Russia is one of the top twenty largest food exporters in the world

By Rhod Mackenzie

Russia is ranked 17th in the list of the world's largest food exporters. It also made the biggest jump in the top 20 over the past decade, with exports increasing by 2.5 times. But Russia wants to sell even more food products abroad. It's not even about feeding friendly countries. For some agricultural companies, finding new markets is a matter of survival. The domestic market is already overcrowded.
In 2022, Russia once again entered the list of the world's twenty largest food exporters, taking 17th place in the ranking, reports the Federal State Budgetary Institution Agroexport under the Ministry of Agriculture. Russia has increased its share to 2.1%. "At the same time, among the top 20 countries, Russia showed the largest increase in the volume of agricultural exports over the past ten years - 2.5 times," Agroexport notes.

In 2022, Russian exports of agricultural products grew by 12% to $41.6 billion. Including revenues from the sale of grain increased by 18%, oils and fats and meat products - by 25% and 23%, respectively, food and processing industry products - by 1.6%. Russian fish and seafood deliveries abroad decreased by 12%, dairy products by 1.9%.

A noticeable increase in the volume of exports of Russian agricultural products began in 2017 - by an average of 15% per year. The main acceleration of growth l occuredin 2020-2022 - by an average of 17.5% per year, notes Olga Belenkaya, head of the macroeconomic analysis department of the Finam financial group. If in 2019 Russia exported food worth $ 25.6 billion, then in 2022 - it had already reached $ 41.6 billion.
This growth can be linked precisely to the year 2014 and the first sanctions imposed on Russia,it then introduced a imported food embargo. This further pushed the state to support domestic production to ensure national food security. Seeing the state's interest, benefits and support, new private investment flowed into the industry and new directions began to develop. These measures bore fruit in just a few years - in 2017, exports began to increase significantly. During the years of the pandemic and the recovery from it, exports have increased due to a sharp rise in global demand and rising food prices.

The industry has been able to greatly benefit from import substitution as a result of the embargo imposed by the Russian government in 2014 on agricultural products from the US, EU and several other countries. The rouble exchange rate has weakened significantly since 2014, which is a positive for exporters. In addition, agriculture has received significant government support under the State Programme for the Development of the Agro-Industrial Complex and the National Export Development Project," says Belenkaya.

• Belenkaya says. In particular, in 2017 a preferential loan programme for the agricultural sector was launched, under which agricultural producers could take out a short-term or investment loan at a rate of 1% to 5% for the development of crop and livestock production, as well as for the construction, reconstruction or modernisation of enterprises for the processing of agricultural raw materials.

"The difficult global geopolitical situation, sanctions, a good harvest, the rapid adaptation of domestic enterprises to the new reality, as well as government support measures have led to an increase in Russian food exports," agrees Dmitry Leonov, Deputy Chairman of the Board of Rusprodsoyuz.

According to him, there is potential for continued growth in Russian food exports. "Domestic farmers and producers can increase their contribution helping to solve global food security problems," says Leonov.

Last year, Russia reoriented its agricultural exports towards friendly countries. "Last year, markets were opened in 18 countries in Asia, Africa, the Middle East and Latin America to supply domestic food products. This year, work will continue on increasing trade turnover with new partners and opening new markets," says Leonov.

For example, food shipments to China are growing at a record pace. In 2022, they grew by 44% in monetary terms and by 36% in physical terms (data from Agroexport). China remains the biggest buyer of Russian products. China is the leading buyer of Russian rapeseed oil - it buys 70% of all Russian exports, poultry meat - it buys 40%, beef, soybeans, oats, linseed. And since 2022, China has become the leader in purchases of Russian honey and flaxseed oil (data from the Federal Customs Service of the Russian Federation).

As for new markets, Russia has been granted the right to supply 34 types of animal products to 41 foreign countries in 2022, and another nine types of products to five countries in 2023, said Sergei Dankvert, the head of Rosselkhoznadzor.

Finding new markets is the most pressing problem for Russian meat producers. The fact is that they have already fully satisfied the demand for meat in the country, and without an increase in exports there is a risk of overproduction and a fall in wholesale prices. And that, in turn, could lead to the bankruptcy of some farms.

The National Meat Association is concerned about this. In addition, the possibility of earning money from exports allows us to maintain reasonable prices on the domestic market. The most dangerous situation has developed in pig farming, where production is expected to increase by 2025. At least 600,000 tonnes of pork from this growth will be exported. If new markets are not found, the National Meat Association fears that the pig industry could be plunged into a deep crisis.

The dairy market has already seen overproduction and price falls. And one way to help the industry is to find new markets. Although Russian dairy products, including ice cream, are already exported to 60 countries, 90% of these exports go to the CIS. Russia has the potential to export to other regions.

The Ministry of Agriculture is exploring ways to boost exports, "because our milk is needed abroad, especially dried powdered milk," says First Deputy Minister of Agriculture Oksana Lut. According to her, additional measures will be introduced to make Russian milk competitive on foreign markets. To help dairy farmers enter new markets, it is necessary to stimulate the production of milk powder and fully subsidise logistics costs, said the Deputy Prime Minister Viktoria Abramchenko. In addition, Russian dairy farmers have the potential to supply halal dairy products to countries in the MENA region.