Russian agriculture thrives as sanctions close off impor

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  1. rasputin Forum Veteran

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    https://www.ft.com/content/09632e20-88bf-11e7-8bb1-5ba57d47eff7


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    https://www.ft.com/content/09632e20-88bf-11e7-8bb1-5ba57d47eff7

    If western sanctions aimed to cripple Russian business, nobody told the country’s fish farmers.In the cold waters of the Barents Sea, Russian Aquaculture, the country’s largest salmon producer has increased production more than six-fold so far this year, as part of a boom in the country’s food and agriculture industry caused by restrictions on western imports.Around Russia, farms, fields, greenhouses and fertiliser factories are thriving as consumers turn to domestically-produced food, helped by the worst relations between Moscow and the west for a generation.After the EU and US imposed sanctions on some Russian businesses following the country’s invasion of Ukraine and annexation of Crimea in 2014, Moscow hit back with sweeping bans on western food imports.Overnight, about 60 per cent of the country’s total meat and fish imports were banned, and 50 per cent of dairy, vegetable and fruit imports — creating a huge opportunity for domestic producers. Total food imports from the EU fell 40 per cent between 2013 and 2016.“Russian agriculture is booming,” said Andrei Guryev, chief executive of major Russian fertiliser company PhosAgro. “[And] we certainly see a lot of interest from foreign investors.”


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    Russian Aquaculture produced 664 per cent more fish in the first half of 2017 compared with last year, and recently opened a new 1,500 tonne fish farm, as part of plans to double its fish stocks over the next year. Business is so good it is preparing for a secondary share listing “in the near future”.Ilya Sosnov, chief executive, said that he aimed to increase production to 25,000 to 30,000 thousand tonnes of fish by 2025. “We expect to eventually have a market share of around 25 per cent in Russia, which is currently dominated by importers.”Meanwhile, sales at Rusagro, the country’s largest agriculture company, rose 16 per cent in 2016 compared with the year before, including a 49 per cent increase in sales of crops such as wheat and corn. Wheat production at Steppe, a company owned by conglomerate Sistema, grew 80 per cent last year.


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    Nikolay Kovalev, a research analyst at VTB Capital, said that food and agriculture companies in Russia spent $5bn in capital expenditure in 2016 and that in the past few years, local producers have had chances to win market shares, “particularity in fruit, vegetables, cheese, milk, and meat categories”.Shares in Rusagro, PhosAgro, and meat producer Cherkizovo have more than doubled since 2014. Russian Aquaculture’s have quadrupled.Steppe is in talks with investment bankers about an initial public offering that could take place next year or in 2019. The company is buying 130,000 hectares of land this year to take its total holding to 500,000 hectares, and is investing in new greenhouses for cucumber and tomato production.


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    At the same time, Renova, a Russian investment group owned by billionaire Viktor Vekselberg, is investing €390m in greenhouses, the company’s first move into agriculture.PhosAgro, whose shareholders include Fidelity and BlackRock, in April placed a $500m bond at 3.95 per cent, its lowest ever, while Spanish agriculture company Grupo Fuertes last month increased its shareholding in Cherkizovo to 8 per cent, taking its total investment to $77m.Mr Kovalev estimates that Russia-listed agriculture companies trade at a 35 per cent discount to similar companies in other developed and emerging markets and present “appealing investment opportunities in the long term”.Russian wheat production is set to surpass the output of the heady Soviet days of heavy investment in state-run collective farms © BloombergRussia is forecast to produce more than 130m tonnes of grain this year, according to Moscow-based agriculture consultancy ProZerno, surpassing the record achieved by the Soviet Union in 1978, during a period of heavy investment in state-run collective farms.The country could export a record 40m tonnes this year, agriculture minister Alexander Tkachov said last week. Last year it overtook the US in wheat exports for the first time for decades, and is expected to dethrone the EU as the world’s largest exporter this year, according to the US Department of Agriculture.


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    New sanctions imposed by Washington in recent weeks suggest relations are unlikely to improve soon, meaning agricultural producers are investing for the long run.“The sanctions gave us a head start. And I believe the anti-food sanctions will be the last ones to be lifted,” Mr Guryev told the FT.“The west is shooting itself in the foot. Sanctions were meant to hurt Russia, but Russian agriculture has benefited,” said Jim Rogers, a US investor who has shares in PhosAgro and sits on its board.“Money is coming in, and expertise is coming in,” said Mr Rogers, who last month joined the board of AgroGard, a Russian crop and livestock producer. “Five years from now, it will be fully embedded and fully capable. Someone should tell the Americans to lift the sanctions now, before there’s a gigantic, efficient, well-funded industry here.”While 145m Russians provide a good-sized domestic market, many Russian agriculture companies see their long-term growth in exports.“Russia will feed the world. No doubt. We have arable land, water, technology and infrastructure already in place,” said Mr Guryev. “It is quite simple. Countries will simply be faced with a scarcity of food. So they will look at Russia, and invest in Russia, to protect themselves.”





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  2. WFHermans Forum Veteran

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    The Second Crimean War could very well become a worse disaster than the 1853-1856 one was. The sanctions already cost zio-western agriculture and industry, especially in Europe, tens of billions in lost trade alone, and will inevitably cost billions more even if the sanctions are ended today. Russia has now learned to produce everything it imported itself (for instance beef and diary produced by cows). Meanwhile our overlords are importing millions of subhumans and threatening war against Korea, Russia, Iran, Venezuela - just for starters.
  3. rasputin Forum Veteran

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    @WFHermans

    https://www.agweb.com/article/danone-sends-5000-cows-to-siberia-in-quest-for-cheaper-milk-blmg/
    Danone Sends 5,000 Cows to Siberia in Quest for Cheaper Milk


    President Vladimir Putin’s ban on European Union cheese imports has driven up milk prices in Russia by so much that French yogurt maker Danone is transporting almost 5,000 cows to a farm in Siberia to ensure it has an affordable supply.
    The Holstein cows are traveling as many as 2,800 miles (4,500 kilometers) in trucks from the Netherlands and Germany, boosting the herd on a farm near the city of Tyumen, according to Charlie Cappetti, head of Danone’s Russian unit. That should protect the company from the increase in raw milk prices, which are up 14 percent this year, he said.
    “Milk prices have been going up steadily,” Cappetti said in an interview in Moscow. “That puts products such as yogurt under pressure.”
    While the French dairy company doesn’t normally invest in agriculture, it made an exception for Russia. After Putin’s ban on dairy imports took hold in 2014, demand for milk surged as local cheesemakers rushed to replace French camembert and Italian pecorino. That has exacerbated the inflationary effects of the ruble’s weakness.
    Danone invested in the 60-hectare (150-acre) farm with local producer Damate, Cappetti said. The first cows started to provide milk for Danone in May, and a final shipment of cattle is due to arrive in September.
    “We hope that Russian milk inflation will slow down next year,” the executive said. The difference between supply and demand is narrowing as new milk is coming to the market, including from the Siberian farm.
    While easing milk inflation may help the Russian dairy market rebound in volume terms, Danone isn’t expecting a fast economic recovery in the country, according to Cappetti. Sales in Russia have been growing in line with inflation in the first half and should rise in 2018, he said.
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