Dmitri Rylko General director IKAR LLC Russian agricultural- food exports and food security: how two tasks are combined Samarqand, November 2, 2016
Russian agriculture: changing paradigm of sector development Two- fold devalualon caused by falling crude oil and gas prices Counter sanclons ShiNing and modifying government support *** Net result : booslng short and medium term compellveness of domeslc ag on domeslc and internalonal marketplace
Russian cross : crude oil and ruble price indexes
Russian government Keeping nominally same support level to agriculture (against the background of general absolute budget shrinkage in rubles and two- fold devalualon ShiNing subsidy support to industries import killers (highest short/medium/long term import subsltulon potenlal): greenhouses, commercial vegetables, horlculture, dairy, beef cavle Launching new subsidy tools, such as direct subsidy to ag machinery manufacturers, project financing, parlal fixed investment compensalon
Russian agricultural growth rates, % (2004 = 100) 170,0 +8% 160,0 150,0 +5,5% 140,0 +3% 130,0 120,0 110,0 100,0 CAGR 2005-2015 Agriculture: 3,3% Crop: 3,6% Livestock: 2,6% 90,0 Agriculture Crop Livestock
Russian ag and food processing growth rates, % (2004 = 100) 155 145 +2,0% +5,5% 135 125 CAGR 2005-2015 Food industry: 2,9% Agriculture: 3,3% 115 105 95 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Food industry Agriculture
Russian foreign ag trade, $ bln 30 20 10 $20,8 mln $17,0 mln 0-10 - 20-30 IKAR FORECAST $24,4 mln - 40-50 $43,2 mln Other countries Import EU Import CIS Import Other Countries Export EU Export CIS Export Russia is quite aggressively moving to zero agricultural trade balance
Structure of ag export from Russia, $ mln 20 000 18 000 16 000 14 000 12 000 10 000 17% 15% 17% 16% 8 000 6 000 4 000 56% 62% 60% 60% 2 000 0 Other categories Beverages and spirits Fish and seafood 2013 2014 2015 2016* Live animals, meat, dairy Tobacco Cereals and oilseeds, oils and fats, flour, meal and cake, ready- to- eat products
Import structure by macro origins to Russia, $ bln EurEcUnion Under sancvons Others 20,8 21,3 16,5 15,2 18,8 14,4 6,5 5,8 3,7 4,4 3,6 3,5 2013 2014 2015 2016*
Structure of ag import to Russia, $ mln 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 8% 3% 8% 14% 5% 15% 26% 7% 6% 7% 6% 23% 17% 18% 19% 19% 22% 21% 22% 22% 2013 2014 2015 2016* Fruits and vegetables Meat and dairy Tea, coffee, cocoa, other grocery Oilseeds Spirits and beverages Tobacco Other products
Some sectoral insights
Growing export orientafon of Russian oilseed market Sunflower market Rapeseed market 15 000 1 500 TMT 10 000 5 000 30% 43% 61% 80% 1 000 TMT 500 0 2012/13 2013/14 2014/15 2015/16 2016/17* 0 2012/13 2013/14 2014/15 2015/16 2016/17* DomesVc market Export (seed and oil) DomesVc market Export (seed and oil) 700 600 500 400 300 200 100 0 Flaxseed market 92% 91% 2012/13 2013/14 2014/15 2015/16 2016/17* TMT 300 250 200 150 100 50 0 Safflower market 94% 78% 2012/13 2013/14 2014/15 2015/16 2016/17* DomesVc market Export (seed only) DomesVc market Export (seed only)
Meat import subsftufon, TMT 10 000 8 000 30% 27% 27% 24% 6 000 4 000 17% 12% 10% 2 000 0-2 000-4 000 2010 2011 2012 2013 2014 2015 2016* ProducVon Import Import share, %
Cheese import subsftufon, TMT 700 47% 48% 45% 49% 500 37% 300 23% 25% 100-100 - 300-500 2010 2011 2012 2013 2014 2015 2016* ProducVon Import (excl. Belarus) Belarus Import share, %
Cheese import subsftufon, TMT 800 47% 48% 45% 49% 600 400 37% 23% 25% 200 0-200 - 400-600 2010 2011 2012 2013 2014 2015 2016* Cheese producvon Cheese products Import (excl. Belarus) Belarus Import share, %
Veg import subsftufon, TMT 600 400 34% 33% 35% Cucumbers 37% 36% 26% 400 200 Tomatoes 82% 81% 83% 82% 81% 78% 61% 16% 0 200-200 0-400 - 600-200 - 800-400 2010 2011 2012 2013 2014 2015 2016* - 1 000 2010 2011 2012 2013 2014 2015 2016* ProducVon Import (excl. Turkey) Turkey Import share, % ProducVon Import (excl. Turkey) Turkey Import share, %
Retail market: esfmated share of domesfc and imported products, $ mln 400,0 350,0 300,0 250,0 200,0 150,0 100,0 50,0 0,0 DomesVc products Imported products
Netback as applied to agricultural markets: lessons to be learned The netback is calculated by taking all of the revenues from the crude oil, less all costs associated with ge`ng the oil to a market. Netback as applied to agriculture: On import- oriented market the local price is world price PLUS (domeslc tariff and NTM barriers) transportalon cost On self- sufficient/export oriented market the local price is world price MINUS (imporlng country tariff and NTM barriers) and transportalon cost
Netback concept as applied to the Russian poultry meat market 3,0 2,8 2,6 2,4 2,2 2,0 1,8 1,6 1,4 1,2 35% 27% 19% 13% 14% 13% 10% 5% 4% Share of import Imported broiler to Russia price DomesVc Price
Some pre- final subjeclve notes Food security and/or food independence Self sufficiency of first level BeVer (for agriculture, and the government!) to keep some industries reasonably net imporlng, rather than boost full self- sufficiency, if there is no obvious (potenlal) natural export compellveness We need a good and strong scien3fic theory and apparatus to check and measure it
Москва: две концепции продажи орехов/сухофруктов
Import of raisins to Russia by origins and customs value per kilo (2015) 5,00 9000 4,55 4,50 8000 4,00 7000 3,50 3,06 6000 3,00 2,50 2,00 1,93 1,88 1,73 1,70 5000 4000 1,50 1,00 1,35 1,14 0,71 3000 2000 0,50 0,00 56 1798 7074 2386 100 480 334 8265 1641 RSA TURKEY IRAN CHILE CHINA INDIA UZBEKISTAN AFGANISTAN KAZAKHSTAN 1000 0 Import, Tons Average price, $/kg
Thank you! Рахмат! d.rylko@ikar.ru Skype: Dimash457