The May dreams
According to the forecast of the Ministry of agriculture, the export of domestic agricultural products for the ten months of 2019 amounted to about $19.3 billion. According to Deputy Minister of agriculture Oksana Lut, there is no growth compared to the same period last year. On the contrary, the indicators of last year's exports were 2-3% higher than the current ones, and by the end of the year, the difference may be 5-6% not in our favor. At the same time, according to the expert, there is nothing to worry about: the backlog is explained by changes in the structure of Russian exports of agriculture, writes The DairyNews.
"In terms of preliminary results - now our exports are about 19.3 billion dollars in monetary terms. We are already a little behind compared to the same period last year - about three percent, at the end of the year we will lag behind by 5-6%. This is primarily due to the change in the structure of exports - we intend to reduce the share of grain exports to 25% of the total. Our market is being rebuilt, developed and in the future will focus on the export of products with high added value", - said Oksana Lut.
The representatives of large Russian companies managed to talk on plans for Russian exports in the next five years on Tuesday during the Agricultural forum of Russia, organized by the newspaper "Vedomosti". The correspondent of The DairyNews, who was also present at the conference, was able to see firsthand how different points of view can be on the double increase in exports in five years.
Is China the future? Some representatives of the agricultural sector are really optimistic about the increase in the share of exports. Stefan Duerr, CEO of “EKONIVA-APK holding”, is sure that China is a very promising market for the dairy sector, and in Europe our producers lack a brand:
"Russia needs to develop the image of its products in Europe in terms of purity, quality and usefulness. Each market needs its own approach, and for our country, the Chinese market in dairy products, as we know, is now the most promising. There, our brand is quite famous, and in the future China will be a huge market for milk. Consumption there is growing at a tremendous pace, and our task is to occupy this niche.
We will remind, in a year "EkoNiva" plans to take the first place in the world on production of milk, overtaking the Chinese holding China Modern Dairy producing 3200 tons of milk a day.
Other industries, however, are less optimistic about China. Here are comments of Natalia Utkina, technologist of the Union of ice cream makers of Russia:
"We supply very little ice cream to China, their market is very complex and specific, and the industry needs a very large financial investment to promote products there. In order to successfully export products to all countries of the world, including China, we need state support in terms of creating our own trading houses and developing a state brand. If each manufacturer sells its trademark, the costs will be incredibly high, there will be no return. We will be able to export our products actively if we combine our efforts with the help of the state".
Sergey Sklyar, GC "Antey", production and processing of fish and crab:
"We are not expected in the Asian market. In different markets, there are many aspects to consider, each has its own peculiarity, it must be taken into account before entering the Asian market. We can keep on talking with the Chinese party, and come to nothing - to fight against the mentality, officials, tax and customs inspections, the language barrier, etc."
Alexander Teplyakov, General Director of Novosibirsk food company. Specialization – plant growing and animal husbandry:
"We have been working with China for six years, starting with the supply of rapeseed, then we supplied oats, flax, now - wheat. It is important to note that the Chinese market is very complex, and when working with it, it is not allowed to have illusions", - said Alexander Teplyakov.
So where to deliver? Everything is clear with China, there is a lot of work. But there are areas where our products will be able to occupy their niche. A number of experts note that it is true. According to Sergey Ivanov, Executive Director of the group of companies “Efco”, Egypt is an excellent region for entering the markets of the Middle East, Africa, and even Europe.
"We started with Egypt. We have always understood that we need to go into deep processing abroad, and Egypt has turned out to be an interesting market - there is a growing population, prosperity. It is an ideal entry point into the region of North Africa and the Middle East, in addition, Egypt has duty-free trade with most of Europe. This is a very convenient platform for us to start selling our fats to southern Europe", said Sergey Ivanov.
According to the expert, it is the state that should provide significant assistance in this issue. The company enters the territory of competition with global companies that have more opportunities and resources, and the speed of implementation of such projects is potentially very important.
"We count on assistance in promoting effective models of the industry organization. We have all the opportunities, the volume of business now is $ 200 million, by 2024 we plan to increase it to $1 billion. According to our estimates, the volume of butter supplies for export will be about $400-500 million", predicted Sergey Ivanov.
Agro-industrial complex "Eco-culture" plans to increase the share of exports in respect of vegetable crops, and primarily works with the export of tomatoes. Alexander Rudakov, President of the company, notes the growth of the tomato industry in recent years and predicts that in a maximum of four years imported tomatoes will be completely replaced. As for exports, "Eco-culture" plans to supply products to the Gulf countries, Saudi Arabia and the UAE. Next year, it is planned to export products within $100 million.
"The cost of our tomatoes in the southern regions is very low, so we are competitive. We plan to start developing a large project in Mineralnye vody, from where tomatoes will be exported to the Gulf countries, Saudi Arabia and the UAE. We are able to build distribution in these countries and sell the product under our brand. Nothing prevents us from competing with European producers, but first, we plan to feed Russia. We will start deliveries to Uzbekistan in November and to Dubai next spring. Next year we will export tomatoes in the range of $50-100 million".
Stefan Duerr, the head of "EkoNiva" notes that the Napoleonic plans of his company to increase milk production by one and a half times in the next year will have a positive impact on exports. Along with China, he noted other Asian countries where “EkoNiva” products will be delivered - Vietnam, Korea, etc.
"Such a large volume of milk will go not only for domestic use. We are already building our largest cheese factory in Russia - in Novosibirsk. From there, we hope to import products not only to China, but also to Vietnam, Korea and other Asian countries", said Stefan Duerr.
Another important product from the point of view of export is ice cream. Natalia Utkina noted a number of countries where we could supply cold delicacy - among them a number of countries of the former CIS, Israel and Africa.
"Our producers are ready to export ice cream. Another thing is what sales channels we can find. But ice cream makers are seriously engaged in this issue, and not everything is going well yet. The main countries for export are Kazakhstan, Israel. We also supply ice cream to China, but taking into account the potential opportunities of the market, we need to send several dozen times more. African countries, Senegal, for example, show good opportunities. Of course, it is desirable that our products went to Europe", - said Natalia Utkina.
What does it take? Coherence of actions of the state and business, of course. Investments, support, reduction of domestic prices for raw materials. All these simple conditions are in fact very difficult to fulfill.
"The prospects for our exports are zero, while the price of milk is so high. When it goes down, we can talk about exports. Just to compare: the price of butter 82.5% fat on the stock exchange costs $2.4 per kilogram, at the same time we sell it at a price of 350 rubles per kilogram. What exports can we talk about here?" - said Alexander Haichenko, Director of "Vologda ice cream" in a comment to The DairyNews.
According to the latest data of the Dairy Intelligence Agency (DIA), the price of raw milk in Russia is 24.89 rubles / kg.
The DairyNews also managed to talk about the prospects of Russian exports with Mikhail Maltsev, Executive Director of the Oil and Fat Union of Russia. According to him, Russian exports have fundamental opportunities to increase significantly - but this requires coordinated work of the executive and legislative branches of government.
"Everything is achievable under the condition of the coordinated work of the executive and legislative authorities. These plans are ambitious, but subject to consolidation, mobilization of all efforts, they are feasible. There are fundamental opportunities to increase exports, but time will show how effectively we will cope", said Mikhail Maltsev.
Deputy Minister of agriculture Oksana Lut told about some aspects of state support of export supplies during the Agricultural forum held the day before. According to her, the Ministry provides comprehensive support to export-oriented enterprises, in particular, it approved agreements with 14 agricultural producers to improve competitiveness, and another 15 companies are selected. In this context, there is expected the total financing of exporters in the amount of 50 billion rubles for 29 companies.
In addition, the state provides a subsidy for the transportation of agricultural products by rail, the volume of which amounted to 1.27 billion rubles in 2019. The Ministry of agriculture proposes to increase this amount by the end of the year.
It was also noted that Rosselkhozbank intends to double the loan portfolio of export-oriented producers. According to the first Deputy Chairman of the Board of the Bank Irina Zhachkina, now the loan portfolio of such companies is about 200 billion rubles. The goal of the bank is to double it by 2024.
Therefore, the question of $ 45 billion dollars of exports remains open. Many industrialists are doing serious work to increase exports abroad, but such a large figure, of course, raises clear doubts. Moreover, the current growth of agricultural exports does not even correspond to the level of the previous year. We can only hope that the system of state support for exports will at least resemble the declared campaign.
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