Chinese ambitions for agricultural export

4.231,3 million rubles are planned to be invested in the sub-program for the development of agricultural export. Today, more than 4 years after the introduction of the food embargo, the authorities intend to support not import substitution, but the export of products with added value. According to experts, the country has significant prospects in a number of industries and even dairy industry, despite the fact that its performance is far from domestic self-sufficiency, has a chance to supply outside the Russian Federation and increase the volume of supplies.

"Today, the agricultural complex is finding new markets, and we are really proud of what has been done, - said the Head of the government Dmitry Medvedev. - It is necessary to maintain the pace of development that has been achieved, to solve the problem of improving the quality of agricultural products and food, to improve logistics, to continue the work on breeding and genetics, to introduce new land into agricultural use, to develop land reclamation".

"All this is also necessary to achieve doubling of exports of agricultural products by 2024", - said the Head of the Cabinet.

According to Medvedev, not only large, but also small and medium-sized businesses are ready to develop new markets.

It is expected that in 2018 the export of agricultural products will grow to $23 billion, in 2019 - to $24 billion, in 2020 - to $25 billion, in 2021 - to $28 billion, in 2022 - to $34 billion, in 2023 - to $41 billion and in 2024 - to $45 billion.

According to the national project, grain export should increase to 54.6 million tons by 2024. Its main directions are the countries of Africa, Southeast Asia, the Persian Gulf and China.

Vice-President of the Russian grain union Alexander Korbut notes that "it is not said in what prices — current or comparable, which allows us to wait for "help" from the world market in the form of price increase. At the same time, it is typical that export growth will be quite slow until 2020. This can be justified by the fact that the development will go on within the framework of the current State Program, but then there will appear and immediately start operating all new support mechanisms; we will get ready for the production of unique finished food products and the world will shudder from the Russian food expansion. Although, it maybe in another way: the current generation of officials is responsible for the result until 2020 and what will happen afterwards ..."

According to the draft program of export development, it is assumed that the share of meat and dairy products in the export of agriculture by 2024 will be 6%. The figure is not large, but at current levels, it is actually doubling. The main volume will account for meat products.

Alexander Korbut is skeptical about the export support program. According to him, the document has no guidelines for business and the state in addition to cash exports.

"The forecast figures are given only for grain and oilseeds. There is nothing about the production of meat, milk, food products and other things. In other words, there are no guidelines for business and the state! Perhaps they will appear in the new version of the State Program, but maybe then it would be better to prepare both documents at the same time?" - asks Korbut.

"The agricultural export is expected to increase 2.2 times. This is a very big increase for the six-year period. But if we go back to the situation six years ago, we will see that the growth was the same, 2.2 times. I have a suspicion that the previous figures were taken when drawing up the indicators, with an emphasis on the fact that we should grow at least by this figure. The only problem is that six years ago, the growth began from a very low base: in 2010, the most severe crop failure since late 1990s. Then the export failed. In 2017 there were record figures, which we will keep until 2024," - said the head of SOVECON Andrey Sizov.

According to the analyst, in general, if we talk about agricultural export, it is necessary to know where Russian producers are really competitive. Or may become such with a little extra effort.

"Those are the areas that need to be developed, and when they say that they are going to make some "Bashkir Parmesan" and thereby get an increase in agricultural export 2.5 times, I doubt that such an ambitious aim can be achieved in such ways. And again, the reality is that the bulk of export is grain, oilseeds, products of their processing, milk and meat", - stressed Andrey Sizov.

TO CHINA?

As it became known, the Ministry of agriculture of the Russian Federation ordered the development of the concept of export of agricultural products, food and beverages to China. The Ministry is ready to spend 20 million rubles for development. The document should represent a plan for the development of exports of Russian agricultural products, food and beverages to the Chinese market until 2024.

It is expected that it will show the areas, methods of development of Russian export, as well as the resources necessary to stimulate it.

"We met separately with representatives of the confectionery industry, and they have great prospects for the Chinese market, some of our world-famous brands are supplied to China quite actively. Small companies also have potential in China. However, there are a number of challenges to supply. This primarily applies to meat and dairy products. We are talking about some problems on our part – there are a number of rules on the part of a number of regulatory authorities that make it difficult to supply to China. We are thinking about it now, we are working with Federal authorities, preparing initiatives from Moscow to remove these restrictions. At the same time, the Chinese side has a number of unresolved issues", said Kirill Ilyichev, Head of the Moscow export center.

Boris Titov, the Commissioner for the protection of the rights of entrepreneurs under the President of the Russian Federation, answering the question of The DairyNews said that there were many problems with the export of agricultural products to the Chinese market however, they are gradually being solved.

"Gradually, these issues are fading, we opened the grain markets and we opened the market of poultry meat. I believe that this is one of the potentially very large export opportunities for Russia. As a result of negotiations and mutual decisions in the field of strengthening quality checks, almost ten producers have been allowed to export Russian chicken to the Chinese market. Today it is a growing export item. We hope that the same will happen in the field of meat supply – first of all, it is sanitary control, ensuring sanitary safety. It is necessary to find mutually acceptable solutions, as this is also a huge potential market. Moreover, all agricultural products that come from Russia are marked in China as an environmentally friendly product – in China there are few "clean" products due to the fact that a lot of mineral fertilizers and pesticides are applied. Therefore, Russian eco-products in the Chinese market have good chances to be sold", said Titov.

Agroholding "Rusagro" is looking at China attentively. Head of the holding Maxim Basov in a recent interview stressed that the company would be happy to export a wider range of products to China in the presence of an open market. So far, this sales channel for a number of interesting products has been closed for Russian enterprises.

"We export a lot of butter. Today the main markets for us in terms of packed butter are China and Uzbekistan. Although we are present throughout Central Asia, we plan to increase our presence here. We sell meal mainly in Europe, margarine - mainly in Central Asia. And our new product — cheese and functional mixtures - we currently sell on domestic market. But we are waiting for the opening of the Chinese market, and if this happens, then, of course, we will immediately try to start building a business in China. Powdered mixtures will, of course, be exported to China", said Maxim Basov.

Earlier the Rosselkhoznadzor announced the intensification of work on opening export markets, including with China, but the Russian negotiations are not as successful as the ones of the Belarusian side, for example. For seven months of the year, the enterprises of the Ministry of agriculture and food of Belarus have delivered almost 60 thousand tons of dairy products to China in the amount of $20 million

Russian-Chinese negotiations have not yet led to the opening of dairy supplies to China; the results have been expected over the past year and a half.

Maria Potapova, Deputy Director for commercial affairs of the Blagoveshchensk dairy plant noted that the company does not export products to China because of the ban.

"There are products that we could supply to China. We hope that the situation will change in the near future. China really needs our milk, they tried the products of our plant and they liked it, although they do not drink natural milk", said Maria Potapova.

According to analysts, the opening of exports to China would spur the domestic dairy market. However, the dairy sector of China is very highly competitive and in order to enter it, Russian enterprises need a competent strategy, a balanced approach and a unique offer that can occupy its niche. Perhaps, the state support for exports in the field of promotion of Russian products would be most relevant.