Volga Baikal AGRO NEWS Update on the Export Situation !!!
Export from Russia to China grew by a quarter!
For ten months 2020, more than 3.7 million tons of food products valued at $ 3.2 billion were delivered from Russia to China.
Since the beginning of 2020, the export of Russian agricultural products to China has grown by 24% compared to the same period of 2019, according to the Agroexport, subordinate center of the Ministry of the Agriculture. For ten months, more than 3.7 million tons of food products for $ 3.2 billion were delivered to China. China retains the status of the largest importer of the Russian agricultural products – it accounts for 14% of the volume of domestic agricultural exports (excluding exports to the EAEU countries in September – October ). In particular, China is a leading buyer of Russian fish, soybeans, sunflower, rapeseed and soybean oils, poultry and beef, wheat flour, chocolate, honey and other products.
Fat-and-oil and meat products remain the drivers of growth in Russian agricultural exports in 2020. Thus, the supply of sunflower oil increased 2.2 times compared to the same period last year to $ 447 million (629 thousand tons), thanks to which the PRC became the leader among importers of Russian sunflower oil this year. The export of soybean oil increased 1.8 times to $ 213 million (290 thousand tons), rapeseed oil – by 30% to $ 179 million (205 thousand tons). At the beginning of this year, Russian exporters of meal received accreditation; over 10 full months, 26 thousand tons of this product for $ 12 million were supplied to the Chinese market.
The export of soybeans increased by 27% up to $ 201 million; 2.5 times up to $ 89 million – rapeseeds, by 48% up to $ 71 million – oilseed flax.
As Daria Snitko, head of the Center for Economic Forecasting at Gazprombank, explained to“China is the first country to face the coronavirus pandemic and the first to emerge from the crisis caused by quarantines and a decrease in economic activity.“ At the end of the year, among the world’s largest economies, only China will maintain a positive GDP growth rate of about 1% yoy. In a situation where there are almost no sources of demand growth in global markets, and prices for many goods have fallen, China began to increase purchases of various raw materials in the summer. I see this as the main reason for the growth in food exports from Russia to China,” – commented the expert.
According to her, the problems of access of the Russian goods to international markets have remained the same since 2019: expensive logistics, lack of carrying capacity (special cars, for example, for thermal transportation of products), the problem of protecting branded products in the Chinese market. However, this year, the devaluation of the ruble, a surplus of products in the shrinking domestic market, and the activity of Chinese buyers in replenishing food reserves have increased the competitiveness of our suppliers, Snitko notes.
According to Maxim Nikitochkin, senior manager of the EY agro-industrial complex services group, deliveries to China have a number of difficulties. “This is also logistics, despite the common border – there are only a few railway corridors, the main transport channels are still sea delivery, which is close from Russia only for Vladivostok,” he says. – Significant difficulties are explained by the protectionism of China, which manifests itself in very difficult and confusing certification rules; obtaining permits for exporting products to China can take a year or more. Shipments are also associated with the complexity of commercial activities due to the difference in mentality.” He also notes that the potential for expanding the range of products supplied to China is not obvious and a fairly large assortment is already being exported.
According to Agroexport, Russia has the potential to further expand the export of fish, fat and oil, meat and dairy products to the PRC. In particular, in the coming years, we can expect an increase in the export of the main types of vegetable oils (sunflower, soybean, rapeseed), meal and cake, as well as raw materials for the oil and fat industry (soybeans, rapeseed). Also promising products for the Chinese market are sugar, confectionery, cereals and legumes, milling products.