Russia this year may become the world record holder in the export of wheat, taking it away from the United States. In general, as a result of last year, the volume of supplies of food and agricultural products to the external market rose to $ 20.7 billion. But while imports exceed exports, therefore President Vladimir Putin set the task in 4 years to become self-sufficient in basic types of food. The Ministry of Agriculture expects that Russia can become a net exporter as early as 2020.
Rosstat recently clarified data on the harvest in the Russian Federation, increasing the previous figure by more than 1 million tons of grain. Thus, according to the service, in the current agricultural year (July 2017 - June 2018), Russia collected 135.393 million tons of grain, of which 85.9 million tons - wheat.
Russian President Vladimir Putin, speaking in early March with a message to the Federal Assembly, congratulated the farmers on this result, drawing attention to the fact that he had surpassed even the maximum rate of the Soviet Union at 127.4 million tons, achieved in 1978.
The Ministry of Agriculture, in turn, revised the export forecast. Minister Alexander Tkachev told reporters that Russia's export potential for grain supplies this year could reach 50 million tons.
Earlier, his department predicted exports at the level of 45-47 million tons of grain, including 35 million tons of wheat.
According to the ministry, from July 1 last year to February 21, 2018, Russia supplied 33.548 million tons of grain to foreign markets, which is 39.7% more than a year earlier. At the same time, wheat exports grew by more than 40% to 26.25 million tons, barley doubled to 3.9 million tons.
The buyers of Russian grain are more than a hundred countries of the world, including Egypt, Turkey, Bangladesh, Saudi Arabia, Indonesia, Azerbaijan, Nigeria, etc.
The agency Bloomberg recently reported that according to the results of the 2017-2018 grain year, Russia exports 30% more wheat than last year (36.6 million tons) and will become the leader of the century on this indicator. The current record belongs to the United States - in 1992-1993. The states supplied 36.8 million tons of wheat to the world market.
Alexander Tkachev says that Russia intends to continue to remain the world leader in the supply of wheat.
“I think that even with a decrease in the volume of wheat harvest, we will maintain the leadership in the world market,” the minister said, adding that this was possible thanks to the record harvests of the past two years.
In general, according to Rosstat, agricultural production in 2017 increased by 2.4%. In January of this year, growth was 2.5% over the same period last year. According to customs statistics, exports of food products and agricultural raw materials in monetary terms increased by 21.3% and amounted to $ 20.7 billion. This is more than arms exports, said President Vladimir Putin.
But, despite the current successes, Russia is still a net food importer. Last year, goods and raw materials for $ 28.8 billion were imported into the country.
Vladimir Putin, speaking in early March with a message to the Federal Assembly, set a task for the industry to become a net food exporter in four years.
“Within four years, we plan to supply more agro-industrial products to world markets than we import into the country,” the president said. According to him, it is necessary to increase the country's self-sufficiency in beef, milk and vegetables.
To this end, the state is ready to continue to provide measures to support the industry, including small farms.
The Ministry of Agriculture believes that Russia is able to regain the status of a net exporter of agricultural products in two years.
“I think that in 2020, the agro-industrial complex can achieve a result that could not be achieved for decades, and regain the status of a net exporter of food, lost 65 years ago,” said Alexander Tkachev.
And by 2024, according to him, “we set an ambitious goal - to bring the volume of exports to $ 50 billion.”
It must be emphasized that farmers receive substantial support from the federal budget. In 2018, its volume will amount to 242 billion rubles. The same government spent in 2017. In February of this year, Prime Minister Dmitry Medvedev promised to continue to maintain all measures to support the sector, including concessional lending.
However, experts warn that there should not be excessive optimism, there are still enough problems, including in the successful grain sector.
Increased exports from Russia and some other countries led to a fall in grain prices. This was also noted by Vladimir Putin.
According to the FAO (Food and Agriculture Organization of the United Nations), the index of world food prices in February of this year was 2.7% lower than a year ago. Grain price index fell by 6.8%.
Quotes on world markets are not in a hurry to soar, therefore, to a greater extent, the export benchmarks of our country have a goal to sell the accumulated grain volumes, the partner of the practice of the agro-industrial complex NEO Center, Vladimir Shaforostov, said.
To support the declining prices of Russian exporters, last year subsidies were introduced for rail transportation of grain from regions remote from ports. The Ministry of Agriculture intends to make this measure permanent.
At the end of September, Russian Railways decided to offer a 10.3% discount on the transportation of grain from a number of oblasts of the Central, Volga and Siberian federal districts through Russian seaports.
At the end of December 2017, Prime Minister Dmitry Medvedev at a meeting with deputy prime ministers announced that the government allocated 1 billion rubles for Russian Railways subsidies in 2017, and in 2018 almost 2 billion rubles were earmarked for this purpose.
In addition to low prices, the problem for grain producers is the lack of modern storage facilities within the country. At the same time, most of the granaries are used since the times of the Soviet Union, and their degree of wear already exceeds 50%.
Putin held a meeting on agricultural cooperation in Voronezh
Many elevators, which allow to preserve the quality and quantity of grain for a long time, are now occupied by interventional state fund grain. This issue is acute in Siberia, in the Volga region, in a number of central regions. The Ministry of Agriculture has already announced plans for the release of part of the capacity through the export of 500 thousand tons of "state" grain. This is expected to occur in June.
But this measure may further reduce prices. Anatoly Kutsenko, Director of the Department of Economics, Investments and Regulation of Agricultural Markets of the Agriculture Ministry, speaking at the profile conference “Where the Margin is 2018”, stressed that “we will release elevators, and farmers should learn to live in new conditions without counting on public procurement”.
“The cost now needs to be included in the current market conditions,” he said.
In order to increase and maintain exports, it is necessary to build a unified system for analyzing the industry, but it is not there yet, said Pavel Sigal, First Vice-President of Support of Russia. Such a system will allow more flexibility to react in terms of regulation and additional necessary incentives for different regions and different types of farms. This is the first step towards the effective use of farmland within the country, ensuring sustainable returns without depleting the soil, he said.
In general, the Ministry of Agriculture believes that the existing set of support measures and the progress taken by the farms will make it possible to bring the crop to 150 million tons by 2025 and exports to 60 million tons.
India can be a champion in the collection of wheat
The production of basic grains in India in 2017/18 MY may reach 277.49 million tons, which is 2.37 million tons more than the previous record harvest in the country, reports AgriCensus.
It should be noted that the increase in the total grain production in the country contributed to an increase in the gross harvest of corn, which is projected at 27.14 million tons - a record figure for India. The driver of growth in grain production in the current season has become favorable weather conditions and the expansion of sowing areas.
Rice production in the country is projected at about 111 million tons, which is 1.3 million tons higher than the 2016/17 MY. Gross harvest of leguminous crops is also estimated at a record level - 23.95 million tons against 23.13 million tons in the 2016/17 season.
At the same time, it is noted that the wheat harvest will slightly decrease - to 97.11 million tons, which is 1.4 million tons less than the result of the previous season, but exceeds the average annual rate (93.34 million tons). The decrease in grain production is due primarily to a reduction of 4.27% in the area of sowing, as well as the reorientation of Indian farmers to the cultivation of leguminous crops.
Why is export growing?
The reason for the explosive growth in exports is the active increase in grain harvest against the background of slow growth in domestic consumption. Food consumption is relatively stable: despite the fall in income, consumers are in no hurry to switch to bread and pasta in large quantities. Fodder is growing against the background of continuing rapid growth in the production of meat and poultry, whose producers were able to adapt to limited consumer demand. But the increase in consumption as a whole is relatively low, a maximum of several million tons per year.
Since 2000, the production of grain as a whole has more than doubled: from 65 million to 135 million tons in 2017. True, if you look at more accurately transferring averages, for example, averages over five years, then the growth, of course, will not seem so rapid: from 76 million tons on average for 2000–2004 to 112 million tons for 2013–2017 ). But in any case, 135 million tons is a new record in the entire history of Russia. The previous one has been held since 1978, when the RSFSR collected 127 million tons, which President Putin recalled in his message to the Federal Assembly recently, not without pleasure.
With Freedom and Weather
The main reason for the increase in fees is freedom. First, the freedom of entrepreneurship, which the former members of state and collective farms received with the collapse of the fantastically inefficient planned Soviet agriculture. No one else told them what and how to sow, and to whom and at what price "to pass." Secondly, the freedom to dispose of land, since the institutions of private ownership of agricultural land and its long-term lease appeared in Russia. Thirdly, the freedom of foreign trade - Russian farmers received the right to export their products to a huge global market. All these rules of the game were established back in the 1990s - early 2000s and began to bear fruit years later.
Lucky and with prices. From the mid-2000s to 2012, prices in the world grew in most commodity markets, and grain was no exception. Since 2012, prices have been actively falling in order to stabilize at historically low levels in recent years. This hit farmers' incomes around the world hard, but for the Russian situation the situation was mitigated by the 2014 devaluation.
The weather also helped. For Russia, global warming means, first and foremost, increasingly mild winters. Due to this, our share of winter wheat, whose yield is significantly higher than spring wheat, is steadily expanding. In 2016–2017, very lucky and with precipitation. The cool and rainy summer of 2017, as we expected, largely contributed to the record collection of 2017.
The total grain supply in the current season, which is made up of rolling stocks and crops, is estimated at around 155 million tons, domestic demand is not more than 80 million tons. Thus, the export potential can theoretically be estimated at 60 million and 70 million m. However, in fact exported will be noticeably less.
The main reason is the lack of port capacity. Despite their rapid expansion in recent decades, they have not kept pace with the increase in fees. The current impossibility of transshipment through Ukrainian ports, which in previous years were sometimes used to export part of Russian grain from time to time, also interferes.
Yes, and the existing capacity could be used much more efficiently due to a clearer organization of grain supplies to the port terminals, which would exclude multi-kilometer truck lines that became part of the landscape of many southern cities.
In the coming years, infrastructure problems are likely to be largely resolved. We will see the expansion of existing terminals and the construction of new ones, deliveries from the domestic market will be organized clearly and quickly, and traffic jams will be a thing of the past. But will this necessarily mean a further steady increase in the collection and export of food, as the authorities, who are seriously determined to increase non-oil and gas export, wish?
According to forecasts of Adani Enterprises, in the 2017/18 season, India can import 2-3 million tons of wheat, despite the good harvest.
Tells Grain On-Line with a link to The Financial Express.
The gross harvest of wheat may increase to 95 million tons, which is 10 million tons more than in the current crop failure season. However, the country will still need large-scale wheat imports. “It takes several productive years to raise stocks to a comfortable level,” says Atul Chaturvedi, head of Adani Enterprises, one of the largest agricultural companies in India.
Since June last year, India has purchased more than 5 million tons of imported wheat, since its own production has been undermined for two years due to drought and untimely rains.
The arrival of new wheat on the market will begin in April. The government of India can restore the import duty on wheat from mid-March to protect its own production.
The government of India is focused on the purchase of 32-33 million tons of wheat in the state fund against 22-23 million tons last year, said Atul Chaturvedi.
For processors in the southern states of India, imported wheat will be cheaper than wheat transported from the northern states. “The world is flooded with wheat, for millers in the south of India it will be cheaper to import Black Sea or Australian wheat,” says Atul Chaturvedi.
At least next season, Russia will once again be a major grain exporter. To a large extent, this is predetermined by the expected high stocks and, so far, quite good views of the new crop. However, overall growth sustainability raises questions.
Due to infrastructural restrictions, prices are significantly lower than last year: in non-export regions - by 20–40%, in the export South - by about 10–20%. Some farmers still have a safety margin after the safe season of 2016/17, but it is actively decreasing. There is no need to talk about mass bankruptcies, but at least we will see a decrease in agrotechnological costs (for seeds, fertilizers, equipment), which will seriously increase the risk of a shortage in case of adverse weather conditions. But the price factor is opportunistic, and probably in a not so distant future its value will decrease. In general, we expect prices to grow in world agricultural markets in the coming years.
Much more concern is caused by the actions of the state, which may impair the long-term rules of the game. The state is increasingly interfering in the regulation of agricultural exports. At the end of 2014, grain exports were unofficially limited, and in 2015, for the first time in Russian history, a floating export duty on wheat was introduced. Currently it is reset but not canceled. The issue of raising export duties on oilseeds, which Russia has reduced after joining the WTO, is being discussed. A separate and highly topical issue of concern to the grain business is whether restrictions will be imposed on the operation of southern grain terminals in anticipation of the World Cup.
Anxiety is caused by a possible substantial increase in duties on imported herbicides as a result of an anti-dumping investigation within the Eurasian Economic Commission. Obviously, this decision will sooner or later be followed by an active increase in prices for agrochemical products within the country. The confrontation between the FAS and the merging Bayer and Monsanto continues, which could lead to the care of the future of the world's largest supplier of agricultural chemistry and fertilizers from the Russian market.
It is unlikely that any of these plots individually can significantly hinder the growth of Russian crop production, but in the aggregate these factors are a significant risk for the development of the agro-industrial complex.
It seems that for the officials the growth of the sector has become commonplace and self-evident. No matter how new the dues are, either lining up the farmers, no matter how you change the rules of the game, they will still continue to increase production. This is certainly not the case. Any major changes in the rules of the game, the revision of which is already underway, will certainly affect the future of agriculture. The problem is that all this will manifest itself only through the years, and it is not customary to think seriously about such a prospect.