Russia’s focus on grain and poultry exports

22-12-2021 | |
Russia's aim is to export 1 million tonnes of poultry annually by 2030. Photo: Shutterstock
Russia's aim is to export 1 million tonnes of poultry annually by 2030. Photo: Shutterstock

By 2024, the Russian government anticipates that 818 billion rubles (approx. US$ 11 billion) will be invested in several hundred export-oriented agricultural projects. The country wants to boost its grain sector, poultry exports and the animal feed industry.

Since the 2014 food embargo, Russia has lost almost all food exports from the US, the EU, and several other countries, with a lack of some products and food inflation as a result. But with subsidies and dedicated projects, Russian agricultural companies managed to beat the proclaimed food security targets in most livestock industry segments, except for raw milk production. Russia is even looking to export more products.

Emerging economies

Dmitry Krasnov, director of the Russian center, Agroexport, has forecast that Russian agricultural exports are set to rise from US$ 30.5 billion (€ 27.2 million) in 2020 to US$ 37 billion (€ 33 million) in 2024. Out of the additional US$ 6.5 billion in export revenues, around € 2 billion will be for food products (mainly meat), € 1.78 billion for oil and fat, and € 0.98 billion for grain. Nearly 81% of the investments are expected to be pumped into brand new projects.

Just as in previous years, the European part of Russia will account for the largest part of growth in agricultural production and the lion’s share of the overall planned investments of around 305 billion rubles (€ 3.8 billion). Until now, with the exception of grain, food of Russian origin has been primarily exported to the CIS region. “However, further growth in Russian agricultural exports will be mainly associated with countries in Asia, Africa, India and the Middle East,” Krasnov said.

A new grain era

The export development is expected to be primarily driven by expanding grain production. Under a grain industry development strategy, the Russian government aims to produce 150 million tonnes of grain per year up to 2030 to meet the growing demand for feed on the domestic market, as well as to sell more grain to foreign customers.

To fuel that growth, the Russian Agricultural Ministry has, among other projects, recently rolled out a programme aimed at developing new highly productive varieties of grain for 6 billion rubles (€ 80.3 million). The programme envisages the development of at least 26 competitive varieties of crops, including at least 17 varieties by 2025.

“In the global market, we see 3 relatively new processes, namely the emergence of hybrid wheat varieties, genome editing using CRISPR technology, and the commercial development of GM seeds. Each of these phenomena, if successful, can dramatically turn the tides on the grain market and pose a serious challenge to our traditional seed production,” Dmytri Rylko, general director of the Russian Institute of Agricultural Market Studies, told the local magazine, Agroinvestor.

Russia's export development is expected to be mainly driven by expanded grain production. Photo: Misset
Russia's export development is expected to be mainly driven by expanded grain production. Photo: Misset

The main target of the new programme is to rebuild the Russian grain industry and convince farmers to switch to more valuable grain. As explained by Elena Turina, director of the analytical department of the Russian Grain Union, the current production of valuable wheat with high gluten content, or durum wheat, in Russia is insufficient, and this is the issue the new programme is designed to solve.

Boosting poultry exports

In the coming decade, Russia will need more grain to feed the expanding poultry population as the country is on a fast track to boosting poultry exports. “Currently, we export about 300,000 tonnes of poultry per year. In 2025, our objective is to increase this figure to 700,000 tonnes, and reach 1 million tonnes by 2030,” said Galina Bobyleva, general director of the Russian Union of poultry producers.

Russian turkey meat exports are expected to quadruple in the coming decade as Russia is likely to become the world’s second-largest turkey producer, having relatively low domestic demand. “Given the increase in production volumes, as well as the opening of new markets, Russian exports of turkey meat may climb to 35,000 tonnes per year by 2030 (worth € 66.9 million),” Agroexport forecasted.

According to Agroexport, the biggest prospects for Russian poultry exports, and specifically turkey exports, lie in Africa (particularly South Africa) as well as Asia and the Middle East. “Due to the high proportion of the Muslim population in regions like Africa and the Middle East, most likely, the growth of exports to those regions will lead to an increase in the share of exports of products certified in accordance with Halal requirements,” said Sergey Lakhtyukhov, general director of the Russian Union of Poultry Farmers.

Lakhtyukhov expects that the growth of Russian poultry exports will not be huge in the next few years due to restrictions related to the Covid-19 pandemic, as well as other factors such as rising logistics costs on international deliveries. But, in the long run, expanding export supplies are expected to contribute to the development of Russia’s poultry industry. Expanding poultry exports are expected to lead to significant changes in the Russian grain industry. Historically, Russia has mainly focused on the production of wheat. However, under all projections, soybean and maize production is expected to grow fast in Russia in the coming decade.

Competing on feed

An efficient feed industry is expected to be a cornerstone of the upcoming Russian export development campaign. “The times have passed when the Russian livestock industry thrived in perfect conditions, protected from imports by sanctions,” commented a source in the Russian livestock industry. “In foreign markets, we have to compete with the world’s strongest and most effective companies, and this means that our companies need to be as effective as possible.”

At the same time, according to Laktyukhov, the Russian poultry industry is experiencing the pressure of rising production costs, which is mainly associated with expensive feed. “An increase in production costs leads to an increase in the price of the final product. In the current environment of inflationary growth, the purchasing power of domestic consumers has declined significantly. Currently, poultry farmers do not have the option of raising the sales prices for chicken carcasses. Exports of more expensive poultry products, such as chicken parts and processed poultry products, would undoubtedly reduce the degree of these pressures,” Laktyukhov concluded.

246
Vladislav Vorotnikov Russian correspondent