Government guarantees farmers protection following WTO accession

Russian President Dmitry Medvedev assured his country’s agricultural producers they could be sure of receiving adequate customs protection for key areas of production even after Russia has completed the WTO accession process. Indeed, in some cases import duties are even set to increase. Medvedev stressed the fact that state support would not be cut back and that financial assistance amounting up to EUR 6.3 billion per year is scheduled through to 2012. After this date, state support will be lowered gradually, but will not fall below the present level.


Prices for Russian and Belarusian potassium increase yet again

The export company founded by the Russian producer Uralkali and the Belarusian producer Belaruskali has again raised the price of its granulated potassium chloride which is scheduled for export to Brazil. The company had already confirmed a first price increase in May of this year. The new price per metric ton, including freight costs to the port of destination, is US$ 550 (EUR 386.43) for bulk buyers and US$ 560 (EUR 393.46) for smaller buyers, making it US$ 30/t (EUR 21.08) more than before. The price increase is being driven by the high international demand for potash fertilizers at a time when there are limited market supplies. Yet another major reason is that the prices for agricultural produce have gone up on international markets.

Source: Agra-Europe of 4 July 2011

German agricultural exports to Russia now increasingly dynamic

German agricultural exports rose substantially in the first six months of 2011. Preliminary statistics speak of Germany exporting agricultural and food products worth around EUR 27.3 billion. ‘That’s an increase of around EUR 2.7 billion or 11.1 % over the same period in the previous year. Exports have thus reached a new record high,’ said German Secretary of State, Dr. Gerd Müller, in Berlin on 25August 2011. He then went on to say that the positive developments from 2010 are thus continuing. Around three quarters of profits come from exports to EU countries, however the percentage share going to the new Eastern European states is constantly increasing (+ 18.7 %), whereby exports to Russia are developing particularly dynamically. Indeed, with a growth rate of 18.6 % taking it to EUR 907 million, Russia was the largest third-country market, ahead of both Switzerland and the United States.


New regulations for agricultural land now in force

Thanks to the change in the law governing the use of agricultural land which came into force at the start of July, some 1 million hectares are to be farmed again. Russia’s Agricultural Minister Jelena Skrynnik explained this latest development to the farming journal ‘Rossijskaja Gazeta’ on 2 August 2011. Certain obligations pertaining to the purchase or leasing of agricultural land by farming enterprises, including private farmers, have been eliminated or the bureaucratic formalities that accompany them have been simplified.  According to the Russian Public Prosecutor’s Office, insolvency alone is accountable for more than 960 000 ha of unused land up and down the country. Previous legislation did not allow for the redistribution of this land whilst insolvency proceedings were ongoing. The upshot was a loss of leasehold rent and tax revenue but also the degradation of agricultural areas.

The Agriculture Ministry’s plan is to insure up to 80% of the crops. However, this is a long term objective and one that cannot be accomplished within the space of a year. Nonetheless, Minister Skrynnik emphasized the fact that this is the ideal they are working towards. She also pointed out that insurance cover is provided for in the government’s support package, ‘Owing to the fact that insurance premiums have gone down, the government will subsidize them by 50%. Also, not just one organisation will be responsible for guarantees but an entire pool of insurers.   The new regulations are scheduled to come into force as of 2012. ‘Farmers must understand that this will protect them against negative developments – not just in terms of crop farming but with regard to animal husbandry, too’, explained Minister Skrynnik.

Source: Interfax Selskoe khozyaystvo i prodovolstvie, No. 30 of 30 August 2011

Financial support for agricultural sector in Russia

According to a press statement by Russia’s Agricultural Ministry, the Russian government has granted its various regions subsidies totalling RUB 76.16 in a bid to boost national agriculture. In this statement from 19 August the ministry states that Russian farmers have received RUB 57.6 billion, some RUB 19.7 billion of which came from the regional budget. This year alone some RUB 125 billion have been earmarked for agricultural support measures. Of this, some RUB 111.8 billion (90%) are subsidized. Together with assistance from the regional fund, the total volume of state subsidies for the agricultural sector is RUB 149.1 billion. This breaks down as follows: 75 % (RUB 111.8 billion) from the federal budget and 25% (RUB 37.3 billion) from the regional budget. Funding for Russian agriculture was one of the themes tabled in the Agriculture Ministry’s operational meeting on 23 August 2011.

Source: Interfax Selskoe khozyaystvo i prodovolstvie no. 34 of 24 August 2011

Russia expecting exceptional sunflower harvest

Almost all experts in the country agree on this point, even though their individual forecasts do tend to differ, reports the Moscow economic journal ‘Vedomosti’. The Executive Director of the SovEcon consultancy and research centre for agro-economics, Andrey Sisov, explained that the bigger companies were not interested in substantially lower purchasing prices for raw materials because they were wanted to oust smaller, antiquated competitors from the market. Russia’s oil mills have an annual processing capacity of up to ten million metric tons of sunflower seeds; only around 60 percent are processed at modern plants. Although the Russian Agriculture Ministry has not yet issued any estimates, the Agriculture Minister Elena Skrynnik stated that some 86 % of market demand for plant oil is to be met by domestic production. According to Rosstat, the Russian Federal Statistics Office, the area of land under sunflower cultivation in 2011 has increased by 5.7% over the previous year to around 7.6 million hectares.

Source:  of 30 August 2011