NTT, Japan’s leading telecommunications operator, today announced plans to increase profitability over the next three years and intend to accelerate the restructuring of its regional units that are experiencing problems.
The three-year development plan involves the expansion of high-speed communication services through fiber-optic networks, as well as the reduction of tariffs for communication services of the ADSL standard.
NTT intends to raise the EBITDA margin (earnings before interest, taxes, depreciation and amortization) to 33% by the end of the 2003/2004 fiscal year, while in the past fiscal year the profit margin was estimated at 31.9%. The company also plans to almost double the free cash flow from 260 billion yen in the past fiscal year to 500 billion yen (4 billion dollars) in the 2003/2004 fiscal year, and also increase the rate of return on capital from 4.2% to 6%.
The company plans to further transfer part of the staff of its regional operators, NTT East and NTT West, into more profitable divisions of the group.
NTT announced its plans after the closure of the Tokyo Stock Exchange.
He who sows corn grows richer
Kazakhstan plans to increase the profitability of the grain sector by 30-40% over the next four years with the help of a new scheme for the distribution of state grants. Under this scheme, new norms on organic food standards will be introduced. Emphasis will be placed on the cultivation of corn and soybeans, rather than wheat, in accordance with the State Program for the Development of the Agro-Industrial Complex (Agro-Industrial Complex) 2017-2021.
The main objective of the new program is to involve 670 thousand small farms in cooperative agricultural enterprises.
From 2013 to 2016, almost 1% of entrepreneurs received 70% of state support.
This means that only 68 thousand large holdings received state financial assistance at this time. The main goal of the new schemes is the equal distribution of public funds. Thus, these funds will be available to small producers.
The new program requires large-scale funding. The state is going to allocate 423 billion tenge. on the agricultural sector. Maybe,
The most important consequence of this program is that next year Kazakhstan will reduce the financing of wheat production.
from 7.100 to 600 tenge per hectare. Also, subsidies for the cultivation of maize were reduced from 2,472 per hectare to 1,600 tenge. Meanwhile, subsidies for growing soybeans, rapeseed and other oilseeds were increased from 7,460 to 11,918 tenge per hectare.
Irrigation of fields. Photos from the Wisconsin Department of Natural Resources.
At the same time, the program did not define new crop production standards. In the old program of 2013 “Agribusiness 2020”, a gradual increase in production by 21 million tons of grain and 9.1 million tons of exports by 2020 was laid. In 2016, 23.7 million tons of grain were grown, export is expected to be 9.5 million tons.
Under the Soviet Union, the harvests of northern Kazakhstan were mostly intended for domestic consumption. Now that nearly 40 million hectares are becoming available for agriculture, Kazakhstan is able to feed other parts of the world, Nazarbayev said at a press conference on December 1, 2016.
Focus on resource efficiency
On November 30, at the state meeting, Minister of Agriculture Askar Myrzakhmetov explained that the main goal of the program is to create competitive products that would be in demand in the global market.
Kazakhstan overproduces wheat by 2 million tons - while the country suffers from a lack of pasture grasses
in the amount of 1.2 million tons.
“As a result, we decided to reduce the area of land intended for growing wheat from 12.4 million hectares in 2016 to 10.1 million hectares in 2021, said Myrzakhmetov. - This land should first be used in the cultivation of barley and oats.
Myrzakhmetov promised that a reduction in the land area for growing wheat does not mean a decrease in wheat production. On the contrary, by 2021, the ministry expects a slight increase in wheat production compared to the current level, although the minister did not share the details of such plans.
A handful of grain. Photos from the site HuffingtonPost.com
At the moment, the growth of grain production is hampered by the absence of an export market, since domestic consumption is only 10 million tons per year. In order to cope with this problem, Kazakhstan is creating a new export center for the agro-industrial complex. The main task of this organization will be the promotion of the country's agricultural products in new markets and the search for new trading opportunities.
Combine harvester. Photos from the website shutterstock.com
The new program also provides for the adoption of standards for organic food, including grain. Until 2016, there was no legal oversight of organic products in Kazakhstan. In the future, grain enterprises will register their products in accordance with the standards. However, the details of this reform are still unknown.
The program does not suit some
Many entrepreneurs in Kazakhstan welcome the new program, considering it to be the first initiative that respects the interests of not only large holdings, but also small producers. However, some farmers expressed concern that by increasing the pressure on the wheat industry, Kazakhstan could be without export supplies.
“We consider this decision to be hasty,” said Toremurarat Utepov, general director of Kostanay grain enterprise PKF Kairat on December 11, 2016 at a conference of farmers and entrepreneurs. - Kazakhstan wheat is a brand that is known worldwide. Not supporting its cultivation, we saw the branch on which we sit. I traveled half the world and I can say that we have one of the lowest levels of state financial support (wheat cultivation). We do not ask for 500 euros per hectare, as in Finland, but on the other hand, a complete rejection of subsidies is also wrong.
On November 29, Sergey Kulagin, akim of the Akmola region of Kazakhstan, said at the state meeting that the basis of the surplus is the lack of an export market. He believes that wheat is the only industry in northern Kazakhstan that remains profitable and export-oriented. In his opinion, the main task of the state should be to support the development of exports.
- In such a situation, it seems surprising that Russia several years ago produced 75 million tons of grain, and now it intends to produce 150 million tons. And we are talking about some kind of excess, ”said Kulagin. - The same situation in China. One third of the world is hungry. I suggest the state to change its position on the grain industry.
Zuylbek Akashev, CEO of Kostanay’s Baraganda Co. enterprise, told World Grain that most entrepreneurs welcome the new program, but they believe that it does not fully solve some problems:
“Firstly, there is almost 15 million hectares of arable land in the country left without treatment or not used for agriculture,” said Akashev. - Since the diversification campaign began, the state has reduced the area of sown land from 14.7 million hectares in 2012 to 12.4 million hectares in 2016. Some entrepreneurs believe that it is meaningless, because the use of abandoned fields may be more reasonable. In addition, there is a serious grain quality problem in the country. From 2013 to 2015, the percentage of low-quality grain remained constantly high. Besides. The state has not yet solved the problem of degradation of arable land and has no idea how to cope with climate problems.
Margin records passed
For the companies specializing in crop production, the 2016/17 season has become one of the best in recent years, says Deputy Director Syngenty (one of the leaders in the market of agricultural chemistry and seeds) in Russia and the CIS, Andrei Rogov. Such a conclusion was made on the basis of a study conducted by the company together with the All-Russian Center for the Study of Public Opinion (VTsIOM) with the participation of the Institute for Agricultural Market Studies (IKAR). The second, designed to become an annual Agricultural Companies Development Index, measures and compares the degree of confidence and optimism of farmers, the availability of financial resources (loans) for them, and also gives an understanding of how widely used modern methods of seed production, plant protection, fertilizer, storage and transportation of agricultural products. The results of a survey of 100 leading farms from 21 regions of the country, conducted in April, showed that, despite the crisis in the economy as a whole, a positive trend has been observed in the agrarian sector for the second year in a row. According to the results of the survey, 38% of respondents named the 2016/17 season as the most successful in the last five years, while 28% considered the previous agricultural year as such.
The index shows the preservation of the optimistic mood of the agrarians, agrees the General Director of ICAR Dmitry Rylko. “In the past three seasons, the profits of agricultural producers have been“ cut off ”from the subsidies they receive, in contrast to the previous multi-year period, when in fact all their profitability was based on government support, he notes. “Without it, the farmers worked virtually to zero.” The situation is justified by macroeconomic phenomena that occurred in agriculture at this time: first of all by devaluation (by 75%), secondly by counter-sanctions (25%). The profitability boom is typical for all major regions producing crop products, the expert emphasizes. At the same time, according to Rylko, one should pay attention to the first signs of inhibition, which manifest themselves in lowering companies' expectations in terms of profitability (see chart) and a low proportion of those who plan to increase crops in 2017 (only 27% of respondents). All this suggests that the effect of the devaluation of the ruble and counter-sanctions is gradually fading away and new points need to be found to maintain growth, he said.
According to Vladimir Petrichenko, director general of the ProZerno analytical company, at the beginning of the 2017/18 season, almost all the main agricultural cultures will have a difficult situation with prices: they will be lower than a year earlier. The main reason is the large carry-over stocks of both grain and oilseeds with stagnant demand. Low world prices will also have an impact, as well as the expectation of good harvests. Therefore, in the first half of the agricultural year it will be very difficult to talk about the high yield of plant growers, the expert thinks. In the middle of winter, the situation will begin to improve, agricultural crops will become more expensive. “It’s still difficult to say what the dynamics and uniformity of growth will be,” he adds. “But, of course, it will be an interesting season with a low start and a second half more or less attractive at prices.”
Many analysts expect the volatility of prices for agricultural commodities in early summer, focusing on the first assumptions about the impact of weather on the crop, reminds Daria Snitko. It is possible that after several years of lower prices, speculative positions on the stock exchanges will continue to grow. “Futures market players are waiting for any reason to increase trade, so each news, even insignificant from the point of view of influence on the market balance, can“ trade the market, ”as it did with sugar last year, the expert says. “The second important factor will be the regulation of agricultural markets in Europe, which is gradually weakening, in particular, quotas on production volumes, minimum purchase prices are canceled.” Through this, the dairy market has already passed; now it is the turn for the production of sugar beet. The cancellation of its quota in the current season will lead to an increase in the supply of local agriculture and sugar in the EU, a decrease in imports by the alliance and, accordingly, a decrease in world prices. And, of course, the Russian sugar industry will react to this factor, says Snitko.
What do farmers put
According to the estimation of the Center for Economic Forecasting of Gazprombank, in the new season, production of soybeans and corn, which are demanded by livestock in the domestic market, will continue to be interesting. Among niche agricultural crops, chickpeas are attractive, as there is still a shortage in the global market, and Russian feed manufacturers are already beginning to get used to this ingredient. “A more long-term history is the cultivation of hops in Russia, since the world brewing industry is undergoing a crafting revolution, and many countries are starting to develop this production,” adds Daria Snitko.
The general director of the agricultural company Progress (Krasnodar Territory), Alexander Nezhenets, is pessimistic for the next season. “We bought all the means of production when the dollar cost 65 rubles, the costs increased by 15%, and we will obviously sell our products at a less favorable rate, now it is already 56-57 rubles / $ 1,” the manager explained in May. - On this difference, we lose a significant part of our conditional profit (according to calculations, in the whole farm it could be at the level of 25%), moreover, the world prices continue to fall, the main agricultural crops will cost at least 10% cheaper than the outgoing season. In addition, this year, due to a change in the scheme of granting subsidies, the company was left without state support.
The main agricultural crop grown in the Vimna agricultural firm (Nizhny Novgorod region, founded by shareholders and top managers of AFG National in 2016) is sugar beet, which serves as a raw material for its own Sergach sugar factory. “In our region, this technical agriculture is one of the most profitable, but it requires significant investments in equipment and in preparing the soil,” said the first deputy director of the company Roman Devitsin. - We adhere to the four-field crop rotation, that is, on the same piece of land, beets are sown once every four years. In the remaining three years, other agricultural crops are grown there. At the same time, we choose those who, in addition to the main task of preparing the land for the subsequent sowing of beets, also allow us to earn. ” In addition to grain crops (both spring and winter crops), this year, legumes, in particular, peas, are included in the crop rotation. In the conditions of the region, they provide a higher profitability compared to grain. In addition, legumes have significant export potential, notes Devicin.
The company is counting on 2016 price levels. “Then there was not a very good market situation, we start from a moderately pessimistic forecast,” said a top manager. Although in general, the profitability of crop production at an agrofirm should increase in 2017, he hopes. “We purchased a farm that was not financed in the required amount for a long time and, as a result, had low production and economic indicators,” he says. - Intensive agronomic technologies and modern equipment, which we use, allow us to increase crop yields, reduce losses in harvesting and increase returns from cultivated land. The results of work last year confirm this. ”
For Sukden, sugar beet is also a priority agricultural crop. Sugar production is the key activity of the holding. However, just as “Spring”, taking into account crop rotation and the growth of the agricultural market of Russia as a whole, the company develops other areas as well: it grows grains, oilseeds, and tomatoes, the head of the Sukden analytics service, Marina Sidak, lists. In the season 2016/17, the harvest of all agricultural crops grown by the holding's holdings was a record one. On the one hand, it formed a strong export potential, and on the other, it put pressure on prices. Yield of production varied depending on the region, but in general it was quite high, she said. At the same time, the greatest profit was obtained in oilseeds (before the problems with Turkey), and the smallest - in grain, fodder barley turned out to be especially a failure.
In the new agricultural year due to high carryover stocks and good prospects for future harvests, prices should drop significantly, which will certainly reduce the yield of crops, Sidak expects. “Today there are not too many factors supporting the price situation. First of all, it is growing exports (mainly sugar), consumption and weather risks, she says. “But there are much more negative factors: high carryover stocks, low world prices, strong competition with Ukraine, aggravation of relations with Turkey as the main market for Russian sunflower oil and grain, unstable government policy of the Egyptian authorities in the field of food purchases, oil market volatility” .
The general director of Lipetsk Agribusiness, Alexander Chil-Akopov, traditionally waits for a good yield on sunflower. “We grow high olein varieties of this agricultural crop, which allows us to earn more,” he explains. На втором месте по объему прибыли будет пивоваренный ячмень, рассчитывает руководитель: цены на него в уходящем сезоне выросли, и такие же высокие уровни предприятию уже подтвердили компании-покупатели в этом году. На третьем месте — сахарная свекла. «С точки зрения выручки с гектара она, конечно, лидирует, но вот рентабельность в этом сельхозгоду, скорее всего, будет замыкать топ-3, — считает Чил-Акопов. — Цены на сахар снизились, и мы не ожидаем высокого дохода».
В целом маржа растениеводов в новом сезоне будет ниже, чем в уходящем сельхозгоду, полагает Чил-Акопов. «Затраты постепенно растут вместе с инфляцией, доходы уменьшаются, — комментирует он. “This, of course, is not a critical drop, in any case, companies that are engaged in crop production will be profitable, but their profitability may be reduced by 50%.”
Overproduction in the grain market
Grain agriculture is no longer among the most profitable. It’s good to earn them only in export-oriented regions. In the season 2017/18, the profitability of growing the main types of cereals (wheat, rye, barley) will continue to decline. Both in the domestic and international markets, there is an overproduction of products and an increase in stocks, which leads to a decrease in sales prices, said consultant of the AIC practice of the consulting group NEO Center Stanislav Shlensky. Already in April 2017, the average prices for feed wheat in Russia were 24% lower than a year earlier, for food rye - by 21%, for feed barley - by 22%. In addition, the continued increase in the cost of fertilizers, fuel and energy resources has a negative impact on profitability. According to the analyst, to increase profitability, it is advisable to reduce the area under grain, planting them in more marginal agricultural crops, such as legumes (soybeans).
The outgoing season has shown how great the export dependence of the domestic grain industry on world market conditions and the associated economic risks are, says Pavel Skurikhin, president of the National Union of Grain Producers (NHS). “The high global grain harvest reduced the level of demand and adjusted price parameters. And economic factors were added by political ones - restrictions on quality from Egypt and the decisions taken on grain duties from Turkish colleagues, ”he lists. As a result, the average cost of third-class food wheat in the 2016/17 agricultural year did not exceed 10.5 thousand rubles / ton, and the fourth class - 9.17 thousand rubles / ton instead of 11.2 thousand / ton and 10.6 thousand rubles / t a year earlier. Thus, taking into account the increase in cost, the yield of a number of agricultural enterprises, according to the NHS, decreased by 30%.
According to the expert, for the successful functioning of the grain industry, a balanced approach is needed when drawing up production plans. Only when harvesting with certain quantitative and qualitative parameters, which will certainly be beneficially realized, the development of the grain sector is possible. A special place should be given to the cultivation of pulses, soybeans and corn for grain, he echoes the rest. However, this year, the structure of crops relative to last year will not change much. Of the 48 million hectares (+0.9 million hectares compared to last year), more than 60% is allocated for wheat, corn crops will slightly increase. Therefore, if the weather does not bring unwanted surprises, fundamental changes in the grain market will not occur, the expert predicts. “The high carry-overs, the reduction of intervention prices and the unfavorable global market conditions all create preconditions for weak price prospects for the new season,” he is pessimistic.
IFC Markets analyst Dmitry Lukashov, on the contrary, speaks of an increase in world grain prices. The most promising may look like wheat and oats. According to the USDA and a number of international organizations, world wheat production in the 2017/18 season will decline by 2% compared to 2016/17 to 737.8 million tonnes. “However, it should be noted that the world wheat harvest may be comparable to 2015/16 agricultural year - he draws attention. - First, at that time (two years ago) grain cost 20% more expensive than it is now, which in itself is a good factor in price growth. Secondly, the population of the Earth continues to grow. ” According to forecasts, the global demand for wheat may be 3.2% more than in the 2015/16 season. The increase in prices for oats, according to Lukashov, may be due to a noticeable reduction in its crops in the United States and Canada by about a quarter in 2016/17, despite the fact that these countries account for about half of the supply to the world market.
So far, export prices for the new wheat crop with delivery in August are at the levels of last season - $ 174-175 / ton FOB, knows the director of the strategic marketing department of Rusagrotrans Igor Pavensky. But the ruble exchange rate to the dollar in mid-May was significantly lower than last year - 57 rubles / $ 1 against 64.9 rubles / $ 1. Therefore, according to the yield of grain crops, change can only be for the worse, he is sure. Especially considering the estimates of world agencies that predict world stocks of wheat at high levels: USDA - 258.3 million tons at the end of the season 2017/18 against 255.2 million tons in 2016/17, IGC - 239 million tons and 240 million t.
But on corn, the situation is different: according to the USDA forecast, reserves are expected to decrease from 223.9 million to 195.3 million tons due to a decrease in yield in a number of countries. At the same time, it is quite realistic that in Russia the volumes of agricultural production and, to a lesser extent, exports will increase. Therefore, its profitability may remain “at an acceptable level” of the current season, especially given the incomparably higher yields than for wheat. “Of course, weather risks (drought, rain) in Russia and the world, as well as exchange rate fluctuations of the ruble over the next two months, can greatly change the situation with both prices and profitability,” does not exclude Pavensky.
Oilseed Supports Demand
The Russian market of oilseeds and products of their processing has traditionally shown growth due to the high export demand from Russian processing enterprises and livestock farms. For the period 2012–2016, the crop area increased by 22% (from 10.1 to 12.3 million hectares), while the gross yield of oilseeds during the same period increased by 44% due to increased yields. The growth in demand is reflected in their high margins, adds a senior consultant to the practice of the AIC “NEO Center” Roman Khristoforov. A significant factor for a good return is also Russia's accession to the WTO, which leads to a convergence of domestic prices with world prices due to a gradual reduction in export customs duties. In the new season, the analyst expects higher domestic prices for oilseeds and their products, as well as a significant increase in export potential.
According to the leading ICAR expert Daniil Khotko, the maximum profitability in crop production was formed in the 2015/16 season. In the culminating agricultural year, the profit, in particular, on oilseeds, although it decreased, but still was at high levels: sunflower, soybean and rape remain one of the most profitable agricultural crops. Only sugar beets and rice in the Southern Federal District could produce more per hectare; in the rest of the regions, oilseeds tend to lead.
According to ICAR, in the 2016/17 season in the southern regions of Russia, farmers could earn an average of 30-32 thousand rubles / ha (40-42 thousand rubles / ha in 2015/16) on sunflower. In the center of the country, the profit per hectare was even higher - 32-34 thousand rubles. (41-43 thousand rubles / ha a year earlier). The main reasons for the drop in profitability are lower purchase prices due to a record harvest, the impact of global market conditions and the exchange rate.
According to soy, the situation was somewhat different. Farmers in the south recorded profitability close to last season - about 16-18 thousand rubles / ha, while in the center there was a significant increase in profitability - from 23-25 thousand rubles / ha to 30-32 thousand rubles / ha . “In the center, the margin is at higher levels, since this season there has been a significant increase in yield, and investments per hectare are traditionally lower,” explains Khotko. “However, as the figures show, soy is still not profitable than sunflower.” The drop in yield was observed in the production of rapeseed, its purchase prices were also lower than in the previous season, the expert adds, without specifying the figures.
Season 2017/18 is likely to be marked by a rise in profits for oilseed producers, the expert agrees with Khristoforov. Profitability will, as always, depend on two components: the dollar exchange rate and the world price of butter. If the ruble falls, oil and sunflower will become more expensive. As for the world price for sunflower oil, in the next season it is very likely that it will be higher than in the outgoing, does not exclude Daniel Khotko. “It is possible that Ukraine will reduce the sowing of sunflower, which will undoubtedly set the uptrend in the price situation in the world,” he says. “In addition, the cost of production, again due to the strengthening of the main means of production of the ruble that was strengthened during the period of procurement, among farmers, if increased, it is very insignificant.”
According to the ICAR, sunflower crops in Russia will remain at about last year’s level - 7.5–7.6 million hectares, but most likely there will not be a collection fee, since it is unlikely that the maximum yield figures observed in 2016 Soybean crop growth is obvious: the demand for it is steadily increasing, and farmers will continue to increase production. This year, the area may reach 2.3-2.35 million hectares due to an increase in the Central Federal District and the Far East. Although the collection per hectare is also predicted less, the expert draws attention. There are “very positive expectations” for rapeseed. “Agriculture and oil from it are in good demand on the world market, and the meal and oil cake in the final season were actively consumed domestically,” says Khotko. - You can count on the expansion of crops by 7-8% (especially in the central regions, where there are underutilized processing capacity) to about 1.05 million hectares, as well as an increase in yields, especially in winter rape. " Rape is in principle highly demanded in the center, the expert adds, primarily because it is convenient to supply products from there to Europe.
According to the ICAR, from the beginning of 2017 until the end of April, the sunflower became cheaper in the domestic market. By the beginning of May, on average in Russia, it cost 17.3-17.5 thousand rubles / ton with VAT on the basis of the CPT-plant. A year earlier, at this time, agriculture cost 23-23.5 thousand rubles / ton. However, in May, the world price of oil increased, there is also the potential for an increase in the dollar rate. “As a result, we saw a slight increase to 18-18.5 thousand rubles per ton in the middle of May. However, given the instability of the exchange rate, as well as the possible subsidence of prices on the world market, it is not yet clear to say that the oil market is entering a growing trend in the Russian market, ”said Khotko.
Soybean significant price drop in the season 2016/17 did not happen, despite record volumes. Demand from processors is growing, moreover, the import of soybean meal has almost stopped, which also indirectly supported the market, the expert notes. In mid-May, in the south, soybeans cost 28-28.5 thousand rubles / ton at the plant with VAT, a year ago, about the same levels were recorded. Soybeans can maintain their profitability, agrees Alexander Nezhenets. However, it does not exclude a decline in performance. Such trends are already being traced: if at the beginning of the season Progress was selling agriculture at 30 thousand rubles per ton, in May it was already at 27 thousand rubles per ton.
Sugar beet still gives one of the maximum revenue per hectare. But the cost of growing it is also one of the most record-breaking, emphasizes the leading expert of ICAR, Yevgeny Ivanov. He has no confidence that in the new season the agriculture will retain the status of one of the most profitable. The cost of sugar fell to 30 rubles / kg or less, and taking into account the further expansion of crops, which the Ministry of Agriculture predicts (up to 1,175 thousand hectares, which is almost 70,000 hectares more than last year), and again the expected record of sugar production price situation may develop negatively. “If no natural disasters make their own adjustments, then we really can work out up to 6.5 million tons, which will simply bring down the market,” the expert fears. - In this case, the price of sugar may fall to 25 rubles / kg, which will collapse the purchase price of raw materials and, consequently, the profitability of sugar beet producers. ”
According to Ivanov, 2017 is likely to be the last year, when the areas under the beets will show an increase. “From 2018 on agricultural crops there will be a minus, and it is not yet known how large,” the expert believes. “Concentration of beets around plants continues, even within vertical holdings, far fields will not be used to grow agriculture: it becomes less and less profitable to carry it over long distances.”
To support the market can export sugar. The question of price will largely depend on whether Russia can take out all the surplus before the beginning of August. In the first four months of the year, deliveries abroad went at a rather active pace with a gradual increase in volumes. April was the peak export month - 59 thousand tons. According to the forecast of Soyuzrossahar, for the whole season Russia can export up to 350 thousand tons of sugar. On the other hand, by the summer its domestic consumption increases. “If this happens, the market will be balanced, and prices will rise a bit by the beginning of the new agricultural year,” hopes Ivanov.
The profitability of growing sugar beets can reach 50% or more. At the same time, there are quite a lot of factors that influence profitability. “First of all, this is the yield, which depends on the weather, and on the preparedness of the soil for the cultivation of this particular agricultural crop, on the agricultural practices used, and on the availability of machinery,” Devicin lists. “This year we plan to achieve a 35% profitability for beets, which is associated with a significant expansion of crops (more than twice) and the involvement of new lands in crop rotation that were not previously used for its production and, as a result, require more substantial costs for training. " Also, an increase in the area required and the purchase of new equipment, since the work on obsolete machines leads to large losses during the collection and transportation of the crop. The total investment in this area in 2017 and in 2018 in the agricultural firm "Spring" will be more than 1.1 billion rubles.
With a high volume of sugar output (for now, there are no prerequisites for a decrease in production) of more than 6 million tons for the second consecutive year, prices for it may drop even more, Devicin said. Alexander Nezhenets agrees: "Sugar has already fallen in price from 40 rubles / kg to 32 rubles / kg, if this situation continues, then raw materials are unlikely to be in a good price." Sukden also expect lower prices for agricultural products. The only significant factor supporting the industry may be the export of sugar. However, as practice has shown, there are also problems with him, says Marina Sidak. This is an undeveloped port infrastructure, a rather small experience of exporters, unstable competitiveness of the domestic market, strong competition, difficulties in penetrating new markets, and quality. “Due to these factors, the yield of beet growers in the new season may decline,” she admits. “At the same time, the development of agricultural technologies, state support (concessional lending, subsidies), the modernization of processing plants, the strengthening of the national currency can lead to a decrease in cost, and therefore have a positive impact on profitability.”
Past experience shows that individual small farms, growing promising niche crops, show outstanding relative average crop yield, Daria Snitko said. For example, there were years that were successful for the producers of coriander (the Indian market opened as a result of the poor harvest of this agricultural crop), the market for oil flax, camelina, poppy, and pea has long since become fashionable both in the world and in Russia. But for a long time it is not necessary to bet on them, since overproduction brings down world prices and is fraught with losses, the expert draws attention.
So, for example, happened with safflower. He will lose his attractiveness due to the decline in yield in the new season, Daniil Khotko believes. In the 2016/17 agricultural year, the area under the agricultural crop increased almost 1.5 times to 445 thousand hectares, and the collection almost doubled - from 154 thousand tons in 2015/16 to 290 thousand tons in this. “This is a classic export product to Turkey, but at the beginning of the season, the Turks imposed a duty on the import of this agriculture, which seriously violated the plans of Russian farmers,” said the expert. “There are no alternatives for the supply of safflower: some of the volumes were redirected to Europe and Iran, but Turkey still occupied 85-90% of exports, and without it, this agriculture is not interesting.” The farmers had a reference point to sell it at 14-15 thousand rubles / ton, and now the price of safflower fell to 8-9 thousand rubles / ton. Therefore, part of agricultural producers will refuse to grow it, it is possible that the area will be halved. Safflower will continue to be practiced by those who are logistically located as much as possible to sales markets - in the south of Russia. Interest in agriculture in the Volga region and the center will fall.