Volga Baikal AGRO NEWS Update on the Development of the Russian Agricultural Sector !!!

Russia has got all the resources to obtain the status of a leading agrarian power

Volga Baikal AGRO NEWS Update on the Development of the Russian Agricultural Sector !!!

Russia has got all the resources to obtain the status of a leading agrarian power.

Russia has all the resources to become a leading agrarian power, although so far its share in the world market for agricultural products is about 2%. 

Nowadays, Russia is one of the four leaders in terms of arable land with more than 100 million hectares, or almost 10% of the global indicator. Also, Russia accounts for 20% of the world’s fresh water reserves, it is in second place after Brazil in terms of the volume of dynamic reserves of water resources. However, if we compare the current state of affairs in Russia with other leading countries in terms of arable land, it turns out that the cost of agricultural products produced in China is almost $ 1 trillion, in India – $ 400 billion, in the United States – $ 340 billion, whereas Russia – about $ 85 billion. One of the reasons for the low volumes is that Russia is located north of the listed countries, but Canada is located at a similar latitude with 38.9 million hectares of arable land.

The next question is the cost of exported goods. So, now Russia exports agricultural products for about $ 30 billion a year, while the United States – for $ 150 billion. According to him, the average cost of one kilogram of products supplied to foreign markets from Russia is $ 0.38, and from the USA – $ 0. 65. This indicator is extremely important, since the higher it is, the more value added in goods and less logistics costs relative to the value of the goods. At the same time, a kilogram of agricultural products from the Netherlands, Brazil and China costs at least $ 1. “For now, products without deeper processing prevail in our export balance,” – said D.Aveltsov. He also said that in the whole world for the year, the average price of one ton of exported commodities rose from $ 228 to $ 385, that is, global prices increased by 60%.

Dmitry Aveltsov, Acting Director of the Center for Agroanalytics

We have a good supply of crop production and processing. And we have a stock at world prices, which are now growing and are favorable for agricultural products. There is now a global window of opportunity that needs to be exploited.

In addition to promoting Russia’s interests in the world market, the participants discussed the topic of sustainable production. According to Evgenia Serova, President of the Agro-Food Economy Analytical Center, Professor, Head of the Department of Agricultural Economics at the Higher School of Economics:
Stability in our understanding is growth of 3% per year, but in the global context it is development today, which leaves resources for tomorrow.
“And our curse is that we not only have a lot of oil and gas, but also water – we do not feel the limited resources,” – she stressed.

Speaking about the theses for the strategy of representing the interests of Russia at the upcoming UN Summit, the meeting participants noted the problem that a traditionally limited group of countries forms the main agenda, which sounds nice, but is often far from real problems on a global scale: people are still starving, resources are available not for all. And this situation is well reflected in the figures: in Europe, a person consumes an average of 83 kg of meat per year, in Russia – 76 kg, and on average around the world – 43 kg, the head of the National Meat Association cited data Sergey Yushin.

Now a number of manufacturers from developed countries are actively lobbying for allegedly cleaner production, for example, with a minimum use of antibiotics and a decrease in carbon footprint. However, this will lead to a significant increase in the cost of agricultural products, and any unreasonable environmental restrictions are additional costs. According to the general director of the National Union of Poultry Breeders Sergei Lakhtyukhov, it is possible to produce products without antibiotics, but whether consumers are ready to pay several thousand rubles per kilogram of such a bird is a big question. “When they talk about the carbon footprint, comparing the indicators of the EU and Russia, the question arises: what problems does Russia have with this? Does Russia have such an agenda as a carbon footprint? She’s not there, but we are playing it,” -Yushin said.

In general, according to the participants in the meeting, the agenda promoted by the UN on food programs is often far from Russian realities, but manufacturers of agricultural products have to participate in it in order to be part of the world community now and in the future. For example, Lakhtyukhov said that the UN FAO proposes a set of measures to stimulate the abandonment of animal protein in favor of plant protein. Such proposals are unlikely to be relevant in Russia, – experts say.

Now, according to Lakhtyukhov, the Russian agro-industrial complex is developing not so much in an extensive way, so much through an increase in efficiency. It is necessary to introduce advanced genetics, animal health control and technologies that would reduce the overall need for land resources, – he said. However, only highly profitable agriculture can think about something “high”. But how to achieve sustainable profitability, if the very policy of the state contradicts these objectives, Yushin argues. “With what money to perform feats?” He asks.

Despite disagreements with world politics, Russia cannot go against it, since the work of our agro-industrial complex is now aimed at export, said the general director of the National Union of Pig Breeders Yuri Kovalev. “It is very important not to run ahead of the locomotive and not go against it,” he stressed. At the same time, Russia needs innovative technologies in all sectors, and this requires money, therefore, it needs to be present on export markets.

At the same time, revenues fell by 10% compared to 2013, and costs increased by 18%, – compared Artem Belov, director general of the National Union of Milk Producers “Soyuzmoloko”. “Profitability in business is falling, but the state wants everything at once. We ourselves make ourselves uncompetitive <…> when we introduce export restrictions, and we can become a general’s widow who whipped herself in order to live worse. By our actions, we also create instability in the global market, which undermines confidence in us, ”he added. At the same time, according to Belov, it is still worth thinking about the carbon footprint so as not to end up in the same position as the Russian fuel and energy complex with a carbon tax in the EU.

“We say that our agenda does not correspond to the world one, but how are we going to dictate our agenda? After all, this is ensuring the presence of our food and business in foreign markets,” – asked Dmitry Krasnov, head of the Agroexport center subordinate to the Ministry of Agriculture. According to him, it is precisely entering foreign markets that often solves the issue of financing agro-industrial complex projects: without an international stable program and sales markets, it will not exist.

“In foreign markets, the rules of the game are set by companies that develop standards that are different for each country, – said  Konstantin Korneev,executive director of Rincon Management. However, they need to be streamlined, and Russia, as an international player, should take part in their formation. In addition, he drew attention to how our country treats domestic products: every day there are news about the high content of antibiotics, growth hormones in meat and mice in sausage. In his opinion:

It is worth starting to respect your agricultural products and promoting this position!

Source: Agroinvestor

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