RUSSIA
Focus on exports Russia is aiming to become one of the world’s largest exporters of oils and fats in the next few years by significantly increasing domestic output and by providing additional support for exporters, according to some Russian senior officials and local analysts in the agriculture sector. In recent years, Russia has strengthened its position in the global oils and fats market primarily by increasing exports. According to data from the Russian Ministry of Agriculture, Russian exports of oils and fats grew by about 20% in 2019 compared with the previous year and were worth around US$3.9bn. In terms of volume, exports increased to 3M tonnes, which was a record in the history of modern Russia. Commenting on these figures, Russia’s Deputy Minister of Agriculture Oksana Lut said the 20% growth had been the highest for the Russian oils and fats industry since 2014-2015 and the highest among the non-energy sectors of the Russian economy. As a result, Russia’s share of the global vegetable oils market reached about 14% in the case of soyabean and rapeseed oils, and around 26% for sunflower oil. However, despite these increases, the government still plans further increases in the domestic production and exports of both oils and fats. As part of these plans, by 2024, total exports of domestic vegetable oils are expected to reach US$8.6bn, which would be almost 2.7 times higher than in 2017. According to an official spokesperson from the Russian Ministry of Agriculture, in contrast to previous years, the export 18 OFI – MAY 2020
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Russia is aiming to become a leading oils and fats exporter by increasing domestic output and providing additional support for exporters Eugene Gerden of finished products would be given a specific focus. At the same time, exports of some major oil-bearing crops would decrease to meet the needs of domestic processors. In fact, there has already been a recent decline in exports of oilseeds from Russia. Last year, these exports totalled 726,000 tonnes, compared with 1.2M tonnes in 2018. By 2024, it is forecast not to exceed 447,000 tonnes.
Lack of raw materials
The implementation of these plans, however, could be hampered by serious problems within the industry, notably the shortage of raw materials, according to local analysts. This shortage persists despite the fact that the harvest of oil-bearing crops in Russia this year is expected to exceed a record 17M tonnes. Even such record harvests would be insufficient to meet the demands of domestic oil processors, who currently require a total of around 23-25M tonnes/ year, local analysts say. This figure is expected to increase to 33M tonnes/year by 2024. The lack of raw materials limits the margins of the industry and reduces its export potential. Processors have spoken about the need to expand the planted area of major oil-bearing crops in Russia.
Commenting on the situation, Daria Snitko, head of Gazprombank’s Center for Economic Forecasting and one of Russia’s leading analysts in the field of agriculture, said in an interview with the Russian Rossyiskaya Gazeta business newspaper that there was also a need for Russia and its farmers to make better use of its global experience in the use of arable land. According to Snitko, only 69% of the existing arable land area in Russia is currently used by local farmers, significantly lower than in the majority of developed nations, where the figure is in the range of 75-80%. In the meantime, aware of the problem, the Russian Ministry of Agriculture is planning to introduce up to 10M ha of arable land into the domestic farming business over the next five years. According to state plans, this would fulfil the demands of domestic oilseed processors and also stimulate the production of vegetable oils and fats. The only problem, however, could be related to existing duties on the export of oilseeds from Russia, which are currently set at a rate of 6.5%, a figure the industry considers as extremely low. According to analysts, such a low rate forces farmers to export their crops rather than supply domestic processors. Sunflowerseeds are the exception, with exports growing five-fold for the last three www.ofimagazine.com
01/05/2020 17:39:25
