Russia began to successfully feed China
March 4, 2021
The world continues to import Russian food products. For the first time, our country sold abroad food practically as much as it imported. China, which until recently perceived Russia only as a supplier of raw materials, finally tasted products from Russia. What helped Russian food abroad and is there potential for growth in its exports in the future?
The export of agricultural products since the beginning of the year has grown by more than a third - by 36%. Russia has already sold $ 4.1 billion worth of goods. These are the data of the Federal Center for the Development of Export of Agricultural Products (FGBU "Agroexport") under the Ministry of Agriculture. Last year, it grew by almost 20% to about $ 30 billion.
Grain exports from Russia in January-February more than doubled, to $ 1.8 billion. Such a high rate of supply is explained by the fact that exporters were trying to manage to sell more wheat before the introduction of export duties on February 15. Last year, Russia reached its second-ever harvest level of 133 million tonnes of grain. As a result, Russia promises to become the world leader in wheat exports this agricultural year.
The supply of fat and oil products is also growing: since the beginning of the year, they have increased by 6.3%, to $ 687 million. Sunflower and other oils are setting price records again. The demand for these products is fueled by crop problems in South America and higher oil prices, as well as concerns about the possible introduction of export duties on oil from Russia.
Exports of food and processing industry products decreased by 5.7%, to 346 million dollars, meat and dairy products - increased by 33.7%, to 135 million. $ 448 million. This is due to the fact that China has closed the supply of Russian products, allegedly due to the found coronavirus. “As a result, many enterprises in Russia were put on the brink of survival - not everyone succeeded in redirecting product flows to other countries. At the same time, China consumes more than 60% of fish and various commodity items of this direction, which are produced in Russia, "- notes the head of the analytical department of AMarkets Artem Deev.
Overall, the past year has revealed several important trends. At first,
for the first time in history, Russia exported as much food as it imported in monetary terms.
Thus, the export of food products increased by 18%, to $ 29.1 billion, while imports amounted to $ 29.4 billion. That is, the difference was only $ 0.4 billion. This is a historically low value, said Daria Snitko, head of the Center for Economic Forecasting (CEP) at Gazprombank.
If we take the data of the Federal Center for the Development of Export of Agroindustrial Complex of the Ministry of Agriculture of Russia, then the export of food and agricultural raw materials from Russia at the end of 2020 amounted to $ 30.6 billion, that is, even exceeded imports.
For comparison: until 2014, food imports exceeded Russian exports by an average of $ 25 billion. But in recent years, food imports have been declining all the time, while exports have grown, which has led to such a historical result. Russia can now feed not only itself, but other countries as well.
The second important trend is the decline in the share of the US dollar in Russian exports, especially in trade with China and India. According to the World Bank, in the first half of 2020 it fell to 60.2%, compared to 62% in the first half of 2019. The share of the dollar in payments for imports also decreased - from 35.4% to 35.1%. The decline in the level of de-dollarization of the Russian economy continues.
The third important point: despite the drop in the export of raw materials due to the coronavirus, primarily due to the collapse in prices, the export of non-resource non-energy exports from Russia is growing. In 2020, it amounted to $ 161.3 billion against $ 155.1 billion in 2019, the Russian Export Center calculated. This is a new absolute record. And so Russia is setting a record for the third year in a row for this indicator.
Finally, Russian exports clearly show Russia's pivot towards Asia. The main trade partner of our country is China, which every year opens new products from Russia. At this rate, Russia is quite capable of achieving its goals - to increase trade with China to $ 200 billion by 2024, the Russian Export Center is confident.
In 2020, trade with China amounted to $ 104 billion. At the same time, it decreased by 6.7% compared to 2019, which is explained by a sharp drop in oil and gas prices. Raw materials still account for the lion's share of Russian exports to China (60%). However, in recent years, our country has been actively increasing the supply of food products: vegetable oil, flour, confectionery, chocolate, juices, alcoholic beverages, etc.
According to REC, the share of non-resource non-energy exports to China has been growing for three years in a row: from 21.8% in 2018 to 25.3% in 2019 and up to 33.3% last year. In 2020, non-resource exports grew by almost 13% and amounted to $ 16.4 billion. Russia's total exports to China amounted to $ 49 billion.
According to the Russian Export Center, the Chinese have significantly increased the purchase of sunflower oil, rapeseed, poultry meat and by-products, soybean oil, as well as copper, polyethylene, semi-finished products of unalloyed steel, aluminum and its alloys, copper wire, cast iron. "It is worth noting the emergence of new Russian goods in the volume of NOE to China, such as billets, coils and semi-finished products of various types of ferrous and non-ferrous metals, as well as copper wire, connected with the systematic restrictions imposed by the PRC government on the import of ferrous and non-ferrous scrap," in REC.
Also last year, Russia began delivering frozen beef, soybean sprat and oil cake to China. This became possible thanks to the agreements of the Rosselkhoznadzor with the Chinese.
“The fact that China is increasing purchases of Russian products is explained by the pricing environment - against the background of high world prices, products from Russia are optimal in quality and cost,” Deev said.
Consistent promotion of the image of Russian farmers, including at the level of the heads of government of the two countries, also helps. Many remember how Vladimir Putin presented the leader of China with his favorite ice cream from Russia, Lakomka.
"Improving the image of Russian products abroad as environmentally friendly will help increase their exports in the long term,"
- says the associate professor of the Department of International Business and Customs of the PRUE. Plekhanova Lada Progunova. “In Russia, the use of genetically modified technologies is legally limited, so the Chinese consumer clearly knows that they have found environmentally friendly and safe products,” said REC Director General Veronika Nikishina.
The common border with China and developing logistics also help. According to Nikishina, further construction of infrastructure in the Russian Far East will increase trade between China and Russia.
In general, the pandemic did not prevent the growth of agricultural exports from Russia, but, on the contrary, even helped. “Due to massive quarantines around the world, the agricultural season was not fully completed. The migrants were unable to arrive in time for the harvest, so some of it was lost. There are also climatic problems - floods, droughts, loss of agricultural land - this is a long-term trend that affects food prices (they are rising) and production volumes (they are decreasing). Accordingly, the demand for Russian grain, meat, milk, etc. is growing, ”explains Deev.
In addition, many countries feared a shortage of food due to the pandemic and provoked an exuberant demand for a number of goods, in particular, for cereals, flour, sunflower oil. This caused prices to rise. And the rise in world food prices is helping Russian exporters to earn more. Finally, the devaluation of the ruble played into their hands, making Russian products more attractive in terms of price and quality.
The first months of this year show the potential for growth in agricultural exports from Russia this year, including due to an increase in supplies to China. “The potential for growth in sales to China this year has all agricultural products - from cereals to groceries. In addition, there is a high demand in the PRC for Russian flax, legumes, soybeans, fish products, ”says Deev.
Negotiations are underway with China to lift restrictions on trade in peas, beans, millet, millet, rye flour, semolina. This list also includes animal feed and medicinal raw materials.
In the future, pork should also take a prominent place in the Chinese market. We can talk about the supply of 300-350 thousand tons of pork to China after the restrictions are lifted, according to REC.
A lower grain harvest compared to last year, as well as restrictions on the export of grain and oilseeds, may slightly hinder the growth of exports of agricultural products in 2021. On the other hand, a significant increase in government support will stimulate export growth. If in 2020, within the framework of the state program, 29.7 billion rubles were allocated to support the export of agricultural products (almost everything was used), then in 2021 it is planned to spend 47.3 billion rubles.
Text: Olga Samofalova