Russia doubles grain exports despite difficulties with sanctions.

By Rhod Mackenzie
For the first time in at least three years, Russia has more than doubled its grain exports. According to the Federal Customs Service, by mid-September exports had reached 44.6 million tonnes. At the same time, the share of agricultural exports to 'so called' friendly countries rose to 87%. This information was contained in the statement of the Ministry of Agriculture, prepared by the Minister of Agriculture Dmitry Patrushev for the government session in the State Duma. Earlier, the Russian President Vladimir Putin said that this season's grain exports should total around 60 million tonnes. Will it be possible for Russia to maintain the momentum until the end of the year?

Another record
The Ministry of Agriculture, in preparation for the government meeting, in the State Duma, which will take place at the end of September,the minister Dmitry Patrushev has already prepared answers to questions he expects from the different parties at this event. The document has already been sent to the lower house of the Russian parliament.. The document states that according to the Federal Customs Service as of 11 September, grain exports have increased 2.2 times this year and amounted to 44.6 million tonnes. We are talking about the data starting from 1 January2023.

Analysts confirm from the beginning of the agricultural year (which begins on 1 July 2023 and continues until 1 July 2024) and up until today, this trend has continued. Thus, the Russian Federation has already exported 16.5 million tonnes abroad, according to Alexander Korbut an independent grain market analyst.He said that in the previous season, 2022/23, the figure for this period was 9.5 million tonnes.
The increase in grain exports at the beginning of this agricultural year is due to the large carry-over stocks from the previous season, the Ministry of Agriculture noted. In 2022-2023, farmers received a historic harvest of 157.7 million tonnes of grain, the ministry recalled. At the same time, a record 60 million tonnes were exported abroad. Currently, producers have already amassed more than 123 million tonnes of grain.

" According to the forecast of the Ministry of Agriculture, Russia will deliver up to 60 million tonnes of grain abroad this season,"

" Despite all the difficulties faced by our exporting companies, Russian producers and processors have managed to shift the vector of their activities towards friendly countries, some of which are neighbouring countries," the ministry's documents state. Thus, the share of exports of agricultural products to these countries increased to 87%, according to the data based on the results of the first half of the year.

According to Oleg Barabanov, the programme director of the Valdai Club, the export of Russian grain has faced extremely high logistical difficulties. First of all, the passage from the Black Sea ports is now unsafe, which has led to an increase in insurance premiums and the refusal of many insurers to work with Russian companies grain; alternative routes through the Far East are quite expensive from a logistical point of view. The fact that the country has managed to increase supplies is a good sign: the sector is adapting, he stressed.
" Exports to the unfriendly countries in Europe and Asia have not been particularly large, with a traditional preference for Africa and the Middle East - the very countries that are now in the friendly category," Barabanov pointed out.

Growth rate
This year's export figure is likely to be a historical record for at least the last three years, Alexander Korbut pointed out. One of the main reasons for this dynamism is that domestic producers sell their products at a discount compared to other countries, he noted, adding that the price of Russian grain has been reduced due to sanctions. For example, European grain now sells for $250-255 per tonne, while domestic grain sells for $242, and the price has fallen by around 20% over the year.
" This year's potential exports are likely to be quite high, we can already say that at this rate the country can export more than 60 million tonnes of grain abroad," the analyst is confident. - Everything will depend on the export quotas set by the Ministry of Agriculture, which can either smooth out the already apparent trend by limiting the volume of exports or maintain it. But it is worth remembering that earlier President Vladimir Putin predicted grain exports of 60 million tonnes; most likely the ministry will aim for this figure.

He emphasised that the Russian Federation accounts for more than 20% of world exports, which puts it in the leading position. Russia traditionally sells grain to countries such as Turkey, Saudi Arabia, Bangladesh, Algeria and other plus African countries,also volumes to Indonesia, Egypt and Brazil. Alexander Korbut noted that it is still difficult to estimate Russia's income from its exports, but he thinks its about $14 billion. If the season is successful, the revenues could be higher, he suggested.
The high grain export figures now being recorded could be linked to the "disastrous" start to the last agricultural season, suggested Arkady Zlochevsky, president of the Russian Grain Union. However, the pool of buyers was expanded in 2022, with Algeria, for example. The country used to buy grain from France but now from Russia, the official noted. Saudi Arabia is also increasing its purchases,plus traditional buyers remain - Egypt and Turkey, Bangladesh and so on. The export geography for Russia grain is very wide, he added.
The Middle East, China and other Asian countries could become promising markets in the near future,said Alexander Daniltsev,the head of the Institute of Trade Policy at the Higher School of Economics,
"The demand for meat products is also growing in these countries, so some of this grain can be used for animal feed,particularly in the Middle East, where we are now seeing good demand," he noted.

In addition, countries in the region often act as hubs for the further distribution of the resources. Turkey, for example, processes grain into flour, which then goes to Africa and some of the poorer countries of the World, he concluded.