Page 89 - RusRPTAug19

transportation tariffs, and increase the number of agriculture-related projects in the national infrastructure development plan. After a record year in 2018, agriculture exports have declined noticeably in 1H19. This is, of course, somewhat natural given the high base year, yet the sector is eagerly using the opportunity to request renewed federal aid. The government will likely agree to elements of MinSelKhoz’s request, wanting to remain the world’s newly- established bread box, but experts say the biggest boost to agriculture exports will be more natural: an expected 20% increase in foreign grain prices. Agriculture exporters are currently excluded from receiving subsidies provided by the Russian Export Center, which compensates interest rates for loans aimed at developing exports, after record harvests in 2017. In 2018, agro exports grew 20% y/y to $25.8bn, of which grain accounted for more than 40%. The government then decided that the industry did not need federal support.
In the first half of July, however, agro exports declined by 31%. Future crop expectations, and therefore exports, are also down following low precipitation in several regions. In addition to financial aid, the Ministry of Agriculture is also seeking infrastructure investment in transport and logistics facilities, such as port and grain terminals. The ministry has also asked the government to support a new decree that will expand preferential tariffs for the transportation of grain to all of Russia (rather than specific regions) and to all forms of transportation (rail, road, and water – currently just rail).
Export prices of Russian wheat increased on the last week of June,
Reuters reported citing industry agencies on July 1, attributing the rising prices to hot weather and drought in the Black Sea region. The prices for various grades of wheat increased from $194-$196 per tonne to $195-$198. As reported by bne IntelliNews, despite slight downward revision of exports outlook, Russia is set to remain the world's largest grain exporter in 2019, with Ukraine breathing down its neck. Russia earned $20bn from grain exports last year - more than it earned from arms exports.
Russia’s rapeseed and soybean production in 2019 and 2020 is likely to set new records, World Grain informs. According to the $A’s predictions, some 4.3mn tons of soybean will be produced, while the projected production for rapeseed is 2.27mn tons. $A reports that sunflower seed production is projected to reach 12.30mn tons, just slightly below the record of the previous marketing year. The $A forecast overall oilseed production in Russia in 2019- 20 at 18.8mn tons, which will be roughly the same amount produced in 2018- 19. Exports of oilseeds in 2019-20 will reach an all-time high of 1.7mn tons, 7.3% higher than 2018-19, according to $A projections.
After growing consistently over the past decade, Russian poultry production dropped by 5.1% to 1.5mn tons in the first five months of the year, Global Meat News reported. Frozen poultry production down by as much as 24% year-on-year, the news website wrote, citing official data and industry estimates. According to the Russian State Statistical Service Rosstat, production shrank in North-West federal district, in Urals and Far East, but the most noticeable decrease was seen on the Russia’s south. Overall sales on the Russian market fell by 4% compared to the same period of the previous year, Sveltana Fyodorova, general director of the Russian consulting agency Express Obzor estimated. “The domestic poultry market is saturated with broiler meat, and the average business profitability is reducing because of the strong competition and the rising production costs,” Fyodorova said. The negative production dynamics on some extent undermined the growth of the Russian poultry exports, which was the slowest in the past four years, the analyst added. The Russian poultry market is depressed primarily by the
89 RUSSIA Country Report August 2019 www.intellinews.com