Page 82 - RusRPTFeb20

9.1.6​ Agriculture sector news
Russians winter grain crop is in unusually good shape with only 5.7% classed as in bad condition​, lower than in recent years, according to Roman Nekrasov, an agriculture ministry official, Interfax reported on January 30. The Russian winter has been unusually warm and dry this year, with Muscovites complaining there has been no snow at all. Russian weather forecaster Hydrometcentre has reported 4% of the sowings in a bad condition, compared with 8% a year ago. In the southern North-Caucasus federal district, the situation requires special attention because more than 14% of the winter grain sowings there are not doing well, Nekrasov was quoted as saying, as cited by Reuters. He added that Russian farmers plan to sow spring grains on 29.2 million hectares this year, down 181,000 hectares from a year ago.
The Minister of Agriculture, Dmitry Patrushev, gave an interview to Kommersant and said Russian Agriculture is set to grow 2% y/y in 2019​, implying six consecutive years of real advances. This season, exports are estimated at $24bn (a negligible correction). The long-term target of $45bn by 2024 is intact. Across the key export commodities, the ministry is to keep the grain tariff instrument (currently zero) in place to secure smooth domestic supply, and noted poultry, turkey and dairy products volumes to China. It is also targeting pork flows. The budget for developing rural areas is RUB2.3tn by 2025, while RUB1tn is to be allocated from federal funds. Were private companies to participate, their cash flows could see downside risks. Our View: Exports volumes represent a core growth pillar for Russian agriculture, in our view. In MY20F, we see the grain harvest recovering 8% y/y to 122mnt, underpinning the sizable 42.7mnt export potential that is set to see an acceleration through the season. In poultry and pork, industrial production covers 84-89% of domestic demand, and greater foreign trade would be required for further capacity additions. Exports to Asian countries could become a notable trigger for Rusagro, which is developing its breeding capacities in the Russian Far East. We see this as a longer term driver, while in the short term the story awaits a more favourable supplydemand balance in sugar.
82​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com