They drank bread – Newspaper Kommersant No. 61 (7506) of 04/10/2023
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The overstocking of the domestic market of the Russian Federation with grain, with unclear export prospects, not only continues to put pressure on prices (they fell to the lows of 2019, see Kommersant on April 5), but also forces the agricultural sector regulators, contrary to previous firm statements about the immutability of state policy in the agro-industrial complex, to soften rhetoric and adjust the numbers of forecasts and plans. This is a rare case when a government under sanctions has to solve the problem not of a shortage, but of an excess of production – and think about how to bring it to a norm that is still unknown.
So, on April 7, the Ministry of Agriculture announced a new planned level of grain harvest in the Russian Federation in 2023 – 120 million tons. This is a lot (consumption does not exceed 80 million tons per year), but in reality we are really talking about a gradual realization of the situation in which the industry finds itself: in December 2022, the same Ministry of Agriculture insisted on maintaining fees of 125-127 million tons.
The problem is well known: since the late 2000s, after the massive modernization of the agro-industrial complex, the Russian Federation has traditionally “unloaded” grain on the world market, taking first place in the export of wheat. The military operation in Ukraine broke these plans: although grain is not subject to sanctions, trade has become much more complicated – it includes logistics, freight, insurance, storage and banking, and the prospects of being sanctioned, for example, for financial support of transportation, began to push foreign counterparties to refuse transactions with Russian companies. The grain deal with Ukraine and Turkey, in which the UN pledged to facilitate the removal of restrictions on Russian supplies, has not helped yet: last Friday, Turkish Foreign Minister Mevlut Cavusoglu confirmed that a number of restrictions on Russia remain.
The tools of the Ministry of Agriculture in the fight against a surplus of grain are rather limited: the department has already promised to buy up to an additional 7 million tons of grain to the state fund (see Kommersant on March 24 – but then it will still have to be sold) and has developed a grain trade project protected from sanctions ” gas” scheme (see “Kommersant” dated March 20 – but it is not known how the scheme itself will work for buyers).
Last week, the ministry also began to take regulatory steps, promising, in particular, to raise the “cut-off price” for calculating the export duty to 17,000 rubles. per ton (in fact, we are talking about almost duty-free exports, against which the ministry has objected in recent years). Also interesting in the context is the modest increase by the Ministry of Agriculture of plans for the production of livestock and poultry (16.4 million tons in 2023 against 16.2 million a year earlier), which may indicate plans to increase domestic grain consumption by livestock. In any case, there is no doubt that rebalancing the market of such a volume will not be easy and will take years, grain crops will have to be reduced, and profitability in the agro-industrial complex will be unpredictable.
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