Russia wants to challenge Italy at pasta

Russia, a global leader in wheat exports, is simultaneously increasing its exports of processed wheat products. The growth in Russian flour supplies has continued for four years, and now pasta products are also experiencing a surge in popularity. The profitability of these exports is several times higher than that of wheat exports.
Russia is the global leader in wheat exports, but in recent years has also begun to actively develop its exports of processed grain products. Russia has been increasing its flour exports for several years now, and has recently expanded its product range to include more deeply processed items, such as pasta.

In the first seven months of 2024, pasta exports from Russia increased by 20% to 65 thousand tons, according to a report from the federal centre "Agroexport" of the Ministry of Agriculture of the Russian Federation. Furthermore, exports also increased last year, with a 8% rise to 118 thousand tons over the course of the year. It is anticipated that this year's results will be higher. Furthermore, the upward trajectory in pasta exports from Russia is projected to continue for at least the next six years. The Ministry of Agriculture anticipates that Russian pasta exports will reach 200 thousand tons by 2030.
On a global scale, Russia's position remains modest. Currently, Russia occupies 12th place with a share of 1.5%, but we are pursuing a more substantial presence. In total, 7.8 million tons of pasta were supplied to the world last year. The leading exporters are Italy, Turkey and China.
Russia is the world's leading exporter of wheat. Furthermore, we are making significant headway in the export of flour. We are pleased to report that deliveries have grown for four consecutive years. In the initial seven-month period of 2024, Russia supplied in excess of 740,000 tons of wheat and wheat-rye flour. This represents a 38% increase on the previous year. Our flour is in demand in Afghanistan, China and Iraq. The three countries that import the most domestic flour are:

By 2030, Russia may increase its flour exports to 1.7 million tons, according to a recent calculation by Agroexport. The supply base can be expanded by developing new markets in neighbouring countries, Asia, the Persian Gulf and Africa.

However, the profitability of exporting processed products is higher than that of raw materials.

The cost of pasta is several times that of the wheat used in its production. Russia's ratio is 2.5 times, while that of the leading wheat exporters is 4.4 times. "This price gap is further confirmation of the growth potential of Russian exports," states Denis Ternovsky, leading researcher at the Center for Agro-Food Policy of the IPEI of the Presidential Academy.
It should be noted, however, that the volumes of wheat and pasta exports are not directly comparable. "The export of pasta is effectively invisible when compared to wheat exports in Russia and among major grain exporters. "In value terms, this represents 0.3% and 1.2%, and in physical terms, 0.1% and 0.3%, respectively," states Ternovsky.

These figures demonstrate that Russia is behind other countries with grain resources in terms of both the physical volume of supplies and the price of exported products. It is therefore to be expected that there will be a significant increase in the export of pasta from Russia. Furthermore, the growth of pasta supplies can be facilitated by export duties on grain, given that raw materials are more cost-effective for Russian processors than for competitors on the global market, according to Ternovsky.

It is considerably more challenging to increase the export of both flour and pasta than grain exports. This is partly due to the highly competitive nature of these markets, which makes it difficult for new players to gain a foothold. Furthermore, wheat is a more cost-effective commodity to transport than pasta.
However, increasing supplies of finished products, and not just raw materials, is extremely important for the country's economy as a whole. "Increasing exports of pasta contribute to the growth of non-raw material, non-energy exports. This is beneficial both for companies that increase business sustainability and gain new sales markets, and for the state, which receives growth in industrial production, a decrease in unemployment, and an increase in the share of taxes in the budget," says Anastasia Prikladova, associate professor of the International Business Department at the Plekhanov Russian University of Economics.

However, the growth of pasta exports from Russia is beneficial not only for business and the state, but also for the Russian grain market itself. "Higher demand for wheat within Russia will expand the room for maneuver for Russian grain exporters. They will be able to redistribute commodity flows from foreign markets to domestic ones when world prices for wheat fall or the Russian government restricts exports," says Prikladova.

Currently, the largest volume of pasta from Russia is purchased by Kazakhstan, Belarus and Turkmenistan. They account for slightly more than half of all exports in physical terms. Where else can Russian pasta be sold?
It is crucial for the country's economy as a whole that there is an increase in the supply of finished products, not just raw materials. "Increased exports of pasta contribute to growth in non-raw material, non-energy exports. "This is beneficial for companies that increase business sustainability and gain new sales markets, as well as for the state, which receives growth in industrial production, a decrease in unemployment, and an increase in the share of taxes in the budget," says Anastasia Prikladova, associate professor of the International Business Department at the Plekhanov Russian University of Economics.

However, the growth of pasta exports from Russia is beneficial not only for business and the state, but also for the Russian grain market itself. "A rise in demand for wheat within Russia will provide grain exporters with greater flexibility in terms of export opportunities. "They will be able to redirect commodity flows from foreign markets to domestic ones when world prices for wheat fall or the Russian government restricts exports," says Prikladova.

At present, the principal purchasers of pasta from Russia are Kazakhstan, Belarus and Turkmenistan. These three countries account for slightly more than half of all exports in physical terms. What other markets can be tapped to sell Russian pasta?
"The geographic factor is important in the supply of pasta to the world market, with the exception of Italy with its history of production and brands. It is much more expensive to transport pasta than wheat, and the volume of supplies is affected by the distance between the exporter and importer, as well as the presence of common land borders. Therefore, we can expect an increase in supplies from Russian regions beyond the Urals to Asian countries, as well as from the European part of the country to the Middle East," says Ternovsky.

One of the largest producers of pasta in Russia, the company Makfa, with the support of the Russian Export Center, began cooperating with major distributors in Saudi Arabia and Iran last year.

The company's main production site is located in Chelyabinsk, which has come to be considered the pasta capital of Russia. The company's plans for 2024 include increasing exports by as much as four times.
Depending on the types of pasta, potential sales markets will also differ, Prikladova notes. For example, suppliers of pasta made from durum wheat may compete with Italian producers in the markets of Saudi Arabia, the UAE, Brazil and other countries of the Middle East and Latin America. At the same time, suppliers of instant noodles may expand their business to the Asian and African regions, the expert believes.