Agro-forecast: how will the grain develop. Lyudmila Zueva on the prospects for the development of agriculture in 2020 !!!
The coming year is seen as a tangible boundary when it will be possible to assess the effectiveness of the efforts undertaken in recent years and to understand whether an adjustment to the development strategy of the agricultural sector and its export agenda is necessary !!!
One of the key goals of the past year and a half for agriculture has been the diversification of the export structure. It was decided that it was necessary to reduce the share of cereals, which now make up about a third of the export volume, to 25% and the proportional development of food supplies with high added value. According to the results of 2019, we saw that although the share of grain is falling (in the first three quarters, it decreased by 10% both in monetary and in kind terms), there is no significant increase in export of high value added products. Moreover, grain seems to be the only direction in which there is a steady growth in business activity. This year, the internal redistribution of the market, begun in 2019, will continue. VTB is now the largest owner of grain export infrastructure. Assets such as NRT,NKHP, “Rustransky” (which is the owner of the largest park of grain carriers RAT), “Mirogrupp” are already associated with the bank. Arrangements with Efko»Expand VTB’s zone of influence on export infrastructure in the Taman seaport, where, in addition to grain, oil and fat products will also be handled. Of the deep-sea terminals, the fate of KSK is not yet obvious, however, given the high debt burden of the company, it can be assumed that a buyer may appear on this target as well. In what way the consolidation of the industry will end, in 2020, it is quite possible that it will already be clear.
According to the Ministry of Agriculture, by 2024 the export of grain will amount to 60 million tons, or $ 11.7 billion in value terms. KPMG estimates show that this is probably a conservative expectation, and that export potential can significantly exceed the stated figures. Cereals are the agricultural sector where Russia is already a world leader. For example, in terms of external supplies of wheat, our country is almost twice as fast as exporter No. 2, Canada. Is it true in such realities to shift the focus from grain to value-added products, when it is grain exports that can compensate for the shortfall in target volumes in other sectors? Or should these rights be equalized in terms of sector development strategies? 2020 is the time to answer this strategically important question.
Speaking about the prospects for increasing exports in other product groups, it is worth noting the successes achieved in 2019 in opening new markets for our meat and dairy industry. The first deliveries of pork to Vietnam, beef to Brazil, poultry and drinking milk to China passed. Russia also got the opportunity to ship pork, beef and poultry to Venezuela, beef to Brazil, rabbit meat to South Korea, poultry to the UAE. In the coming year, work in this direction should be continued.
In the oil and fat industry, expected exports by 2024 should exceed current results by almost three times (target – $ 8.6 billion). There are discussions in the industry, due to which to achieve this indicator: on products of the processing of oilseeds or oilseeds. Among industry players, there are ideas to limit the export of oilseeds and increase export duties on this category. It remains only to decide which export stimulation is more effective – through bans or through support?
One of the important challenges in 2020 will be to work with the positioning of Russian products abroad and the formation of a favorable image of the country among foreign consumers. It requires significant financial and temporary investments, but the experience of previous years shows that without these investments we will not be able to gain a foothold in new markets. First of all, this is relevant for manufacturers of products for end consumers, but the formation of the country’s brand as a whole can positively affect the perception of the products of the first redistribution by our partners abroad. In country positioning, the convincing and support of the state itself plays a critical role, and not only directly in the field of agriculture, but also in sports, art, traditions , etc.
With all this, it is necessary to focus on global trends. They are not so pronounced in Russia, but their existence cannot be denied. Among them are the further popularization of healthy lifestyle, organic production, attention to the problem of climate change and following the principles of sustainable development, in particular the desire for greater environmental stability and responsibility for their actions, which are expressed in approaching a new paradigm of non-waste production.
In the production of processed products, I would especially like to note the investments of oil companies. In particular, in biotechnology for the production of bioplastics from sugar beet and grain processing products. The bioplastics market is a relatively new trend, and even in the world as a whole, bioplastics production currently makes up about 1% of the total plastic output. But the growth rate of 4% per year shows the promise of this segment.
Traditional meat in the near future may lose its place in the consumer basket due to the sharp reduction in the cost of substitutes. Therefore, producers in this category should already think about a “meatless” future, just as oil companies take carbon-free perspectives into their strategies. Some Russian producers, by the way, are already investing in the development of artificial meat. So, the position of leader of these innovations was taken by Miratorg”By launching such a production.
Until 2024 there is not much time left. The tight deadlines for increasing exports will stimulate agricultural producers and relevant departments to make innovative decisions in order to make a breakthrough to achieve significant progress in growth indicators. I am sure that in the coming year we will be able to observe with interest the changes taking place.
The author is a senior manager of the competence center at KPMG in Russia and the CIS.