was less than the average for the economy (8.9% vs. 12.6%). This ratio also remained in the first quarter of 2023 (18.9% vs. 22.3%, respectively), although it is the first quarter of the year that traditionally accounts for the most significant costs of farmers for sowing.

In April and May, there was a sharp increase in export shipments of Russian grain (this is partly due to favorable weather conditions in the Black Sea in late spring; see Kommersant of May 12). Recall that in the first months of the season (the agricultural year began on July 1, 2022 and will end on June 30, 2023), the pace of shipments did not inspire optimism in either the farmers or the authorities (for more details, see Kommersant dated June 2). Despite the ongoing problems that the industry has faced over the past year (difficulties with payment for shipments, logistics, storage of grain, etc.), a record harvest made it possible to export from Russia, according to various estimates, from 55 million to 60 million tons of grain. Uncertainty about the export potential, which persisted for most of the season in the assessments and statements of government officials, has been replaced in recent months by the conviction that the export of agricultural products (primarily grains) from the Russian Federation will not lag behind expectations and plans at the end of the agricultural year.

The refusal of the authorities to purchase grain for the intervention fund, which is one of the mechanisms to combat the fall in the industry’s profitability, testifies to the change in sentiment. The last such purchases – 3 million tons of grain for 47.1 billion rubles – were carried out in 2022. They were not planned to continue in 2023, however, fearing export difficulties and restraining the anxiety of farmers, in March the government announced that it was “considering the possibility” to purchase about 7 million tons of grain more (for more details, see Kommersant on March 24). At the same time, last week the head of the Ministry of Agriculture, Dmitry Patrushev, announced that there would be no purchasing interventions at least in 2023, in fact confirming the optimism of the authorities regarding the industry’s ability to independently cope with a record harvest.

Christina Borovikova