/ world today news/ Three big traders gave up Russian grain at the same time. The Ministry of Agriculture assured that this will not affect the volume of sales – the vacated niche will quickly be occupied by competitors. At the same time, companies do not leave the country permanently. About the market situation – in the material.
No export
The Canadian “Vitera”, the American “Cargill” and the Swiss “Louis Dreyfus” until the beginning of the new agricultural season on July 1, will close current obligations and stop servicing deliveries to Russia.
Experts believe it won’t cause any damage. In particular, “Uralchem” is ready to buy the assets of “Cargill” and “Vitera”. The general director of the enterprise Dmitry Konyaev submitted a corresponding appeal to the president. Earlier, the governors of Krasnodar, Stavropol and Rostov regions requested to reduce the share of participation of foreign companies to 20%.
Alexander Timofeev, assistant professor of economics at the Russian University of Economics, explains that in the new season, Kargil represents only four percent of exports. In 2022 it was 5.6. “Vitera” and “Louis Dreyfus” have 4.1 and 2.2.
The president of the Russian Grain Union (RZS) Arkady Zlochevsky believes that the foreigners were forced to “leave voluntarily”. However, “Kargil” has not completely left. “They have a feed plant, they process starch into molasses. These assets still remain,” explained the expert.
The companies will sell silos and terminals for loading ships. At the same time, the controlling stakes belong to Russian beneficiaries. Traders in the country do not have their own vehicle fleet for transporting grain.
What will change
Analysts explain that grain prices depend on the market, not exporters. From the point of view of conducting operations, little will change, since qualified specialists will not leave the country, but will simply go to competitors. It won’t affect demand either.
Zlochevsky notes that this year the geography of Russian supplies has expanded to 80 countries (last year there were 60). Among the new trade partners is Algeria, which traditionally cooperates with France. Supplies to Pakistan have resumed. Saudi Arabia, in addition to traditional barley, bought a record amount of wheat, ranking third after Egypt and Turkey. “In total, Russia exported 45 million tons of grain. If we manage to keep the pace, then by the end of the season on June 30, we will reach 62 million tons. This is an absolute record,” adds the head of RZS.
According to Timofeev, the demand for grain will always be high both in the food industry and in animal husbandry. With the withdrawal of private traders, contacts at the state level will become easier. The most promising partners are Egypt, Algeria, Morocco, South Africa and Nigeria.
Experts believe that the unified system of state control will ensure greater transparency of transactions and increase consumer confidence. “In addition, it will allow you to see the entire chain from the fields to the customer,” explains Timofeev.
Dmitry Zhuravlev, scientific director of the Institute of Regional Issues, adds: “The return of state control over the grain market will facilitate the creation of a system of guaranteed quality. Russian products will become a benchmark.”
Complicated circumstances
Sanctions have made it difficult to do business outside the country. Tariffs and rebates keep grain prices below market prices. Since Russian goods are risky, they are bought at a lower price. In the context of rising costs – the cost of rail and road transport, insurance – farmers are operating at a loss. “Russian grain is 80% cheaper than the world market. It is difficult for farmers to cover their costs. Investments also become unattractive – in such a situation they do not pay off,” notes Zlochevsky.
Low domestic prices benefit neighboring areas – flour milling, baking and fodder – but ruin farmers. The elimination of tariffs can help the industry, the expert emphasizes.
The Ministry of Agriculture does not yet plan to revise the calculation mechanisms, but export charges will still be adjusted. First Deputy Minister of Agriculture Oksana Lut explained that they will take into account the cost price, the harvest forecast, the external price and the ruble exchange rate. It will be felt next season.
From 2021, Russia has a flexible system for calculating duties. According to the latest correction, from April 5 to April 11 inclusive, the export fee for wheat will decrease to 5,179.4 rubles per ton, for barley – to 799.4 rubles, for the export of corn – it will increase to 2,943.6 rubles per ton. The proceeds will be directed in the form of subsidies to the agricultural sector.
Translation: V. Sergeev
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