Russian agriculture update: industry strong but needs modernisation
Published on 02/05/2017
In 2016 Russian sales of agricultural products outstripped sales of arms for the first time since the Soviet Era. Bullish in the face of ongoing sanctions, Russia’s farmers are growing more – aiming to achieve food security by a looming 2020 deadline. Yet, the need to modernise hangs heavy over the industry, leading to opportunities for equipment companies to enter the market.
Russia produces more agricultural goods
Russia is on a roll agriculturally at the moment with production levels of key items rising. Grains, now Russia’s third largest export commodity with a third of output being shipped overseas, reached record volumes in 2016, peaking at 119 million tons.
Elsewhere, Russian farmers are getting serious about hitting their import-substitution targets (Vladimir Putin’s government is aiming to replace imported goods with home-grown products by 2020). Production of meat, including beef, pork and poultry, collectively rose 9% in 2016, whereas Russian dairy farmers are currently helping Russia achieve 75% self-sufficiency in dairy output.
Fruits and vegetables are experiencing production surges too. Harvest volumes increased by 2% in 2016, hitting 5.4 million tons, compared with 2015’s levels. Greenhousing is quickly securing a strong position in Russia’s agricultural mix, with the production levels of greenhouse-grown produce reaching 607.1 thousand tons – 31% higher than the volume cultivated 2015.
Minister stresses need for modernisation in Russian agriculture
The domestic agricultural sector might be in high spirits at present, but Russia’s Minister of Agriculture Aleksandr Tkachev has warned Russian farmers not to get complacent. “We are aware that, sooner or later, the sanctions will be lifted,” Mr Tkachev told RIA Novosti in April 2017. “Russian farmers must be prepared for when Western products hit our markets again.”
Russian producers are being encouraged to increase the competiveness of their products – not just for domestic markets, but to prime them for export too. China, the world’s largest international market for Russian food, is set to bump up its annual Russian imports to 52 million tons by 2028 – heaping more pressure on Russia’s agricultural sector.
More funding for agricultural equipment on the way
Russia’s government has poured billions into subsidies for the agricultural sector – to the tune of $2.9 billion in 2016 – with a significant chunk set aside for purchasing new cutting-edge growing, harvesting, and processing equipment and machinery. Now, further funding is on the horizon.
22% of all of Russia’s farming and food production machinery is imported annually, creating a huge market for international manufacturers to enjoy. Roughly half of all equipment used in the Russian agriculture industry is of foreign origin, so Russians already know and use internationally-sourced equipment essentials.
A further $240 million cash injection is being readied for 2017, which will enable Russian farmers to buy an additional 21,000 new pieces of equipment – more than twice the amount purchased throughout 2016. Some of the other product areas in high demand across Russia include:
• Greenhousing & plant growing equipment
• Food processing, animal breeding & vegetable cultivation equipment
• Harvesting equipment
• Heavy machinery, such as tractors, seeders & combine harvesters
The need for modern farming, processing, and production equipment and machinery will remain high in Russia while sanctions last and food import substitution remains a major policy. If your business can supply the in demand products, then be sure to keep your eyes firmly fixed on the Russian market.