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Russia mulls $230bn farming investment

Moscow, September 6, 2011

Russia's farm ministry issued an ambitious draft plan, needing 6.8 trillion roubles ($230 billion) of investment by 2020, to raise grain output and exports, slash dependence on imported raw sugar and become an exporter of pork and poultry meat.

The draft of a state programme for agricultural development for 2013-2020, published on the agriculture ministry's website (mcx.ru), says federal and regional budgets are expected to provide two thirds of this amount.

A leading Russian analyst, Andrei Sizov Sr. said on Tuesday the ministry was just setting targets for itself, and the plans were likely to be revised downwards.

'First of all, it is a big question if the desired financing can be found,' Sizov, president and CEO of SovEco agricultural analysts, told Reuters.

'And another issue is that even if these targets are reached, Russia is unlikely to find a market for all these commodities, as the competition is high.'

The draft has yet to be agreed with other government ministries and approved by the government.

Under the draft, Russia, until last year the third-largest wheat exporter, will aim to increase grain output to 125 million tonnes in 2020 from 85 million-90 million tonnes expected this year.

The exportable surplus would rise to 41.5 million tonnes from 20 million-23 million expected in the current season. Russia has lifted a wheat export ban imposed after drought slashed last year's harvest.

For this purpose, the ministry plans to increase sown area to 50 million hectares from the current 44 million and average yields to 2.5 tonnes per hectare from 2.0 tonnes.

It also plans to build new grain storage capacity and deep sea export terminals on the Azov, Black and Baltic seas and on Russia's Pacific coast.

Currently, Russia has only two deepwater export ports, Novorossiisk and Tuapse. Significant volumes are moved via small river ports either directly to buyers, or reloaded on the open sea onto larger vessels.

'Exports should be increased to countries of the Asia-Pacific, Africa, Latin America and Europe,' the draft said.

The draft says Russia should reach stability in the  production of sunflower seeds at 7.5 million tonnes by 2020.

Russia produced 5.3 million tonnes of sunseeds in the drought-hit 2010. SovEcon expects the country to harvest a record sunseed crop of 8.3 million tonnes this year.

It said Russia, the third-largest sugar importer, should drastically cut dependence on imported raw sugar and produce 5.4 million tonnes of beet sugar in 2020, covering 91.2 percent of its needs. Russia produces over half of the sugar it consumes from domestic beets and the remainder from imported raws. 

Producers and analysts estimate this year's domestic sugar output in a wide range of 4.2-5.5 million tonnes, which is a record volume for Russia, where the previous record was 3.5 million tonnes in the 2008/09 crop year.

To export poultry, pork

The draft said Russia, a major meat importer, should double output to 14.1 million tonnes by 2020, mainly poultry and pork.

'By 2020, exports of poultry meat may be 400,000 tonnes and of pork 200,000 tonnes,' it said.

It said, currently domestic production covered only 73 percent of consumption with the rest covered by imports.

The draft said Russia should increase poultry output to 5.8 million tonnes in 2020 from 2.8 million tonnes in 2010, pork output to 4.53 million tonnes from 2.3 million and beef output to 3.15 million tonnes from 1.7 million tonnes.

The draft envisages switching to import tariffs from tariff quotas after domestic products reach 'sufficient competitiveness', without specifying when this may happen.

Russia regulates meat imports with tariff quotas, under which suppliers may ship determined volumes at a discount import tariff.

Russia is rapidly developing poultry and pig-breeding and has said it should reach self-sufficiency in the next three years. – Reuters




Tags: export | Russia | Poultry | farming | Ministry | moscow | Pork |

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