Overview of Russian Agribusiness Sector #4

Highlights of the Russian Agribusiness sector prepared by the Office of Agricultural Counsellor of the Embassy of the Kingdom of the Netherlands in Moscow - 14 April2021.

New edition of the state program of the agro-industrial complex: main changes

The Cabinet of Ministers, by its resolution, amended the federal state program for the development of agriculture, fixing the rejection of the ambitious growth of production and exports.

Export: abandoning ambition

·        According to the new state program, the export of agricultural goods this year can reach $ 26 billion, and by 2025 - $ 35.4 billion against the previously planned $ 45 billion. Next year, exports are expected to reach $ 28 billion, in 2023 - $ 31 billion, in 2024 year - $ 34 billion, written in the decree.

·        As reported in the news of the agricultural market, at the end of the last year, the export of agricultural products increased by 20%, to $ 30.7 billion. This is higher than the maximum in 2018 - then agricultural goods worth $ 25.8 billion were supplied to foreign markets. In physical terms, last year's agricultural export amounted to 79 million tons. Thus, officials are dramatically reducing plans for agricultural exports, which was previously warned by experts.

·        According to Dmitry Rylko, Director General of the Institute for Agricultural Market Studies (IKAR), which he expressed to Agrotrend.ru, this year "by inertia" new export targets may still be achievable, but in subsequent years - due to export duties and other methods of new regulation of the agro-industrial complex - the industry may not even achieve reduced indicators.

·        As it was reported in the news of the agricultural market, in the new marketing year a “floating” duty on wheat will be introduced. In addition, officials are also threatening to impose a duty on sunflower oil if domestic prices continue to rise. And the duty on sunflower will be prohibitive.

·        Financing of the project "Export of agricultural products" will be reduced by 7.7 billion rubles, in 2021, and in 2022 - by 300 million rubles. This will happen due to the redistribution of funds now allocated for concessional lending to the International Cooperation and Export project.

Production plans

·        Milk. This year, the country will produce 20.1+ million tons of milk, it follows from the decree. In 2022 there will be 20.24 million tons, in 2023 - 20.5 million tons.

·        Corn. The gross grain harvest in 2021 is expected at 118.6 million tons. The next year the target is quite low - 122.9 million tons, for 2023 - 125.9 million. According to the updated Rosstat data, the 2020 harvest was higher than these values , and amounted to 133.4 million tons of grain, of which wheat - 85.8 million tons.

·        Oilseeds (excluding rapeseed and soybeans) - 12.7 million tonnes in 2021, 13.4 million tonnes in 2022 and almost 14.3 million tonnes in 2023. Last year, the sunflower harvest amounted to 13.3 million tons (-13.7%), as Agrotrend.ru wrote earlier in the news of the agricultural market.

Starting this year, the costs of the state program of the agro-industrial complex will be reduced.

Official document in Russian is available at http://publication.pravo.gov.ru/Document/View/0001202103250013

The world's first vaccine against the novel coronavirus infection COVID-19 for animals, developed by scientists of the Rosselkhoznadzor, has been registered in Russia

"Vaccine against coronavirus infection (COVID-19) of carnivores sorb inactivated" Karnivak-Сov ", developed by the Federal Center for Animal Health (FSBI" ARRIAH "), subordinate to the Rosselkhoznadzor, is registered in Russia. It is the first and currently the only prophylactic preparation against COVID-19 for animals in the world. 

Rosselkhoznadzor scientists continue to study how long immunity is developed after drug administration. According to Konstantin Savenkov, Deputy Head of Rosselkhoznadzor, today this figure is at least 6 months. Already in April, mass production of the vaccine can be launched on the basis of the country's largest platform for the production of drugs for animals of the Federal Center for Animal Health,

The vaccine is of particular importance because, as noted by the World Organization for Animal Health (OIE), some species of animals are susceptible to COVID-19. Cases of detection of this disease have been registered in many countries of the world. Foreign states on a weekly basis inform the World Organization for Animal Health (OIE) about the facts of animal infection. For example, last week the OIE received information  on the detection of coronavirus infection in three pets in Mexico and one in Italy . A week earlier, official sources in  Argentina announced the registration of the disease in four dogs and cats . In Russia, until now, two facts of infection of cats with a new coronavirus infection have been officially established: in Moscow and Tyumen.

In 2020, massive detections of COVID-19 were recorded on mink farms. In particular, infections with the mutated virus were found in most fur farms in Denmark, in connection with which the country's authorities decided to cull these animals. 

The use of the vaccine, according to Russian scientists, can prevent the development of virus mutations, which most often occur during interspecies transmission of the pathogen. 

The World Health Organization (WHO) has repeatedly reported that there is no scientific evidence of the transmission of a new coronavirus infection from animals to humans,. In addition, it must be emphasized that animals can also become infected with some other species from the coronavirus family that are different from COVID-19. 

In connection with the registration of cases of animal disease COVID-19 in many countries of the world, the vaccine developed by the FGBI ARRIAH is planned to be purchased by both domestic fur farms and commercial structures from Greece, Poland and Austria. Enterprises from the USA, Canada and Singapore are also showing interest in Karnivak Cov.

Russia to be fully self-sufficient in output of table chicken eggs in 2021 - Agriculture Ministry

Russia in 2021 should be fully self-sufficient in producing table chicken eggs, the country's Agriculture Ministry said following a meeting with egg producers, when the attending parties considered the current situation on the food market as well as pricing issues for the products, the ministry said in a press release.

The ministry said in the press release that according to current regional data, the production of eggs in the country has stabilized, having totaled 5.8 billion eggs in January-February 2021. The output leaders are the Leningrad, Tula, Kirov, Ivanovo, and Orenburg regions, respectively, as well as a number of other regions.

First Deputy Agriculture Minister Dzhambulat Khatuov said that Russia has been fully self-sufficient in the provision of edible chicken eggs for the past few years, and the country expects to attain the figure again this year.

Deputy Agriculture Minister Oksana Lut has noted that in order to prevent an unsubstantiated rise in the wholesale price as well as to maintain affordability, the ministry continues to cooperate with industry associations and large manufacturers.

The new support mechanisms will facilitate these plans. Specifically, the limit on preferential short-term loans for enterprises in the industry will increase from one billion rubles to 1.5 billion rubles per borrower beginning on April 3. Moreover, the term on preferential investment loans for producers who have been affected by bird flu has been extended to 12 years as of March 27. Measures to regulate the grain and oilseeds markets are aimed at developing the industry and reducing the cost of producing poultry products, the Agriculture Ministry noted.

Russia plans to raise import tax hatching eggs

The Russian government rolled out plans to subject hatching eggs to a 5% import tax starting 1 January 2022. A further raise of 15% is set for 2023.

The measure intends to promote and protect the domestic production of hatching eggs. Russia is struggling with an acute shortage of hatching eggs, a group of producers told during the government meeting with the Russian Agricultural Minister Dmitry Patrushev. Import restrictions introduced after the outbreak of highly pathogenic avian influenza (AI) stripped dozens of poultry farms from imported hatching eggs. It is estimated that the share of companies relying on imported hatching eggs in Russia is close to 20%. The price per hatching egg on the Russian market has nearly doubled in the past months, reaching 30 Roubles (US$ 0.35). The rising costs are driving some farms below the breakeven point, forcing them to cut production, Russian poultry producers stated during the government meeting.

In January 2021, poultry production in Russia decreased by 6.4% compared to the same period last year, the Russian union of poultry farmers Rosptitsesoyuz estimated. Rising costs are cited as the main reason for the decline. The rising costs push the domestic prices for broiler meat and eggs up, causing concerns among government officials. To avoid problems in the future, the Russian government plans to up national hatching egg production. To encourage farmers to expand hatching egg production, the Agricultural Ministry plans to compensate a part of capital costs of new projects.

The planned taxation of imported eggs is intended to push farmers to source hatching eggs on the domestic market. Currently, hatching eggs import is not subjected to a customs duty in Russia. Sergei Lakhtyukhov, chairman of the Russian Union of Poultry Producers, estimated that Russia imported 700 million hatching eggs in 2020, or 15% to 20% from its overall demand.

Export duties on sunflower seeds and oil

PM Mishustin signed a decree introducing a floating rate of export duty on sunflower oil by introduction of an adjustment coefficient of $50 per tonne. and increasing the rate of export duty on sunflower seeds.  The government allocates 9 billion roubles of subsidies to producers of sunflower oil and sugar to compensate a part of costs from the price control agreements on these products.

This will stabilize prices for these products on the domestic market, the statement said.

Beginning on July 1, 2021 and through August 31, 2022, an export duty of 50% but no less than $320 per tonne will be in effect with respect to sunflower seeds. Moreover, a 30% duty on rapeseed will be prolonged till August 31, 2022.

With regard to sunflower oil, a floating export duty of 70% will be introduced from September 1, 2021 through August 31. "It will be levied on the difference between the base price ($1,000 per ton) and the indicative price (the arithmetic average of market prices for the month) reduced by the size of the adjustment factor ($50 per 1 ton). The Ministry of Agriculture has been instructed to constantly monitor the market in order to establish the indicative price. Information on the size of the duty will be promptly posted on the websites of government agencies.

Vegetable production in Russian greenhouses has grown by 80% in five years

Greenhouse vegetable growing is one of the most dynamically developing areas of plant growing in our country. Since 2016, the area of ​​greenhouse complexes in Russia has grown by more than 1.5 times, to the level of about 3 thousand hectares. At the same time, the volume of production during the same time increased by more than 80% and last year reached a record figure of 1.37 million tons.

The five leading regions in this area include Lipetsk, Moscow, Volgograd regions, Krasnodar and Stavropol regions. The growth in indicators is largely due to the use of highly productive varieties and modern technologies for growing greenhouse vegetables. Thanks to this, last year their yield increased by 14.3% to 47.2 kg / 1 sq. m. At the same time, in the most modern greenhouses of the fifth generation, it has reached about 100 kg / 1 sq. m for tomato and more than 160 kg / 1 sq. m for a cucumber. In addition, a complex of state support measures, including preferential investment and short-term loans, contributes to the intensive development of greenhouse vegetable growing.

The Ministry of Agriculture expects the positive dynamics to continue and in 2021 - according to the forecast, the harvest in winter greenhouses will exceed 1.4 million tons. This is confirmed by the current performance indicators, since the beginning of the year, 13.3% more vegetables and green crops were grown than in the same period last year (319.3 thousand tons). Including the harvest of tomatoes amounted to 106 thousand tons, cucumbers - 206 thousand tons.

Russia's Agro Ministry sends first industry attaches to 10 countries

Russia's Agriculture Ministry has sent its first 10 attaches from the country's agro-industrial complex to work in Mexico, Thailand, Malaysia, Saudi Arabia, Peru, South Africa, Nigeria, Ghana, Angola, and Ethiopia, the ministry said in a statement.

According to the statement of the Ministry of Agriculture, their respective responsibilities will include drafting and preparing proposals to develop agricultural cooperation, concluding international agreements and contracts in the area of the agro-industrial complex, establishing business contacts with representatives of government and business, as well as facilitating negotiations between Russian companies and potential partners.

The Agriculture Ministry is currently establishing a network of attaches for the agro-industrial complex in foreign countries in accordance with the order of Russian President Vladimir Putin.

Additionally, representatives from the Agriculture Ministry are set to be sent to South Korea, China, Vietnam, and Israel in the near future. In case the epidemiological situation permits, about 30 more specialists will begin working in Russia's priority markets by the end of the year.

The Agricultural Ministry's attaches abroad, among others, are graduates of the Agricultural Attaché professional preparation program, which has been implemented since 2019 under the auspices of the ministry's department of International Agricultural Markets and Foreign Economic Activity in the Agro-Industrial Complex at Moscow State Institute of International Relations, MGIMO. According to the plan, agricultural attaches are to be sent to 50 countries by the end of 2022.

Sources: Agrotrend.ru, Rosselkhoznadzor, Rossiyskaya Gazeta, Interfax, Ministry of Agriculture of the Russian Federation, Poultry World