White House increases support for agricultural exports

The government is increasing the volume of support for agricultural exports: financing of the core project, as head of the department Dmitry Patrushev said yesterday at the collegium of the Ministry of Agriculture, will grow from 51 billion to 58 billion rubles. Among the “raised” areas – budgetary subsidies for the transportation of agricultural products. These measures, along with the revision of export duties on grain and the extension of the grain deal, should unload the domestic market, overstocked due to a record harvest last year and the expectation that supply will exceed demand this year.

The meeting of the collegium of the Ministry of Agriculture on Friday showed that against the backdrop of a reduction in state support for the agro-industrial complex as a whole (372 billion rubles against 425 billion rubles a year earlier), the authorities are pointwise increasing assistance to exporters of agricultural products. According to the head of the department, Dmitry Patrushev, 51 billion rubles were provided for the federal project “Export of agricultural products”. (against 68 billion a year earlier.— “b”), but the government decided to allocate an additional 7 billion rubles.

The need for support is related to the overfulfillment of plans announced yesterday within the framework of the Food Security Doctrine (for grain, sugar, meat, vegetable oil) and expectations of a high harvest. So, yesterday the Ministry of Agriculture confirmed the estimate for grain – at least 123 million tons are expected, of which 78 million tons are wheat. It should be noted that this is noticeably lower than the record 2022 harvest of 157 million tons, but significantly exceeds the volume of domestic consumption, estimated at about 80 million tons.

“Obviously, not just a lot of products need to be produced – maintaining profitability requires a serious balance,” Dmitry Patrushev noted. Recall that the overstocking of the domestic grain market (according to Rosstat, wheat stocks in agricultural organizations increased by 1.65 times in annual terms by May 1), which led to a decrease in prices for the 2022 harvest, the authorities tried to solve by purchasing 3 million tons of grain in the intervention fund. As Dmitry Patrushev noted yesterday, before that, such purchases were carried out only in 2016 – about three times less. A possible purchase of another 7 million tons of grain was announced (see Kommersant on March 24), but against the backdrop of unresolved problems with financing the purchase and storage of the state fund, the Ministry of Agriculture then noted that so far there were no plans to increase purchases. This may also be due to the understanding that purchases will not completely solve the problem of overstocking.

So the authorities are still betting on increasing exports. The export of grain in this agricultural year (July 1, 2022 – June 30, 2023) is predicted by the Ministry of Agriculture at the level of 55 million tons, analysts allow reaching 59 million tons (see Kommersant of May 2). In the coming agricultural year, exports are estimated at 50-55 million tons. Mindful of the success of agricultural exports in 2022 and the reorientation to the markets of friendly countries (they accounted for 87% of Russian deliveries – about 25 percentage points more than in 2021), Deputy Prime Minister Victoria Abramchenko yesterday announced an increase in funding for a program to subsidize part of transport exporters’ costs. If last year companies received 7 billion rubles. for these purposes, now they will be able to count on 11 billion rubles, which will support the export of agricultural products in the amount of at least 7.3 million tons.

The grain deal also plays its role in unloading the domestic market of the Russian Federation, which, we recall, has been extended until July 17 (see Kommersant of May 5). This has already been reflected in world prices – according to the Food and Agriculture Organization of the United Nations (FAO), in May 2023, the grain index fell to 129.7 points, which is 25% lower than the record high value a year ago. The FAO explains this by the decline in wheat prices amid expectations of a good harvest in the 2023/24 season, as well as the extension of the Black Sea Initiative.

The Russian authorities, in turn, are trying to reduce price pressure on the market by changing the mechanism for calculating the export duty on grain. A decision was made to revise the minimum price for these products – as a result, as the Ministry of Agriculture announced yesterday, the duty on wheat will decrease by 1.6 times from June 7 (to 2.8 thousand rubles per ton), and the duty on barley will be reset to zero. This, as reported by the Union of Grain Exporters, contributed to the adjustment of purchase prices for grain, which grew by 7%.

Evgenia Kryuchkova