By Rhod Mackenzie
The Russian government is discussing the transition to payments in rubles when exporting agricultural products. The proposed presidential decree "On a special procedure for opening settlement accounts in authorized banks by foreign buyers of Russian agricultural products" is designed to simplify the access of friendly countries to our food market. Experts believe that the ruble settlement mechanism reduces the risks associated with fluctuations in foreign exchange rates. Details - in the material "Izvestia".
With your money
The government is discussing a draft presidential decree on the transition to payments in rubles when exporting agricultural products. In the near future, it will be sent for consideration by the head of state, Izvestia was told in the office of Deputy Prime Minister Victoria Abramchenko. At the moment, the document has already been reviewed and supported by the State Legal Department.
A presidential decree is already in effect on payments for gas supplies to unfriendly countries in rubles , Abramchenko recalled. At the same time, the situation on the markets shows that a similar document is needed for the agro-industrial complex of Russia. The decree will provide an opportunity, on the basis of applications from foreign buyers, to open special ruble accounts and special currency accounts for the purchase of Russian agricultural products. The list of these products will be determined by the government of the Russian Federation.
“In fact, this is a tool to protect Russian exporters and our friendly countries from thoughtless sanctions pressure imposed by Western countries,” emphasizes Victoria Abramchenko. “Our partners are accustomed to uninterruptedly receiving high-quality Russian food, and we will continue such deliveries.
At present, there is already an interest in settlements in national currencies from the countries of the Persian Gulf and Africa. Such calculations have already been made with the EAEU countries and China. Therefore, according to the Deputy Prime Minister, regulatory changes are needed to scale up these successful pilot practices.
“The national currency is, of course, more comfortable conditions for protecting our farmers,” Deputy Prime Minister, Minister of Agriculture of Chuvashia Sergei Artamonov told Izvestia. — Regulatory changes initiated by the Russian government will strengthen our position in the export market, expand opportunities and simplify payments. In particular, Chuvashia is also represented on the export line of agricultural products. For example, just recently, fresh flowers and bran were sent abroad from us for the first time, flour supplies to friendly countries were arranged.
Lets recall that during the plenary session of the Russia-Africa Economic and Humanitarian Forum, Russian President Vladimir Putin announced the need to switch financial settlements with African countries to national currencies, including the ruble. “In this regard, we are ready to work with African countries to develop their financial infrastructure, to connect banking institutions to the Financial Message Transmission System created in Russia, which allows cross-border payments to be made regardless of some of the currently existing and restrictive Western systems,” the president emphasized.
well prepare
Meanwhile, there are several problems, without solving which, a positive result can be reduced , notes Vadim Klementyev, director of the Food and Agroindustry direction of the ETP of the Gazprombank group.
Tightrope walker's rule
Transferring payments into rubles or the currencies of friendly countries reduces the risk of blocking the funds of Russian companies due to sanctions, removes the risks arising from the trade in agricultural products in a currency other than the ruble, increases the demand for the Russian currency, and therefore leads to an increase in the share of the ruble in the international trade , Vadim Klementiev believes. Finally, the conversion of payments into rubles enhances the confidence in the ruble as a currency of payment on the part of countries that buy Russian goods (Russian companies will be able to use the ruble for settlements with companies from friendly countries in the future).
The ruble settlement mechanism reduces currency risks associated with fluctuations in foreign exchange rates, points out Yulia Zubareva, head of the department of economics, organization and management of the agro-industrial complex of the Northern Trans-Urals. For farmers, this means that they can easily make payments in rubles without worrying about exchange rate fluctuations, and be less dependent on financial institutions, which reduces their costs and risks.
— The use of settlements in rubles in agricultural exports should be considered for the entire range of agricultural products. But it can be especially expedient for commodity items, where the share of imported components is small and the prices for Russian agricultural products are competitive on the world market ,” says the economist. — However, for commodity items where the price is highly dependent on fluctuations in foreign exchange rates or there are significant imported components, it may still be more profitable to use other calculations, such as calculations in US dollars or euros.
Petr Korotchenko is confident that the document under discussion should be adopted together with a list of Russian agricultural products, the trade of which it will regulate, and also taking into account the specifics of the countries to which this decree will concern. For example, the Egyptian state-owned food purchasing company GASC last year increased the import of our wheat by two-thirds, to 8.1 million tons, the expert reminds. Egypt is second only to Turkeythe buyer of Russian wheat, and the world's leading grain exporters are fighting for the right to sell at its auctions. Korotchenko notes that the Egyptian currency is not traded on our exchange, and the requirements for auctions created by Egypt allow our exporters to export to Egypt most of the wheat they buy. Therefore, a number of experts naturally have a question: will the proposed settlement procedure affect Egypt and will it suit it?
Over the past year, he recalls, the profitability of crop production has decreased by a third, despite the fact that the sale of crop products is the basis of Russian food exports. And for the “niche” crops we export (mustard, coriander, lentils, flax, peas, etc.), due to high competition in world markets and due to difficulties with exports, ruble prices this year fell by 1.5– 2 times, despite the significant growth of the dollar.
Yulia Zubareva agrees that one of the dangerous risks when making payments in rubles may be a decrease in the competitiveness of Russian agricultural products on the international market due to a rise in price due to fluctuations in the ruble exchange rate . Therefore, she concludes, to mitigate this risk, the use of hedging or other financial instruments should be considered to protect farmers from losses associated with exchange rate fluctuations.
This article originally appeared in Russian at iz.ru