Agriculture and Food Industry in Russia, Ukraine, Belarus and Kazakhstan. Market Research Department, SCHNEIDER GROUP May 2018

Transcription

1 Agriculture and Food Industry in Russia, Ukraine, Belarus and Kazakhstan Market Research Department, SCHNEIDER GROUP May 2018

2 Contents Executive Summary Chances and Opportunities General Socio-Economic Indicators General Socio-Economic Statistics: Food Baskets and Subsistence Minimum Role in the National Economies Main Agricultural Regions Agriculture and Food Foreign Trade Key Regulations Appendix: Milk and Cheese Industry This report is an overview of the agricultural sector in Russia, Ukraine, Belarus and Kazakhstan. The extended version of the report provides additional market information. It offers a special insight on the Milk and Cheese industry of the countries, detailed information on the production and consumption, average price, imports and exports of milk products and cheese, and shares of key market players in four countries. We would be happy to provide you with this extended version upon your request. Also we are happy to provide you with analysis on any specific subject you are interested in. To learn more, please contact us 2

3 Executive Summary (1) Relative market size by country from a total of USD 294bn based on sales in 2017, % 9% 4% 3% 84% Food imports vs. local production in USD terms in 2016, % Kazakhstan Belarus Ukraine Russia 25% 28% 17% 18% 75% 72% 83% 82% Russia Ukraine Belarus Kazakhstan Sources: National Statistical Agencies, BMI Imports Local production Sources: National Statistical Agencies, Customs Services Market size Combined size of the food markets of Russia, Ukraine, Belarus and Kazakhstan totaled USD 294bn* in The Russian market, with sales at c. USD 247,6bn in 2017 or 84% of the combined market size, is the largest. This proportion is broadly repeated in the allocation of population among these countries. Imports vs. local production Local production dominates all the markets in value terms. Imports are between 17% and 28% in value terms, with a similarity of import shares in Russia and Ukraine (17-18%) and in Belarus and Kazakhstan (25-28%). Fruit and meat remain the most imported categories among agricultural goods both in value and volume terms. Main export shares in Russia are taken by cereals and fish products (36,2% and 17,1%). *Devaluation of local currencies has significantly affected sales in foreign currency terms 3

4 Executive Summary (2) Food production, % of GDP 20,6 22,1 7,5 3,6 Russia Ukraine Belarus Kazakhstan Sources: National Statistical Agencies, IMF Development of food sales in local currencies, % Russia Ukraine Belarus Kazakhstan Sources: National Statistical Agencies, BMI Role of agriculture in the national economies Agricultural production accounts for a significant role in the national economies of Ukraine and Belarus (20,6% and 22,1% of GDP). These numbers are smaller for Russia (7,5%) and especially Kazakhstan (3,6%). However, Kazakhstan s agricultural sector is among the most promising in the world This allocation can be partially explained by the favorable climatic and geostrategic conditions. Agricultural sectors in most of the countries suffer from the lack of farming efficiency and remain below their potential. All agricultural markets grew over the last years despite the difficult economic environment. The Belarussian market has grown the most by 18,2% on average (compared to the Russian 7,8%). High level of regional concentration of agricultural output is typical for Russia. There s been a permanent increase in production and consumption of fresh vegetables and low-fat meat, which reflects the preferences and purchasing power of the population. 4

5 Executive Summary (3) Average subsistence minimum, 2017 $172,2 $61,1 $158,3 $75,0 Russia Ukraine Belarus Kazakhstan Sources: National Statistical Agencies Food basket and subsistence minimum Based on changes in economic environment the value of consumer baskets (subsistence minimum) and therefore food baskets is reviewed at different time periods by the governments and a number of regional authorities. Subsistence minimum is established for various population groups. It is the highest in Russia with more than $172 and the lowest is in Ukraine $61. Russian Food Embargo In August 2014, Russia imposed an embargo on the import of products from the EU, the U.S. and a number of other countries in response to the restrictive measures applied against Russia. Since then a significant restructuring of the agricultural sector, including the foreign trade, in four countries has been observed. The agricultural legislation in all the countries is moving towards establishment of the comprehensible Agricultural Law. It is currently the most complex in Ukraine (on average, 1000 regulations for the agro-industrial sector). Milk and Cheese industry Belarus is leading in milk and cheese production, import and export among all four countries. The highest prices for milk and cheese through the years remain in Russia. The highest per capita milk and cheese consuming countries are Belarus and Russia. The markets are quite concentrated. Usually, there are 5-7 leaders controlling more than 50% of the market. 5

6 Chances and Opportunities (1) Russia Significant opportunities offered by the large market Indicators 2017 General govt gross debt, USD bn 266,2 General govt gross debt to GDP, % 17,4% Consumer credit, USD bn 194 Consumer credit to GDP, % 12,7% Human Development Index (HDI) 0,804 Unemployment, % 5,2% GDP, USD bn Russia is a major market with 146,8mn inhabitants, of which 74% live in cities and towns and 26% live in rural areas. 77mn people are working-age (aged 15-72). Average life expectancy at birth: 70,1 years. According to OECD, 54% of those aged have attained a university degree. 12 th largest economy in the world in 2017 measured by GDP in real terms: USD 1 530bn. 6 th largest economy in the world in 2017 measured by GDP based on PPP valuation: USD 4 010bn. GDP per capita in 2017 at current prices: USD (and USD based on PPP). Annual progress in World Bank s Ease of Doing Business 2018 ranking: 35 th place in 2017 (2016: 40 th ). Corruption Perceptions Index score (Transparency International): 29 in 2017 (2016: 29) f Average exchange rates were used. Sources: Russian Ministry of Finance, National Statistical Agencies, Central Bank, UNDP, The World Bank, IMF, Tradingeconomics.com, own estimates 6

7 Chances and Opportunities (2) Ukraine A large market with great potential Indicators 2017 General govt gross debt, USD bn 82,4 General govt gross debt to GDP, % 75,6% Consumer credit, USD bn 4,3 Consumer credit to GDP, % 3,9% Human Development Index (HDI) 0,743 Unemployment, % 9,4% GDP, USD bn Ukraine is a big market with 42,5mn inhabitants, of which 70% live in cities and towns and another 30% live in rural areas. 24mn people are working-age (aged 15-70). Average life expectancy at birth: 72 years. According to the Ukrainian Institute of Demographics and Sociological Research, 76% of those aged have attained a university degree. 62 nd largest economy in the world in 2017 measured by GDP in real terms: USD 109,3bn. 50 th largest economy in the world in 2017 measured by GDP based on PPP valuation: USD 368,8bn. GDP per capita in 2017 at current prices: USD (and USD based on PPP). Annual progress in World Bank s Ease of Doing Business 2018 ranking: 76 th place in 2017 (2016: 80 th ). Corruption Perceptions Index score (Transparency International): 30 in 2017 (2016: 29) f Average exchange rates were used. Sources: IMF, UNDP, The World Bank, Tradingeconomics.com, own estimates 7

8 Chances and Opportunities (3) Belarus A bridge between the EU and the EEU Indicators 2017 General govt gross debt, USD bn 27,7 General govt gross debt to GDP, % 51% Consumer credit, USD bn 1,3 Consumer credit to GDP, % 2,4% Human Development Index (HDI) 0,796 Unemployment, % 1% 59,7 63,6 GDP, USD bn 73,1 76,1 54, ,4 Belarus is a major market with 9,5mn inhabitants, of which 77% live in cities and towns and 23% live in rural areas. 7,2mn people are working-age (aged 15-72). Average life expectancy at birth: 74,1 years. According to OECD, 19% of those aged have attained a university degree. 82 nd largest economy in the world in 2017 measured by GDP in real terms: USD 54,4bn. 74 th largest economy in the world in 2017 measured by GDP based on PPP valuation: USD 178,9bn. GDP per capita in 2017 at current prices: USD (and USD based on PPP). Annual progress in World Bank s Ease of Doing Business 2018 ranking: 38 th place in 2017 (2016: 37 th ). Corruption Perceptions Index score (Transparency International): 44 in 2017 (2016: 40) f Average exchange rates were used. Sources: IMF, UNDP, The World Bank, Tradingeconomics.com, own estimates 8

9 Chances and Opportunities (4) Kazakhstan The Central Asian tiger Indicators 2017 General govt gross debt, USD bn 34,1 General govt gross debt to GDP, % 21,2% Consumer credit, USD bn 13,2 Consumer credit to GDP, % 8,2% Human Development Index (HDI) 0,794 Unemployment, % 5% GDP, USD bn Kazakhstan is a major market with 18mn inhabitants, of which 53% live in cities and towns and 47% live in rural areas. 12,8mn people are working-age (aged 15-64). Average life expectancy at birth: 72 years. According to the CIS Interstate Statistics Committee, 34% of those aged have attained a university degree. 59 th largest economy in the world in 2017 measured by GDP in real terms: USD 160,8bn. 45 th largest economy in the world in 2017 measured by GDP based on PPP valuation: USD 477,6bn. GDP per capita in 2017 at current prices: USD (and USD based on PPP). Annual progress in World Bank s Ease of Doing Business 2018 ranking: 36 th place in 2017 (2016: 35 th ). Corruption Perceptions Index score (Transparency International): 31 in 2017 (2016: 29) f Average exchange rates were used. Sources: Tradingeconomics.com, IMF, UNDP, The World Bank, own estimates 9

10 General Socio-Economic Statistics (1) Population by Age Group Russia s population age groups, % of population 146,6m 147m 13,9% 17,2% Ukraine s population age groups, % of population 42,5m 42,4m 16,1% 19,0% 14,3% 12,2% >65 years 13,7% 13,1% >65 years 45,2% 41,6% years years 44,5% 42,4% years years 9,7% 10,7% 16,9% 18,4% years 0-14 years 10,3% 9,3% 15,5% 16,3% years 0-14 years Sources: World Bank, UN, BMI Sources: World Bank, UN, BMI Belarus s population age groups, % of population Kazakhstan s population age groups, % of population 9,6m 9,2m 17,7m 19,4m 14,7% 17,4% 14,0% 13,3% >65 years 7,4% 8,6% 9,8% 9,7% >65 years 45,0% 41,4% 10,7% 10,2% 15,7% 17,7% years years years 0-14 years 42,5% 40,0% 14,7% 14,1% 25,7% 27,6% years years years 0-14 years Sources: World Bank, UN, BMI Sources: World Bank, UN, BMI 10

11 General Socio-Economic Statistics (2) Russia: Food Basket and Subsistence Minimum Russia s food basket federal average Product Average expected consumption per capita annually, kg Workers Retirees Children Bread products (bread and pasta goods in terms of flour; flour, grains, 126,5 98,2 77,6 beans) Potatoes 100, ,1 Vegetables and melons 114, ,5 Sugar and confectionery (in terms of sugar) 23,8 21,2 21,8 Meat products 58, Fish products 18, ,6 Milk and dairy products (in terms of milk) ,8 360,7 Eggs, number Vegetable oil, margarine and other fats Other products (salt, tea, spices) 4,9 4,2 3,5 Source: Federal Law 227-FZ dated Russia s food basket establishes the thresholds of consumption of specific products by different population categories. They differ from one region to another. It is reviewed every five years and is approved as a Federal Law. Russia's subsistence minimum by population group, RUB per month The food basket is part of the consumer basket, which also includes non-food products, utilities and services (156 lines in total). Based on changes in prices and the economic environment in general, the value of the consumer basket ("subsistence minimum") is reviewed quarterly by the federal government and regional authorities. It is established for the three population groups as above. This level for Moscow was 55% higher than for the rest of the country in Per capita Working age Pensioners Children Source: National Statistical Agencies 11

12 General Socio-Economic Statistics (3) Ukraine: Food Basket and Subsistence Minimum Ukraine s food basket average Average expected consumption per capita annually, kg Product Non-working Able to work population Bread and bakery 114,4 113,2 Cereals 9 10,7 Potatoes Vegetables (including salted and pickled) 94 83,5 Fruit and berries 80 47,3 Sugar and confectionery 37 22,5 Vegetable oil and margarine 9,1 8,2 Meat and meat products Fish and seafood 13 11,5 Milk and dairy products 143,5 122,3 Eggs, number ,5 Tea and other hot drinks 0,9 0,83 Salt and spices 3,3 2,77 Source: Government Decree No. 780 dated Similarly, Ukraine s food basket establishes the minimum expected levels of consumption of specific products by different population categories. It was last reviewed in October 2016; changes are approved as a Government Decree. Ukraine's subsistence minimum by population group, UAH per month Overall The food basket is part of the consumer basket, which also includes non-food products, utilities and services (296 lines in total). The government reviews the value of the consumer basket ("subsistence minimum") at least once a year. It is established for the four population groups as above. Until 2017, the minimum wage level was very close to that of the subsistence level. Effective from 1 January 2017, minimum wage was doubled. Children under 6 Children aged 6-18 Able to work Unable to work Source: minfin.com.ua 12

13 General Socio-Economic Statistics (4) Belarus: Food Basket and Subsistence Minimum Food basket in Belarus average Average expected consumption per capita annually, kg Product Working Retired population population Bread and bakery 130,3 100,4 Cereals 16,1 9,5 Potatoes 124,1 91,3 Vegetables 142,5 95,1 Fruit and fruit juices 73,8 54,8 Sugar and confectionery 43,9 28,1 Vegetable oil and margarine 8,8 6,9 Meat and meat products 60,7 43,4 Fish and seafood 15,4 9,5 Milk and dairy products 152,7 151,1 Eggs, number 270,1 160,6 Tea 0,8 0,6 Salt 3,7 2,9 Sources: Decrees of the Ministry of Labor and Social Welfare No 107 dated and No 146 dated The food basket in Belarus establishes average expected levels of consumption of specific products by different population categories: a family of four, a young family of three, a working age person, a pensioner, a student, a child under 3, a child aged 3-6 and a child aged Minimum consumer budget by select population category in Belarus, BYR per month Jul-16 Aug/Oct- 16 Nov-16/ Jan-17 Feb/Apr- 17 Family of 4 Young family of 3 Working population Retired population Students Source: Ministry of Labor and Social Welfare, myfin.by It is reviewed every five years, previous revision was in 2014; changes are approved as a Decree of the Ministry of Labor and Social Welfare. The food basket includes more than 100 lines. Considering price changes, the value of the consumer basket ("minimum consumer budget") is reviewed by the government at least every four months. The price level of the previous quarter is used as a basis for calculation. 13

14 General Socio-Economic Statistics (5) Kazakhstan: Food Basket and Subsistence Minimum Food basket in Kazakhstan average Product Average expected consumption per capita annually, kg Working population Retired population Bread and bakery 156,37 116,65 Cereals 19,8 15,1 Potatoes 94,1 85,3 Vegetables 99,2 76,9 Fruit and fruit juices 30,1 22,8 Sugar and confectionery 22 16,6 Vegetable oil and margarine 11,32 9,26 Meat and meat products 50,5 40,6 Fish and seafood 9 7,6 Milk and dairy products 117,3 95,2 Eggs, number Tea 0,87 0,67 Salt and spices 2,91 2,23 Source: Joint Decree of the acting Minister of Health and Social Development No. 623 dated and acting Minister of National Economy No. 585 dated The food basket in Kazakhstan establishes the thresholds of consumption of specific products by different population categories: population in general, children aged 0-13, adolescents (boys and girls), population able to work >18 (men and women) and pensioners. The food basket includes more than 40 lines. Minimum consumer budget in Kazakhstan, KZT per month Source: Law on Kazakhstan s National Budget for No. 26-VI dated The basket was last revised in A new revision process was launched in December The Ministry of Labor and Social Welfare has been responsible for the process. Based on changes in prices and the economic environment in general, the value of the consumer basket ("minimum consumer budget") is reviewed by the government at least every year; changes are approved in the Law on Kazakhstan s National Budget. 14

15 Role in the National Economies (1) Key Sector Statistics 2017 Russia Ukraine Belarus Kazakhstan Agricultural employment, % of total working population Food production employment, % of working population Average salary in agriculture, USD Average salary in food production, USD 9,2% 17,6% 9,6% 16,2% 2,6% 3,6% 3,9% 3,5% Food sales, USD bn 247,6 26,3 11,1 8,9 Arable land, % of land area 7,5% 56,2% 30% 10,9% Cattle stock, thou. heads Annual milk output, thou. tons Sources: National Statistical Agencies, World Bank, U.S. Department of Agriculture, UN Food and Agriculture Organization, CLAL (Italy) 15

16 Role in the National Economies (2) Agriculture and Food Production Global perspective: GVA contribution of agriculture in certain countries in 2016, % Food production in 2016, % of total industrial production 17,4% 13,7% 14,0% 4,7% 7,9% 4,8% 5,5% 8,6% 3,8% 2,4% 7,0% 1,6% 1,6% 1,0% 4,2% 12% 25% 25% 9% Russia Ukraine Belarus Kazakhstan Sources: World Bank In terms of the agriculture sector s contribution to GVA, Russia is in the group of 15 countries (where the share is between about 4% to 5% of GVA). Other major emerging economies (like China, India and Indonesia) each display a share of more than 8% of GVA. Food production in Ukraine and Belarus makes about 25% of total industrial production, which considerably exceeds these numbers for Russia and Kazakhstan. The highest per capita value of produced agricultural goods is in Belarus (1 095 USD). Food production in 2016, USD per capita Sources: National Statistical Agencies Russia Ukraine Belarus Kazakhstan Sources: National Statistical Agencies 16

17 Role in the National Economies (3) Agriculture: Key Facts High level of regional concentration of agricultural output is typical for Russia. Central, Southern and Volga Federal Districts account for about 70% of agricultural production. A large number of people in Kazakhstan and Ukraine live in rural areas, including potential agricultural labor force (47% and 30% respectively). Until now, Kazakhstan s agricultural industry has suffered from lack of efficiency due to poor soil quality on one hand and lack of mechanized farming and overuse of harmful chemicals on the other hand. At the same time Kazakhstan s agricultural sector is among the world s most promising. Due to lack of investment, Belarussian and Ukrainian agricultural sectors perform far below their potential. In Belarus it is mostly represented by state-run collective farms and a small number of privately run farms. In Ukraine the government is beginning to aim at attracting foreign investment. Land category, % of total land area 7,5 13,3 56,2 71,2 Sources: World Bank, UN Data Ukraine is rich in black soil which is very fertile due to humus (special organic substance). Along with favorable climatic conditions this makes the country very competitive in the world of agriculture. The level of bureaucracy in the agricultural sector in all four countries is still very high. An increase can be noted in the production of a number of agricultural segments in Russia, Belarus and Kazakhstan since 2012, as seen below ,5 10,9 80,4 Russia Ukraine Belarus Kazakhstan Arable land Agricultural land 17

18 Role in the National Economies (4) Production of Key Agricultural Goods Average change in production of main crops in , % Average change in production of main animal goods in , % Wheat Fresh vegetables Tomatoes Sugar beet Milk Lamb Rye Potatoes Pork Oats Corn Poultry Cereals Carrots Buckwheat Barley Apples Beef and Veal Eggs Ukraine Russia Kazakhstan Belarus Sources: National Statistical Agencies, UN Data, FAO Ukraine Russia Kazakhstan Belarus Sources: National Statistical Agencies, UN Data, FAO 18

19 Role in the National Economies (5) Food Production and Consumption Average change in consumption of some of the products in , % Pork Poultry Beef and Veal Wheat Sunflowerseed Oil Soybean Meal Rye Oats Corn Barley Ukraine Russia Kazakhstan Belarus Sources: National Statistical Agencies, UN Data, FAO Average production of sugar beet, oats and barley in Kazakhstan rose by more than 100%. A considerable growth in wheat (94%) and corn (86%) production has taken place in Russia. An average decrease of up to 70% in production of crops is seen in Belarus and Ukraine. Most of the animal products in all the countries showed a growth in production. There was a considerable increase in lamb and chicken production in Belarus (50% and 30% respectively) and pork in Russia (30%). Meat consumption indicated an average drop for pork and raise for poultry in all the countries. A considerable increase in beef and veal consumption (76%) is seen in Belarus. A high rise in soybean meal production has been observed in Russia and Ukraine and in consumption in Kazakhstan (86%, 78% and 61% respectively). There s been a permanent increase in production and consumption of fresh vegetables in all four countries starting from 1990 th, which reflects the preferences and purchasing power of the population. 19

20 Role in the National Economies (6) Other Foods and Drinks The growth in production of fish (including canned fish) since 2012 has been seen in all four countries. The highest growth can be noted in Kazakhstan (15%). Total per capita consumption of alcohol showed a considerable growth in Belarus (28%) and a slight increase in Russia. There was a decrease in alcohol consumption in Kazakhstan and Ukraine. The highest per capita consumption of alcohol remains in Russia (107 litres). There was a general decrease in wine consumption in the countries. However, in Kazakhstan it has recently shown a constant growth (27%) despite religious views of its population. A considerable growth in per capita beer consumption is seen in Belarus in There has been a general increase in nonalcoholic drinks consumption in all the countries. Hot drinks such as tea and coffee account up to 76% of all non-alcoholic drinks sales in Ukraine. Beer consumption per capita, litres 52,2 68,8 70,0 68,5 54,6 52,6 29,7 50,8 58,3 73,0 68,3 51,1 49,4 49,1 27,6 27,3 26,9 26,5 Non-alcohol drinks y-o-y sales growth in national currencies, % 9,3 8 3,5 67,9 70, f 22,5 Belarus Kazakhstan Ukraine Russia 8 12,2 33, ,8 14,4 5 5, f 13,6 11,4 10,8 8,7 Belarus Kazakhstan Ukraine Russia Sources: National Statistical Agencies, BMI 20

21 Main Agricultural Regions (1) Russia, 2017 Fixed investment in agriculture Region name % of total fixed investment in agriculture % of region s total fixed investment Krasnodar 4,4% 8,3% Rostov 1,9% 5,5% Tatarstan 2,9% 5,2% Belgorod 2,6% 17,8% Stavropol 3,3% 25,5% Voronezh 5,3% 17,6% Saratov 0,7% 4,3% Bashkortostan 1,7% 4,5% Altai 0,8% 11,8% Volgograd 0,7% 3,3% Region name Output, USD bn % of total Poultry Meat Milk Cereals & Leguminous Sunflower Sugar beet Vegetables Potatoes Tomatoes Fruit & Berries 1 Krasnodar 7,1 7,3% 2 Rostov 5 5,1% 3 Tatarstan 4,4 4,5% 4 Belgorod 3,9 4,1% 5 Stavropol 3,5 3,6% 6 Voronezh 3,4 3,5% 7 Saratov 3 3,1% 8 Bashkortostan 2,9 3% 9 Altai 2,6 2,7% 10 Volgograd 2,5 2,6% Source: National Statistical Agencies, regional websites Icons made by Smashicons, Freepik from 21

22 Main Agricultural Regions (2) Ukraine, Fixed investment in agriculture Region name % of total fixed investment in agriculture % of region s total fixed investment Vinnytsya 6,7% 40,6% Dnipropetrovsk 7,1% 10,9% Kiev 8,2% 12,4% Poltava 7,1% 23,6% Kharkiv 6% 18,4% Khmelnitskiy 3,6% 20,2% Cherkasy 5,4% 42% Odesa 5,2% 15,7% Kherson 4,7% 51,7% Chernihiv 4,3% 40,6% Region name Output, USD bn % of total Poultry Meat Milk Cereals & Leguminous Sunflower Sugar beet Vegetables Potatoes Tomatoes Fruit & Berries 1 Vinnytsya 0,77 8,3% 2 Dnipropetrovsk 0,57 6,1% 3 Kiev 0,55 5,9% 4 Poltava 0,54 5,8% 5 Kharkiv 0,53 5,7% 6 Khmelnitskiy 0,52 5,6% 7 Cherkasy 0,5 5,3% 8 Odesa 0,44 4,7% 9 Kherson 0,42 4,5% 10 Chernihiv 0,41 4,4% Source: National Statistical Agencies, regional websites Icons made by Smashicons, Freepik from 22

23 Main Agricultural Regions (3) Belarus, Fixed investment in agriculture Region name % of total fixed investment in agriculture % of region s total fixed investment Minsk 31,1% 13,2% Brest 17,5% 18,2% Gomel 15,2% 11,3% Grodno 13,9% 9,1% Vitebsk 12,7% 14,3% Mogilev 9,7% 13,7% Region name Output, USD bn % of total Poultry Meat Milk Cereals & Leguminous Flax Rape Sugar beet Vegetables Potatoes Fruit & Berries 1 Minsk 2,02 24,2% 2 Brest 1,58 18,9% 3 Gomel 1,35 16,2% 4 Grodno 1,34 16,0% 5 Vitebsk 1,03 12,3% 6 Mogilev 1,02 12,2% Source: National Statistical Agencies, regional websites Icons made by Smashicons, Freepik from 23

24 Main Agricultural Regions (4) Kazakhstan, Fixed investment in agriculture Region name % of total fixed investment in agriculture % of region s total fixed investment Almaty 12,1% 8,1% South Kazakhstan 10,8% 7,9% North Kazakhstan 20,5% 38,2% East Kazakhstan 5,3% 4,2% Akmolinsk 10,1% 13,8% Kostanai 10,8% 19% Zhambyl 5,5% 8,2% Karaganda 2,7% 2,7% Aktobe 2,9% 2,3% Pavlodar 15,7% 11,2% Region name Output, USD bn % of total Poultry Meat Milk Cereals & Leguminous Sunflower Sugar beet Vegetables Potatoes Tomatoes Fruit & Berries 1 Almaty 1,99 15,8% 2 3 South Kazakhstan North Kazakhstan 1,6 12,7% 1,57 12,5% 4 East Kazakhstan 1,41 11,2% 5 Akmolinsk 1,17 9,3% 6 Kostanai 1,11 8,8% 7 Zhambyl 0,78 6,2% 8 Karaganda 0,76 6% 9 Aktobe 0,62 4,9% 10 Pavlodar 0,6 4,8% Source: National Statistical Agencies, regional websites Icons made by Smashicons, Freepik from 24

25 Agriculture and Food Foreign Trade (1) Russia Russia s agricultural and food imports and exports, USD bn 22,9 21,1 16,3 17,1 24, ,8 Imports Exports Sources: National Statistical Agencies,FAO, Customs Services Main export shares in Russia are taken by cereals and fish products (36,2% and 17,1%). Vegetable oil share in export amounts 11,9%. Fruit and meat remain the most imported categories among agricultural goods both in value and volume terms. Considerable amount of vegetables, fish, dairy products and drinks are also imported. Except for animal fat, cow meat and salt, a rise in import of main products in volume terms has been observed compared to The highest growth is seen in the import of prepared food (36,6%), vegetables (36,3%) and fish (3,2 times). Russia s agricultural and food exports, % of total revenue 16,3bn 17,1bn 20,8bn 24,9% 25,0% 23,8% 1,4% 1,3% 1,3% 1,8% 2,5% 2,8% 2,6% 2,6% 4,8% 4,0% 10,5% 11,8% 17,4% 17,9% 34,7% 32,8% 1,2% 2,1% 2,4% 2,4% 3,0% 11,9% 17,1% 36,2% Other categories Milk and milk products Meat and meat products Vegetables Soft and alchohol drinks Tobacco and tobacco products Vegetable oil Fish and fish products Cereals, incl. wheat Sources: National Statistical Agencies,FAO, Customs Services 25

26 Agriculture and Food Foreign Trade (2) Russia Main food imports, thou. tons Main food and beverage imports, USD mn Other categories Other categories 19% 16% 16% 14% 5% 6% 5% 7% 5% 5% 5% 5% 5% 5% 5% 3% 7% 6% 5% 7% 5% 7% 8% 8% 10% 7% 7% 7% 9% 9% 10% 12% 10% 10% 9% 6% 14% 15% 12% 10% 13% 15% 16% 16% Tomato Milk and dairy products Fish and fish products Potato Apples Cereals Meat and meat products Vegetable Oils Banana Citrus Fruit 13% 12% 12% 12% 3% 5% 5% 4% 5% 5% 5% 5% 4% 5% 5% 4% 5% 5% 5% 7% 5% 6% 6% 6% 8% 8% 6% 7% 5% 7% 8% 7% 11% 9% 9% 10% 9% 8% 9% 10% 16% 14% 10% 10% 16% 17% 18% 19% Tobacco and tobacco products Processed vegetables, fruit, nut products Vegetable oils Tea & Coffee Fish, crustaceans and mollusks Vegetables Oilseeds, other seeds and grain, straw and fodder Milk and dairy products Soft and alcoholic drinks Meat and meat products Fruit Source: National Statistical Agencies,FAO, Customs Services Source: National Statistical Agencies,FAO, Customs Services 26

27 Agriculture and Food Foreign Trade (3) Ukraine Agricultural and food exports, % of total amount 16,6bn 14,6bn 15,3bn 19% 17% 16% 16% 23% 23% 26% 26% 52% 55% 53% 52% 6% 6% 5% 6% % 46% 44% 45% 5% 34% 5% 6% 6% 33% 33% 32% 19% 16% 17% 17% Finished food industry products Animal or plant fats and oils Plant products Live animals and livestock products Agricultural and food imports, % of total amount 6,1bn 3,5bn 3,9bn 17,8bn Source: National Statistical Agencies,FAO, Customs Services 4,3bn Finished food industry products Animal or plant fats and oils Plant products Live animals and livestock products Source: National Statistical Agencies,FAO, Customs Services Ukraine s agricultural and food imports and exports, USD bn 16,7 6,1 14,6 15,3 17,8 3,5 3,9 4, Source: National Statistical Agencies,FAO, Customs Services There has been a slight growth both in Ukraine s import and export in value terms since The main share in Ukraine s export through the years has been taken by plant products. About 26% of the country s exported products are animal products. Ukrainian consumers show higher preference for domestically produced goods. Tea and coffee industries present major opportunities for importers. Ukraine tends to introduce protectionist measures towards the local meat industry. Exports Imports 27

28 Agriculture and Food Foreign Trade (4) Belarus Agricultural and food exports, % of total amount 5,5bn 4,4bn 26% 24% 21% 24% 1% 3% 2% 2% 13% 11% 14% 11% 61% 59% 4,2bn 4,8bn 64% 63% Prepared foodstuffs, beverages and tobacco goods Animal or vegetable fats and oils Vegetable products Belorussian agricultural and food imports and exports, USD bn 4,8 5,5 4,4 4,4 4,0 4,2 4,8 4,5 Imports Exports Live animals and animal products Source: National Statistical Agencies Agricultural and food imports, % of total amount 4,8bn 44% 4% 34% 50% 48% 47% 19% 4,4bn 4bn 4,8bn 36% 35% 37% 3% 4% 4% 11% 13% 12% Prepared foodstuffs, beverages and tobacco goods Animal or vegetable fats and oils Vegetable products Live animals and animal products Source: National Statistical Agencies Source: National Statistical Agencies, FAO An increase has recently been observed in both import and export of Belarus in value terms. The main share in Belarussian import and export through the years has been taken by vegetable products (about 50% and 60% respectively). More than 35% of food imported to Belarus is prepared food. Belarus has a strong domestic agricultural sector that continues to grow, along with investment in industry technologies. Belarus food export sector benefits from the restrictions concerning Russian foreign trade. 28

29 Agriculture and Food Foreign Trade (5) Kazakhstan Agricultural and food exports, % of total amount 2,2bn 1,7bn 1,6bn 1,9bn Kazakhstan s agricultural and food imports and exports, USD bn 10% 9% 6% 6% 3% 3% 3% 5% 84% 85% 87% 85% Finished food industry products Animal or plant fats and oils Plant products Live animals and livestock products 2,2 2,5 1,7 1,9 1,6 1,6 1,9 1,8 Exports Imports 4% 4% 4% 4% Source: National Statistical Agencies Source: National Statistical Agencies, FAO Agricultural and food imports, % of total amount 2,5bn 1,9bn 1,6bn 1,8bn 38% 38% 38% 37% 2% 2% 2% 2% 42% 44% 44% 45% 18% 15% 15% 17% Finished food industry products Animal or plant fats and oils Plant products Live animals and livestock products Source: National Statistical Agencies A growth both in import and export has been observed in Kazakhstan in value terms since A large share in the country s export through the years has been taken by plant products (about 85%). Prepared food products play a considerable role in Kazakhstan s import sector (37%). Food preferences of Kazakhs move towards processed and packaged food. However, the authorities tend to support local food processing industry by keeping higher taxes on imports. 29

30 Agriculture and Food Foreign Trade (6) European Union and the USA European Union Trade with Russia, Imports in USD mn European Union Trade with Russia, Exports in USD mn Live animals; animal products Vegetable products Animal or vegetable fats and oils Foodstuffs, beverages, tobacco Live animals; animal products Vegetable products Animal or vegetable fats and oils Foodstuffs, beverages, tobacco Sources: European Commission, National Statistical Agencies U.S. Trade with Russia (Jan.-Oct.), in USD mn , , , , , , ,00 0, Source: Ministry of Economic Development of the Russian Federation In August 2014, Russia imposed an embargo on the import of products from the EU, the U.S. and a number of other countries* in response to the restrictive measures applied against Russia. Since then the recession in the Russian economy including the agriculture and food industry has been observed. It started to recover slightly at the end of There has been a significant restructuring of the import-export sector in Russia, which has also influenced the trade relations within the CIS. Export Import *Canada, Australia, Norway, Ukraine, Albania, Montenegro, Iceland, Lichtenstein 30

31 Agriculture and Food Foreign Trade (7) Geography of Imports, Russia Food products with the highest share of import to Russia from outside the CIS, 2017 Food products with the highest share of import to Russia from the CIS, 2017 Grapes Cabbage Turkey; 40,3% China; 37,9% 67,8% 65,4% Melons Kazakhstan; 38,7% 62,4% Cucumbers Iran; 37,5% 65,7% Tomatoes Azerbajan; 30,4% 54% Roots Israel; 45,9% 74,3% Citrus fruit Turkey; 38,1% 98,9% Cheese Belarus; 83,3% 87,7% Bananas Ecuador; 96,2% 100% Butter Belarus; 70,7% 75,0% Onion China; 30,8% 86,4% Potatoes Egypt; 58,2% 79,4% Milk Belarus; 92,0% 99,7% Fish fillet Frozen fish Vietnam; 30,6% Faroe Islands.; 39,3% 99,1% 96,1% Fish dried or salted Belarus; 70,2% 73,6% Fresh fish Faroe Islands; 63,9% 90,5% Poultry Belarus; 54,6% 56,6% Meat products Argentina; 40,8% 93,4% Fresh meat Belarus; 98,6% 98,7% Pork Brazil; 90,5% 97,8% Frozen meat Brazil; 51,3% 85,7% Sources: National Statistical Agencies, Customs Services Sources: National Statistical Agencies, Customs Services 31

32 Agriculture and Food Foreign Trade (8) Geography of Imports, Belarus Imports to Belarus in 2012, thou. tons Tomatoes Potatoes Roots Cabbage Cheese Fresh fish Poultry Beef fresh or frozen Ukraine; 28% Netherlands; 20% Poland; 55% Russia; 87% Norway; 92% Lithuania; 68% Poland; 59% Poland; 22% Main countries Total Imports to Belarus in 2017, thou. tons Tomatoes Potatoes Roots Cabbage Cheese Fresh fish Poultry Beef fresh or frozen Ukraine; 56% Netherlands; 30% Russia; 80% Norway; 88% Turkey; 57% Lithuania; 24% Ukraine; 98,5% Sources: National Statistical Agencies, Customs Services Poland; 52% Main countries Total Sources: National Statistical Agencies, Customs Services Belarus Exports to Russia, thou. tons Roots Cabbage Potatoes Tomatoes Cheese Fish dried or salted Poultry Beef fresh or frozen 16,2 12,5 33,6 2,4 21,1 39,0 78,6 80,6 141,9 103,9 128,0 100,6 131,9 166,1 182, ,1 Sources: National Statistical Agencies, Customs Services Charts show the restructuring in the importexport sector since During this period, the total food export from Belarus to Russia has increased by 1,7 times in volume terms. A growth in the export of banned products from Belarus to Russia is seen (e.g. export of dried and salted fish, potatoes and roots has increased by 8,8; 10,3 and 10,6 times respectively). Ingredients, packaging and labeling define the market status of most of the imported products, including those re-exported within the EEAU. 32

33 Agriculture and Food Foreign Trade (9) Sanctions Brief Overview On 6 August 2014 Russian president signed a Decree 560 "On the application of certain special economic measures to ensure the security of the Russian Federation". The Decree prohibits import of certain agricultural products, raw materials and foodstuffs originating from certain countries into the territory of the Russian Federation for one year. On 7 August 2014, Russian government issued Decision 778 defining the list of products banned and the countries concerned. The list of banned products was first modified by the Russian government Decision from 20/08/ The embargo was extended until 5/08/2016 by the Russian government Decision from 25/06/ which also modified the list of banned products. The Decision 625 was further modified on 27/05/2016 by means of Decision 472 to provide for possibility to import certain products if destined for the production of baby food. A further prolongation of the embargo until 31/12/2017 was introduced by the Presidential Decree 305 from 29/06/2016. On 30 June 2017 the validity of the embargo was again prolonged until 31/12/2018 by the Presidential Decree 293. On 25 October 2017 the Russian Government with its Decree 1292 extended the scope of the embargo. 33

34 Agriculture and Food Foreign Trade (10) Banned Products CN CODE PRODUCT 0103 (excluding ) Live pigs (excluding purebred breeding animals) 0201 Meat of bovine animals, fresh or chilled 0202 Meat of bovine animals, frozen 0203 Pork, fresh, chilled or frozen 0206 (excluding , , , , , , ) Food by-products of cattle, pigs, sheep, goats, horses, donkeys, mules or hinnies, fresh, chilled or frozen (excluding goods for the production of pharmaceutical products) 0207 Meat and edible offal of the poultry indicated in line 0105, fresh, chilled or frozen 0209 Pork fat, separated from lean meat, and poultry fat, not flushed or not extracted in another way, fresh, chilled, frozen, salted, in brine, dried or smoked Out of 0210 Meat salted, in brine, dried or smoked Out of 0301, 0302, 0303, 0304, 0305, 0306, 0307, 0308 Live fish (excluding hatchlings of salmon (Salmo salar), trout (Salmo trutta, Oncorhynchus mykiss), flatfish-turbot (Psetta maxima), capemouth (Dicentrarchus labrax), live ornamental fish) 34

35 Agriculture and Food Foreign Trade (11) Banned Products CN CODE 0302, 0303, 0304, 0305, out of 0306, out of 0307, 0308 PRODUCT Fish and crustaceans, molluscs and other aquatic invertebrates 0401, 0402, 0403, 0404, 0405, 0406 Milk and dairy products (excluding specialised lactose free milk and specialised lactose free dairy products for dietary health food and dietary protective nutrition) 0701 (excluding ), , 0703 (excluding ), 0704, 0705, 0706, , 0708, 0709, 0710, 0711, 0712 (excluding ), 0713 (excluding ), , 0802, 0803, 0804, 0805, 0806, 0807, 0808, 0809, 0810, 0811, 0813 Vegetables, edible roots and tubers (excluding seed potatoes, seed onions, hybrid sweet corn seeds, pea seeds) Fruit and nuts 1501 Pork fat (including lard) and fat Poultry, other than the fat of heading 0209 or Fat of cattle, sheep or goats, other than the fat of heading Lard stearin, lard-oyl, oleostearin, oleooyl and animal oil, not emulsified or unmixed, or not prepared in any other way Sausages and similar products of meat, meat offal or blood; final food products based thereon 35

36 Agriculture and Food Foreign Trade (11) Banned Products CN CODE From , From , From , From , From , From From From PRODUCT Food stuff and finished products (excluding BADs); vitamin-mineral complexes, flavor additives; protein concentrates (of animal and plant origin) and their mixtures; food fibre; food additives (including complex additives) Food stuffs and finished products manufactured on the basis of the cheese production technologies and containing 1.5 % or more of milk fat Salt 36

37 Key Regulations in Agriculture (1) Ukraine The agrarian sector is one of the main budgetforming sectors of the national economy. Its special role is mostly defined by the favorable natural and climatic conditions and its geographical location. In general, the agrarian legislation in Ukraine is characterized by: an excessive number of normative legal acts, different in their legal force; unsystematic inclusion of agrarian and legal norms in laws; the large proportion of regulations that often contradict or duplicate the previously adopted normative acts, which gives ground for their double interpretation and application. On average there are more than 1000 regulations for the agro-industrial complex in Ukraine. The Constitution of Ukraine forms a framework for the development of agrarian law. It recognized the land, its subsoil, water and other natural resources as objects of the property right of the Ukrainian people. Ukrainian legislation stipulated legal restrictions on operations for the sale and purchase of agricultural lands. State registration is required even if it concerns agricultural tenancy. The established in the Art. 13, 14 of the Constitution land competences are specified in the Land Code of Ukraine (25 October, 2001). Important laws in the regulation of agrarian relations: "On the state agrarian policy framework for the period until 2015" from October 18, 2005 (on 21 March, 2018 the Verkhovna Rada of Ukraine registered a draft Law "On the framework of the state agrarian policy and state policy of rural development", 8171); "On the priority of the social development of the village and agro-industrial complex in the National Economy" from October 17, 1991; "On the farm" from June 19, 2003 "On the privatization of property in the agroindustrial complex" from July 10, 1996 "On Fixed Agricultural Tax" from December 17, 1998 "On seeds and garden material", from December 26, 2002; "On the livestock breeding" from December 21, 1999; "On the agricultural output wholesale markets" from June 25, 2009; etc. 37

38 Key Regulations in Agriculture (2) Belarus The main direction of the agrarian legislation development is defined in the "Concept for the Improvement of the Legislation of the Republic of Belarus, approved by the Decree of the President of the Republic of Belarus" on 10 April , as well as the "State Program for Development of Agricultural Business in the Republic of Belarus for ", approved by the government Resolution 196 from 11 March, Basic normative acts regulating relations in the sphere of agriculture: The Law of the Republic of Belarus from February 18, 1991 "On the Farm Economy"; The Law of the Republic of Belarus from December 2, 1994 "On the veterinary"; The Law of the Republic of Belarus from September 28, 1994 "On breeding in animal husbandry"; The Law of the Republic of Belarus from February 14, 1997 "On Seeds"; The Law of the Republic of Belarus from December 25, 2005 "On Plant Protection"; The Law of the Republic of Belarus from August 5, 2009 "On Land Reclamation"; The Decree of the President of the Republic of Belarus from July 13, "On the introduction of a single tax for producers of agricultural products"; The Decree of the President of the Republic of Belarus from January 27, "On the management improvement of the organizations of agro-industrial complex"; The Land Code of the Republic of Belarus, 2008; The Water Code of the Republic of Belarus, 1998; The Forest Code of the Republic of Belarus, 2000; etc. It is worth noting that land purchase and leasing procedure is strictly governed by a number of legal acts, including Decrees of the President. According to the rules, land plots are provided to foreign entities under the results of the auction and only via leasing, unless the investment agreement provides for otherwise. 38

39 Key Regulations in Agriculture (3) Kazakhstan Over the past years, the Parliament of Kazakhstan has adopted more than 30 laws, including the Farm Law, regulating relations in the agrarian sector. Private ownership of agricultural land has been introduced. The agrarian legislation of Kazakhstan is based on the Constitution of the Republic of Kazakhstan, international norms and standards. The land is state owned. Kazakh non-state companies may privately own land plots granted for agricultural commodity production. However, the right of permanent land use cannot belong to foreign land users. Among the main legislative acts can be identified: The Law of the Republic of Kazakhstan "On state regulation of the development of the agro-industrial complex and rural areas" (July 8, 2005); The Law of the Republic of Kazakhstan "On the farm economy" (March 31, 1998); The Law of the Republic of Kazakhstan "On agricultural partnerships and their associations (unions)" (December 25, 2000); Kazakhstan 2050" Strategy; "The Law of the Republic of Kazakhstan "On Grain" (January 19, 2001); The Law of the Republic of Kazakhstan "On Seed Production" (February 8, 2003); The Law of the Republic of Kazakhstan "On the Protection of Selection Achievements" (June 13, 1999); The Law of the Republic of Kazakhstan "On the Development of the Cotton Industry" (July 21, 2007); The Law of the Republic of Kazakhstan "On livestock breeding" (9 July 1998); The Law of the Republic of Kazakhstan "On Veterinary Medicine" (July 10, 2002); Regulations on the procedure and conditions for the organization of leasing in agriculture, approved by the Government of the Republic of Kazakhstan (1998); "The cotton market monitoring rules", approved by the order of the Minister of Agriculture of the Republic of Kazakhstan (October 3, 2007); The Development Program "Agribusiness 2020"; The Law of the Republic of Kazakhstan from 29 October, 2015 "On Agricultural Cooperatives", etc. 39

40 Market Research Department Christoph Spank Market Research Team Leader Maria Samundjan Senior Project Manager Tatiana Bibikova Market Research Analyst Arianna Manili Trainee Taisiya Filina Junior Project Manager Nikita Kolomiez Trainee The exclusive right to the content of this presentation including the rights of translation, reproduction, transmittal, distribution and usage of the presentation and parts of it, in any way, as well as the rights to the company s logo and name SCHNEIDER GROUP, in existing and future publications in printed or electronic form, and the ability to confer rights to a third party belong to SCHNEIDER GROUP. The reproduction, alteration, transmittal or any distribution or usage of this presentation or parts of it, as well as of the company s logo or name SCHNEIDER GROUP in any way, need the written permission of SCHNEIDER GROUP in advance and shall be accompanied with the link to the SCHNEIDER GROUP website and reference to the copyright permission. SCHNEIDER GROUP 40

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