The agro-industrial complex is tired of accelerating the economy and took up inflation

The agrarian complex of the Russian Federation, which is responsible for providing the country with food, is losing the title of the growth driver of the Russian economy, which it has proudly carried in recent years.

According to the Ministry of Agriculture, the decline in agricultural production this year will be 2%. This will happen for the first time since 2018, when this figure was minus 0.6%. In 2020, agricultural production in the Russian Federation increased by 1.3%.

The perfect storm in a bowl of borscht

And if earlier relatively stable food prices held back inflation in the country, this year it is food that has accelerated inflationary processes. The same driver, just the other way around. And among the most expensive included those products that were previously beyond suspicion - vegetables. As a result, the whole country learned what a "borscht set" is, and made sure that cooking a basic Russian soup from it has become quite an expensive pleasure. According to Rosstat, by mid-December, the price of cabbage rose 2.2 times, potatoes - by 55%, carrots - by 30%, onions - by 15%.

This year, food inflation reached double digits and in November compared to November last year was almost 11%. Largely due to the situation in the agricultural sector, as well as due to problems in the global supply chains, the Central Bank was forced to raise its forecast for annual inflation from 5.7-6.2% to 7.4-7.9%. “Inflation accelerated significantly due to a more modest vegetable harvest, as well as rising costs in animal husbandry. MEAT, MILK , vegetables are the so-called marker products. A noticeable increase in prices for marker goods, even with their small weight in the consumer basket, can disperse inflationary expectations, ”said Elvira Nabiullina, HEAD of the Central Bank.

According to her, the figure for the year will largely depend on what happens in agriculture.

Meanwhile, the industry itself this year was in a sense between a rock and a hard place. On the one hand, it was necessary to increase production, although the conditions in which the farmers worked were far from ideal, and even from normal. The ongoing pandemic, which has led to a shortage of labor, a sharp increase in the cost of fertilizers and inflation in other costs, drought in a number of major grain-producing regions, the death of animals and birds from dangerous diseases.

On the other hand, in conditions of high inflation, which, among other things, was broadcast from world markets, it was necessary to restrain the rise in prices for their products, to integrate into the tough regulatory measures that the state took to ensure that food remained affordable.

We also had to support exports, which, although no longer an ambitious goal, are necessary to maintain our place in world markets, and come to terms with an import competitor, which suddenly became necessary after a successful solution to the problem of import substitution.

According to experts, it is difficult to remember when so many problems arose in the industry at the same time. And although many of them became a reflection of world economic processes and the result of "foreign" inflation, it was not easier from this.

The State Supports and Repels

The state tried to support producers with additional injections. To curb price growth amid the pandemic, 1 billion rubles were allocated to poultry farmers, 9 billion to vegetable oil and SUGAR producers, and 4.7 billion to millers and bakers. However, this did not help bring down the inflationary wave in full.

In the outgoing year, the arsenal of state measures to regulate foreign trade was also updated, which were designed to support domestic market prices. In the grain market, in addition to the EXPORT quota and duties, a “grain damper” with a floating duty was launched, in the oilseed market, duties on the export of sunflower, rapeseed and soybeans were increased to prohibitive, and the export of sunflower oil was limited to a “sunflower damper”.

It was decided to bring down the rise in sugar prices with a duty-free import quota of 350,000 tons. And although it was not actually needed - only about 40 thousand tons were chosen - the quota was extended until August 31, 2022 in the amount of 300 thousand tons. And quite a surprise for the market was the proposal of the Ministry of Agriculture in 2022 to “unpack” duty-free imports of pork and beef.

Under these conditions, there were fears that agriculture, which in recent years has been actively pumped up with state money and private investment, will lose

investment attractiveness. These concerns persist. Moreover, they increase as they prepare for a new sowing campaign. Although, as Minister of Agriculture Dmitry Patrushev recently stated in the State Duma, "a balance is needed in which food prices will remain at an acceptable level, but the profitability of production and investment attractiveness will not decrease."

In general, according to the Ministry of Agriculture, 291 billion rubles were allocated for the implementation of the state program for the development of agriculture in 2021, taking into account all additional funds. The 2022 budget law provides for 285 billion rubles for these purposes.

Restriction on grain exports: "surplus appraisal" or new opportunities

In 2021, the agro-industrial complex of the Russian Federation, despite natural disasters, will receive the third largest grain harvest - more than 123 million tons (according to the forecast of the Ministry of Agriculture) after the record 2017 (135.5 million tons). This is 10 million tons less than in 2020 (133.5 million tons). Although grain market experts have recently paid attention to the "strange adjustments" of the harvest, which were made in a number of regions: the volume of harvested grain increased, while the harvested area practically did not change. This was also confirmed by the data on harvesting, which were posted on the website of the Ministry of Agriculture.

In general, the relationship with information in the industry was not easy. So, in August, the daily publication of data on harvesting was stopped for almost half a month. The Ministry of Agriculture explained this by the need for "technical work" with the regions to "clarify the form and structure" of these data. It is difficult to assess the efforts made, since neither the form of submission of information, nor its structure after the resumption of publication has actually changed.

Grain market experts also had to work in the new reality associated with limited information in 2021. Some of them, who lowered grain harvest forecasts against the backdrop of Rosstat data on the reduction in sown areas, faced the reaction of the FAS in the form of a document “Warning on the inadmissibility of committing actions that could lead to violation of antimonopoly law”. And the vocabulary of regulators in relation to objectionable forecasts was replenished with the expressions “stuffing information” and “verbal interventions”.

At the same time, there is an opinion in the market that the pessimism of some analysts in the conditions of volatility plays into the hands of speculators warming up prices, and that at least two informational attacks on the Russian grain market have been made this season.

But be that as it may, the lack of official reliable information always gives rise to rumors and suspicions, which only increases the risk of speculative price fluctuations.

In the outgoing year, the mechanism for restricting grain exports began to operate in full force on the grain market, which was included in 2020 and was declared as protection against sharp fluctuations in prices on the world market. On February 15, the quota began to operate, its volume amounted to 17.5 million tons. It, unlike the 2020 quota (7 million tons from April 1 to June 30), was distributed on a historical basis and was provided to 234 companies. In addition, the quota has become a tariff. Within its framework, the export of wheat was initially subject to a duty of 25 euros per ton. Since March 1, it has been increased to 50 euros per ton. From March 15, the export duty on corn was 25 euros, on barley - 10 euros per ton. All these duties were valid until June 1.

However, as the results showed, the quota turned out to be unselected, which was what some grain market experts warned about, speaking of the futility of restrictive efforts. Even before its introduction, they noted that for the second half of the season (January-June 2021), the export potential does not exceed the quota, and in fact it turned out to be even less. By June 30, the expiration date of the quota, no more than 12 million tons were taken from it. Not all quota holders took advantage of the opportunity to send grain abroad. If in January 47 companies exported wheat, then by February 15, only 20 companies remained on the market. And in April-May, their number was completely reduced to 6-7.

Although at the time of the introduction of the quota, exporters announced their intention to fully select it and then return to discussions with the government on the possibility of zeroing export duties.

But the regulatory initiatives were already unstoppable, and now they don’t even remember the prospects for zeroing. From June 2, an unlimited “floating” duty on wheat, barley and corn began to operate (the so-called grain damper, the proceeds from which were promised to be returned to grain producers in the form of subsidies). The amount of duties is now calculated weekly according to price indicators based on the prices of export contracts, which are registered on the Moscow Exchange. The cut-off price for wheat is $200 per ton, for corn and barley - $185 per ton. The amount of the duty is 70% of the excess of this indicator.

Moreover, the farmers were not explained why these price parameters were taken as a basis and why the duty period is calculated for a week. And proposals to increase the cut-off price and make the duty monthly due to the duration of export contracts were not heard. As well as the assessments given by farmers to these innovations were not heard. One of them is severe in a Siberian way: “surplus appraisal 2.0”, which, in the conditions of a hurricane increase in prices for resources, pulls into the “swamp of economic depression,” Siberian farmers said.

As a result, the rise in world grain prices has led to a high “trajectory” of withdrawal of funds from farmers, and the promised subsidies in the form of a return on funds from the “grain damper” are not yet visible.

According to the Institute for Agricultural Market Studies (IKAR), by mid-November, the budget received about $800 million from the grain damper. The Ministry of Finance, according to State Duma deputies, reported receiving 56 billion rubles by this period. However, 10 billion rubles have been allocated to farmers so far, and even those have not yet reached them. This, in particular, was complained by a representative of the Steppe agricultural holding, owned by AFK Sistema. What can we say about smaller companies that do not have such a rear.

As for the main task that export restrictions were designed to solve, experts' assessments on this matter are ambiguous.

According to Eduard Zernin, Chairman of the Board of the Union of Grain Exporters, export restrictions have shown their effectiveness. “They made it possible to cope with the price speculative pressure of external markets. Now the domestic market is stable, and the harvested grain is enough both to fully meet domestic needs and to supply foreign trade partners,” he said. “We look forward to the continuation of the state policy that protects the processing sector, in particular, to maintain export duties on raw materials on a permanent basis.”

Zernin noted that "the outgoing year was remembered for the rush of world demand for grain and the numerous attempts of speculators to inflate the already high prices for all grain crops, especially for wheat." Therefore RUSSIAsimply had to impose export restrictions in order to keep domestic prices at an acceptable level. The decrease in grain exports in this agricultural year (July 2021-June 2022) in the range of 20-25% due to restrictions, the head of the union considers expected and non-critical.

Due to the decline in wheat exports, for the first time in recent years, they started talking about the loss of Russia's leadership in the world market. According to the USDA, the Russian Federation exports 36 million tons of wheat this year, and the closest competitor of the EU - 37 million tons.

However, the head of the analytical center of JSC Rusagrotrans, Igor Pavensky, believes that the EU, which claims leadership, will not be able to compete with the Russian Federation in the export of soft wheat. “This means that we will hold the first place in our niche - the export of soft wheat - this season,” he is sure. True, he notes that the EU and Ukraine export grain quite actively and are a significant competitor to Russia.

A positive factor in the introduction of restrictions can be called the fact that under these conditions, companies began to look for new opportunities for export - in particular, to move away from its focus on raw materials.

“With the introduction of the export duty, we seem to be a bit in a rush, because there is no long-term planning for exports: the duty today may be the same, tomorrow it may be different, as it is considered, it is not entirely clear,” said the Chairman of the Board of Directors, President of Progress Group of Companies agro” (Krasnodar Territory) Andrey Oleinik. “But at the same time, the state, seemingly unwillingly, is pushing us into a different business model.”

According to him, the company is now working to re-profile exports. “We will be re-profiling. We will not send wheat for export, but we will send FLOUR. Instead of corn, we will export ready-made feed. That is, value-added products, so as not to give the added value to someone on the other side, but to keep it,” he said.

“The same Turkey supplies Africa with up to 1.5 million tons of flour per year, while buying grain from us. Why can they and we can't? It seems to me that a very interesting situation is developing now, which, as a result, can really push (to the world market - IF) several dozen large agricultural and food export companies. They will grope and occupy a niche that no one has been occupied with, for example, the niche of our environmentally friendly products, for example, ”he said.

And United Grain Company, against the backdrop of restrictive measures, is considering investing in infrastructure abroad. Now she, in particular, is working on the creation of a subsidiary in Egypt.

At the same time, the president of the Russian Grain Union, Arkady Zlochevsky, believes that the goals of export restrictions have not been achieved and the consequences for the industry will be serious.

“The pressure on the price situation in the domestic market, which the regulator was counting on, did not occur,” he said, citing the reasons that “a decent amount of grain was attributed, drawn in statistics,” and also that “the regulator is working in the wrong direction.” direction in which it was conceived. “It was conceived to lower domestic prices, but it works to raise world prices,” he said. “Regulators are not effectively fulfilling their intended tasks, this is direct evidence that they need to be changed.”

According to Zlochevsky, since the beginning of the season (from July 1, 2021), the price of Russian wheat has increased by $100 and reached $344 per ton (at the end of November). “This is super dynamics, an absolute record for all historical times,” he said. “In this indicator, there is a rather serious contribution of the export duty on grain.”

According to him, the restriction of exports will lead this year to a 40% decrease in the revenue of the agricultural sector against the backdrop of a more than 30% increase in production costs and production costs.

Even more categorical is the Vice Speaker of the State Duma, one of the most successful, according to experts on the agricultural market, the Minister of Agriculture (from 1999 to 2009) Alexei Gordeev. According to him, the regulation of the agro-industrial complex market, primarily grain exports, is a strategic mistake that led to an increase in world prices, since the Russian Federation occupies 20% of the world grain market. “And something needs to be done about it. For example, I would now announce that the duties will be canceled so that the farmers sow more boldly and we get a big harvest,” Gordeev said in December. In general, he called the government's attempts to regulate food prices an inadequate response and said that in fairness it is necessary to analyze the entire pricing chain in the production of agricultural products.

The expected effect of grain export restrictions has not been received by pig breeders, who, in fact, initiated the introduction of quotas and export duties. In October, DIRECTOR General of the National Union of Pig Breeders Yuri Kovalev acknowledged that despite the quota and duties, "the cost of producing live pigs still increased by 25-30%." “Obviously, there will be no reverse turn, manufacturers will have to exist in such conditions,” he complained.

“The cost of feed still increased by 40%,” said Dmitry Matveev, general director of the Kabosh Group of Companies (one of the largest cheese producers). “Instead of limiting the export of wheat, it is better to create conditions that will allow more production in the Russian Federation and more exports.”

“And creating an artificial shortage, thinking that due to the export ban, those who grow wheat will sell it cheaply, is stupid. All the same, everyone is holding the goods and waiting for the price increase. Any protective measures are very bad,” he stressed.

Under these conditions, the government had to allocate 10 billion rubles to livestock breeders for the purchase of feed.

But the restrictions remain and are improved. On December 17, the customs subcommittee supported the proposal of the Ministry of Agriculture on a quota for grain exports from the Russian Federation in 2022 in the amount of 11 million tons, including 8 million tons of wheat. Its validity period is from February 15 to June 30. In addition, the Ministry of Economic Development proposed fixing the annual nature of the quota by a government decree and introducing a progressive scale for calculating export duties when the world price of wheat rises to $375 and to $400 per ton. On the one hand, experts call price growth to such parameters unlikely, especially since prices have been falling lately. On the other hand, they believe that this will protect the market from speculative external attacks.

Meat imports: watch out, the doors are opening

The "funnel of state regulation" has drawn in the meat market, thus making a good gift to Brazil and other exporters. At the suggestion of the Ministry of Agriculture, in 2022, the Russian Federation will have a duty-free quota for the import of up to 200,000 tons of beef (throughout the whole year) and up to 100,000 tons of pork (for six months).

The department explained the need for this measure traditionally - to stabilize the price situation. Forming plans for 2021 at the end of 2020, the Ministry of Agriculture expected that meat production as a whole could increase by about 2%, including pork - by 3.9%, beef and poultry meat - by 1% (each type), reported Maxim Titov, director of the department for regulation of agricultural markets of the Ministry of Agriculture, in the Federation Council at the end of November.

However, already at the beginning of the year it became clear that these plans would not come true, because, among other problems, the industry faced a significant complication of the epizootic situation. Already in January, mainly due to the spread of bird flu, chicken production in the Russian Federation decreased by 6.4%, which led to an increase in prices. Despite the measures taken, production has not fully recovered; in September, the backlog was still 1.7%. And, as the agency predicts, at the end of the year, at best, the growth of indicators will “go to zero”.

As a result, demand shifted from chicken to pork. But the pig industry was overtaken by African swine fever (ASF), which raged especially hard in 2021. According to the National Pig Producers Union, 1 million pigs have been slaughtered due to ASF this year, compared to 2 million pigs in the previous 10 years. And it turned out that ASF, in the words of the head of the union, Yuri Kovalev, practically “ate” the entire increase in production, which was ensured by the new capacities introduced in 2021. According to the union, new projects have provided at least 250,000 tons of pork this year, while losses from the destruction of pigs due to ASF will exceed 200,000 tons. Moreover, ASF in the outgoing year was recorded in such large pork producers as the Belgorod, Lipetsk and Tambov regions.

The problems were added by the summer heat in the center of the country, which negatively affected weight gain.

Against this background, pork production in September in annual terms decreased by 7%, for 9 months - by 0.1%, and prices went up.

However, according to Kovalev, the October data completely "turned the picture" and the industry moved from a 7% fall in September to a 2% growth. Amid an increase in production and news of duty-free imports of pork, which he called a "forced creative decision", producer prices have fallen below 2020 levels.

According to his forecast, a record increase in domestic pork production is expected in 2022, and preferential imports can seriously complicate the situation in the industry. “On the one hand, the figure of 100 thousand tons seems to be small, but on the other hand, it is 5% of consumption if it is imported,” says Kovalev. “This could increase supply by 10% and lead to a decrease in average wholesale prices by 10% and maybe up to 15%. And this is the most unpleasant thing that we can expect next year. Market glut is an additional challenge compared to all the others.”

According to the head of the union, the growth in production in the industry in 2021 will be from 0.5% to 1%, in 2022, taking into account possible epizootic problems, it is expected to be at the level of 6-8%. The same figures are predicted for 2023.

At the same time, the prospects for increasing exports in these conditions are still vague. CHINA , on which Russian pig breeders counted, has not only restored production after the outbreak of ASF, but, according to the Center for Industry Expertise of the Russian Agricultural Bank, "is experiencing the first crisis of overproduction." Prices for live pigs there have fallen by half. Vietnam, which has become a major buyer of Russian pork, has begun to offer unbeatable prices for pig legs. Problems in other areas, including due to the logistical crisis. Therefore, a serious increase in pork exports next year should not be expected, experts say.

Meanwhile, Brazil is already seriously preparing for duty-free deliveries to Russia, estimating additional revenue at $200 million. Moreover, it does not wait for 2022. According to the Union of Pig Breeders, the customs service is already recording significant imports of Brazilian pork. ROSSELKHOZNADZOR recently, after a long break, began to expand the list of suppliers from this country, allowing their products to the Russian market.

Oversaturation of the pork market due to cross-elasticity of demand is also feared in the poultry industry. “This will certainly have an impact on our sector as well. Additional volumes, additional pressure on the price. Now 142 rubles. per kg of carcass is lower than profitability. For holdings, there is still a small margin, but when the price drops below 140 rubles. this stock will run out,” says Sergei Lakhtyukhov, director general of the National Union of Poultry Breeders. “Our prices have steadily declined, but for some reason the prices on the shelf have not decreased, although it is we who get all the bumps and cuffs.”

The need to introduce a duty-free quota for beef in the Ministry of Agriculture was explained by the fact that it actually corresponds to the annual import of this meat. But this also worries domestic producers.

According to Roman Kostyuk, director of the National Union of Beef Producers, this measure could lead to a serious outflow of investments from Russian beef cattle breeding and put regions where beef production is the only direction of the agricultural sector in a difficult position. The allowable volume of the quota, according to him, can be no more than 50 thousand tons, and it must be introduced at a certain price level of the Russian beef market.

According to him, tens of billions of rubles have been invested in the development of beef cattle breeding in the Russian Federation in recent years. “Moreover, investments are already difficult to make, because this is a complex and long-term sector. And now the job of persuading new investors to go in and be stressed by the prospect of imports is even harder. Investors can postpone their decision for a year or two. For an industry where output appears two to three years after the start of the project, this means a delay of 5-10 years,” Kostyuk said.

Manufacturers are also waiting for dumping from Brazil, where, due to China 's refusalbuying Brazilian beef freed up a large amount of meat. According to the union, China refused to buy from Brazil from 50,000 to 80,000 tons of beef every month.

According to Kostyuk, beef production in Russia in 2021 may exceed last year's figure by 1.5-3%. In 2020, 1.6 million tons of beef were produced in the Russian Federation.

The quota for duty-free import of pork in the amount of 430 thousand tons in the Russian Federation existed until 2020. Under the terms of the WTO, it was canceled. Currently, there is a “flat” duty of 25%. Imports of pork in 2020 amounted to about 3.8 thousand tons, the National Meat Association (NMA, includes the largest producers of pork and beef) reported.

The import of beef currently has a duty of 15% within the quota, above the quota - 50%. The quota for fresh or chilled beef is 40 thousand tons, for frozen - 530 thousand tons. In 2020, beef imports from non-CIS countries (Paraguay, Brazil, India, etc.), excluding by-products, amounted to just over 163 thousand tons, of which approximately 129 thousand tons were within the quota, according to NMA data. A little more than 100 thousand tons were imported from Belarus during this period. Moreover, deliveries from far abroad in recent years have been declining by an average of 15% per year.

"Dawn" over the "System". Goodbye Campina

The outgoing year was marked by a variety of corporate life in agribusiness, which included both the placement of shares of companies and large M&A deals. This once again confirmed the sound financial position of the leading companies against the backdrop of rising prices for their products, despite a significant increase in costs.

The most notable event was Rusagro's SPO, which was held in September. Within its framework, the main owner of the group, Vadim Moshkovich, sold GDRs for 14.7% of the capital. The total value of the transaction was $275 million. Maxim Vorobyov, the main owner of Russian Aquaculture, a salmon producer, became the anchor investor. He bought shares for $115 million and became the second largest owner of the company with a 10.1% stake. Rusagro CEO Maxim Basov also took part in the SPO. The cost of the package he bought amounted to almost $14 million, his share increased to 7.73%. Another important corporate event in the agro-industrial complex is connected with it - the resignation of Rusagro from January 2022. Basov has headed Rusagro since 2009. At the same time, he does not plan to leave the shareholders. He will remain on the board of directors of the company.

In 2021, the SPO was also held by the Beluga company, the leading producer of strong ALCOHOL in the Russian Federation. During the placement, it attracted 5.6 billion rubles for 12.7% of the shares.

In December, the situation with the additional issue of the Cherkizovo Group, the decision on which was made back in December 2020, also cleared up. The shares are placed to buy back 50% in the Tambovskaya Turkey JV from the Spanish Grupo Fuertes. The joint venture was established by the Cherkizovo Group and Grupo Fuertes in 2012 on a parity basis. Thus, Cherkizovo intends to consolidate 100% of the shares of the turkey meat producer, which ranks second in this market in the Russian Federation after Damate Group.

Prodimex, the leading sugar producer in the Russian Federation, once again announced plans to conduct an IPO. As BLOOMBERG reported, citing sources, the company discussed a possible listing with several investment banks. For the first time, Prodimex announced its intention to conduct an IPO in 2011. Then the company was going to raise from $300 million to $500 million and offer investors from 20% to 25% of the shares. The chairman of the board of directors of the group, Igor Khudokormov, told Interfax that the dialogue with potential investors has been going on since 2008.

In the past year, a number of major players in the agro-industrial complex replenished their assets. Pork producer APK Don (11th place in the pork market of the Russian Federation), which was created with the participation and technological support of the German Tonnies Fleisotwerk, came under the control of the Thai CP Foods (included in the top 10), which has been operating in Russia since 2006. The deal amounted to 22 billion rubles.

The Steppe agricultural holding, owned by AFK Sistema, bought the Mishkino confectionery factory (Rostov Region) this year for almost 1.5 billion rubles. and the holding company of the Pir group, which specializes in the distribution and production of packaged cheeses. The amount of the deal was not disclosed. Sources familiar with her spoke about the order of 5 billion rubles.

And Sistema itself, which owns a stake in the Essentuki mineral water business, was also associated with the production of Arkhyz water. Kommersant's sources in the market claim that Sistema already actually controls the Arkhyz bottling and distribution business. The structures of the corporation turned out to be creditors of Arkhyz Original LLC. The publication does not exclude that in the future Sistema may convert loans into shares and merge the distribution of Arkhyz with Essentuki.

Sistema's interest in new businesses manifested itself in the purchase of 49% of the Zarya fishing company in Kamchatka. Zarya is a major player in the Russian redfish market with a catch of more than 20,000 tons per year. The company holds a share of approximately 10% in the salmon market of Kamchatka and 5% in Russia. It owns the rights to five river fishing sites and 16 sites in the Sea of ​​Okhotsk, as well as two processing enterprises.

One of the largest pork producers in the east of the country, the Tomsk group Sibagro (formerly the Siberian Agrarian Group), continues its active development. And without regard to powerful competitors, it is expanding at the expense of the European part of the country, for example, in the Belgorod region. The assets of the leading pork producers in the Russian Federation, the agricultural holdings Miratorg and Rusagro, are located here.

In April, Sibagro closed a deal to buy the Belgorod holding Promagro (the amount was not disclosed), in September for 900 million rubles. bought the Kursk pig farm Shchigry Glavprodukt. The company emphasized that the new pig farm is located in close proximity to the previously acquired Belgorod sites, which will allow the meat processing plant to be fully loaded and increase production in the center of the country.

In 2021, the poultry business of the Cherkizovo Group grew - the company that leased the facilities of the White Bird in the Kursk Region bought them at auction for almost 5.4 billion rubles.

The owners of infrastructure facilities of the grain market are also changing. In March, Marat Shaidaev and Aleksey Chemerichko, former managers of the United Grain Company and the Novorossiysk Bakery Plant, bought out a grain terminal in the port of Rostov-on-Don from the international trader Bunge. Experts estimated the amount of the transaction from 0.7 billion to 1.5 billion rubles.

Changed the owner of the Saratov bakery plant. Now he is part of the BIO-TON agricultural corporation (Samara region, the largest sunflower producer in the Russian Federation), owned by Eduard Zernin, chairman of the board of the Union of Grain Exporters. The operation of the enterprise, which stopped last year, was resumed in April.

The "Volga expansion" of the corporation continued downstream. In May, "BIO-TON" became the owner of one of the leading agricultural enterprises in the Volgograd region - "Klyuch-Agro" LLC. As Zernin explained, this deal is in line with the company's development strategy in the Volga Valley.

Unilever, one of the world leaders in the production of food and household goods, which will celebrate its 30th anniversary in the Russian market in 2022, parted ways with the brands of sauces Calve (in Russia and the CIS) and Baltimore (worldwide), by selling them to KDV (confectionery and snacks). Unilever decided to "focus on larger areas, namely the production of ice cream and dry condiments," according to its press release. After the sale of this business, Unilever in Russia left ice cream production sites in the Tula region and Omsk as food assets.

And for the Dutch dairy company FrieslandCampina, the outgoing year was the last year of almost 30 years of work on the Russian market. Deciding to focus on development in other markets, she sold Campina LLC to the German manufacturer Ehrmann. He became the owner of a dairy plant in Stupino (Moscow region).

Domestic companies are also abandoning the dairy business, where production growth has slowed down significantly. Thus, Rusagro Group of Companies sold its dairy farm in the Belgorod region, deciding to concentrate on the production of plant-based milk replacement.

Leaving this business and GC "Malino" (Moscow region). “We are getting rid of dairy assets, we have a fairly large dairy herd, currently 2,000 cows. We refuse, because this direction is unprofitable, ”said Sergey Lupekhin, general director of the group, in mid-November. He also lamented the "very weak" competence of management in this area.

According to the forecast of the National Union of Milk Producers (Soyuzmoloko), production growth in the sector will slow down to 0.5-0.7% in 2021 against 4-5% in previous years.

According to the union, in the coming years, the dairy industry is waiting for a wave of mergers and acquisitions, and from non-core investors, "who enter with a fairly significant amount of investment." This creates a risk for small and medium-sized regional players.

But so far, the interest of non-core investors is more related to other areas of the agricultural business.

The structure of the shareholders of the oil company "LUKOIL" Vagit Alekperov and Leonid Fedun established the company "Falcon Gardens". Its main activity is the production of fruit and berry crops. Falcon Gardens may buy the Voronezh APPLE producer CJSC Sad, Kommersant wrote.

Roman Trotsenko also decided to take up the agricultural business. In June, he became a co-founder of AEON Agro with an 80% share (the rest belongs to his partner Mikhail Smirnov). “Today, the agricultural business in Russia is very successful, very profitable, very profitable. And he enjoys all possible forms of state support,” Trotsenko told reporters at the RSPP congress in December. — We have our own arable land in the group, which is used to test a new type of fertilizer. We are constantly increasing the amount of arable land.”

Land: the stakes are rising

The increase in prices also affected the main resource of agriculture - land, which, according to the consulting company BEFL, significantly slowed down the process of M&A transactions with companies in which crop production is the main business or occupies a significant share in it.

“The demand for such assets is high, but there are few offers,” says BEFL Managing Director Vladislav Novoselov. — This is due to the fact that many owners of agricultural assets, primarily owners of land and crop businesses, have postponed transactions until a calmer situation with price dynamics, since any transaction for the sale of a business is quite good capital, and the question arises of alternative investments - where can this capital be use".

According to him, the demand for land and plant-growing assets exists not only among specialized investors. “We see increased demand from related industries, in particular, Avgust and Shchelkovo-agrokhim companies, we see the interest of large flour and grain companies that are looking for raw materials assets. There is also interest from financial investors, from banks, which are also considering projects to invest in the crop business,” he said. - That is, there is a fairly serious demand on the market, backed by money, and a fairly serious decline in supply. This leads to the fact that there are fewer transactions, their size has decreased. This imbalance pushes prices up.”

A significant increase in land prices occurred back in 2020, but today there are no longer those high prices. “2021 is still marked by an extremely serious increase compared to 2020,” Novoselov said. - If we talk about sufficiently high-quality lands in the Central Black Earth Region, then, probably, in the discussions there are figures in the region of 200 thousand rubles / ha, in some cases even higher. If we are talking about high-quality assets in the south, primarily in the Krasnodar Territory, then more than 300 thousand rubles.”

According to him, quite a serious rise in prices in the Volga region. “You can debate for a long time on whether prices will remain the same, whether they will continue to rise or fall. But it is most likely that we will now live in such prices,” he said.

This year, "extremely seriously" increased and land lease rates. An analysis of auctions for the provision of state land for lease showed that annual rental rates increased 12 times compared to the initial price. “Rent is growing, which will continue to push up the cost of land,” Novoselov predicts.

According to Eduard Zernin, chairman of the board of the Union of Grain Exporters, the current situation on the land market absolutely repeats the beginning of the 2000s, “when a mass of unskilled people who had not previously participated in crop production, but who had a financial resource, rushed to the land market.” “This period ended loudly, with the bankruptcy of one of the flagships of the industry, the Razgulay group of companies, which was developing chaotically throughout the country. Now I see this trend one to one,” he said.

“The rise in land prices, first of all, is associated with a large number of non-core investors who, after reading the reports of “expert” bloggers and setting up models in Excel, decided that it was profitable here. At the same time, it is completely forgotten that for a successful agricultural business, one must proceed from production logic and logistics, and have a strong operational team,” Zernin believes.

According to him, this cycle of rising prices will end, it is not endless. “And, most likely, it will end according to the same scenario as with the Razgulay group,” he warns. “Already today there are disturbing calls from a number of large agricultural companies, which, ignoring the experience of their previous colleagues, are acting in approximately the same scenario - they are betting on land growth and randomly buying it in completely different regions of the country, beyond any logic. These are prime candidates for loss of operational control and subsequent bankruptcy.”

In 2022, the Russian Federation will begin implementing the state program for involving unused agricultural land in circulation, prepared by the Ministry of Agriculture. It is assumed that in 10 years at least 13 million hectares of agricultural land will be put into circulation. Financing of the state program for 10 years is estimated at 754 billion rubles, of which about 539 billion rubles. - funds from the federal budget. The area of ​​unused agricultural land in the Russian Federation is estimated at almost 44 million hectares, of which 20 million hectares are arable land.

According to Rosreestr, as of January 1, 2020, the total area of ​​agricultural land in Russia was 381.7 million hectares (382.5 million hectares a year earlier). They accounted for 22.3% of the total land fund of the Russian Federation. Including the area of ​​agricultural land - 197.7 million hectares, of which 116.2 million hectares are arable land, 23 million hectares are pastures, 18.7 million hectares are hayfields, 4.4 million hectares are fallow lands, 1.2 million hectares - perennial plantings. The total area of ​​agricultural land in the composition of all categories of land in the Russian Federation exceeds 222 million hectares.

New reality: there will be no freemen

The conditions under which the agro-industrial complex will operate in 2022 are also far from ideal, primarily in terms of the price situation.

According to Rabobank experts, cited by the FAO (Food and Agriculture Organization of the United Nations), in the new year, food prices will be near the highs over the past ten years due to the high cost of energy and transport costs, adverse weather and the strengthening DOLLAR. “Inflation in the food sector is not temporary. When it comes to agricultural prices, any sense of normality looks unlikely,” said Rabobank Lead Analyst Carlos Mera.

Most of all, according to experts, in 2022, due to the increase in the cost of energy and adverse weather conditions, prices for sugar and corn will rise. The price of wheat will also continue to rise in the first half of the year, but will decrease in the second due to a drop in demand for fodder.

The Central Bank of the Russian Federation also sees the risk of a repetition of the situation with a sharp acceleration in food inflation in 2022. “There are risks that this situation (with a decrease in harvest - IF) will repeat next year, look what happens to fertilizer prices,” said Kirill Tremasov, director of the Central Bank’s monetary policy department, in mid-November. The biggest threat, he said, is high commodity prices.

“The rise in prices for raw materials and intermediate goods in production chains has not yet been fully transferred to the costs of producers,” said the head of the Central Bank, Elvira Nabiullina, at a December press conference, speaking of pro-inflationary risks.

According to VTB Capital analyst Nikolai Kovalev, the determining factors for the development of agriculture in 2022 will be the global epidemiological situation and related restrictions, inflationary pressure on world prices and costs, regulation of exports of products from the Russian Federation, exchange rates and some other factors. “In December 2021, we are seeing an increase in world prices for key crops at the level of 20-40% year-on-year. The corresponding prices are also 50% above the average levels of the last five years, he said. — The consensus of analysts represented in Bloomberg expects an average annual decline in global prices for major crops of 2% per year in 2022-2024. Reducing the pressure of pandemic-related factors, such as accelerating inflation, disruption of production and supply chains, could become a price correction factor,

Representatives of agribusiness assess the prospects for 2022 in different ways, but acknowledge that the year will not be easy.

The head of the National Meat Association, Sergei Yushin, names the main risks of 2022, in particular, the continued unstable epizootic situation, the shortage of feed additives and amino acids, “absolutely inappropriate imports of beef and pork at present”, the environmental agenda, and rising costs.

The Prodimex agricultural holding regrets that "the export of sugar, mastered with such difficulty, had to be cut off on takeoff." “Giant efforts were worth establishing connections. Now the export topic is closed for us,” Vadim Yeryzhensky, deputy general director of the holding, complains.

The fact that 2022 will be more difficult than the previous ones is also recognized by Rusagro Group of Companies, but the company does not change its investment plans. Capital expenditures for 2022 are envisaged in the amount of 15-20 billion rubles. M&A transactions are not excluded.

According to the General Director of the National Union of Milk Producers (Soyuzmoloko) Artem Belov, recent trends indicate that in the coming years the agro-industrial complex of the Russian Federation will have to work in conditions of strict state regulation.

“Analyzing what has happened in agriculture over the past 15 years, we can say that the essence of state policy was to create conditions for business, to give it an opportunity for sustainable development. At the same time, the state interfered in a minimal way in how this should be done, ”he said.

At the same time, the last year has shown that the policy is getting tougher, the regulation is changing. “The state is increasingly intervening in the internal processes that take place in the industry. We see a number of trends that may affect the long-term competitiveness of the industry in a non-obvious way, he said. — This is also an attempt to control and regulate prices, and quite tough. These are also issues related to the restriction and control of exports, with the optimization of the volume of state support. A number of other issues are being discussed."

According to him, "business should be guided by the fact that the freemen, which was in previous years, will not be in the coming years." Tough government policy will not always have a positive impact on the industry, its long-term development, and investment opportunities. “This factor needs to be taken into account, included in strategies and business plans,” he advised.

According to Vice President of the Russian Grain Union Alexander Korbut, the new price level will be maintained for several years until all the problems associated with the pandemic subside. “The cost of production in almost all industries will increase by 15-30%. Selling cheap is no longer possible. For active export, active production is needed, ”Korbut said.

Russia increased exports of meat and dairy products by 30% - Agroexport 

The ESG agenda may also become a challenge for the industry. According to Rosstat, the share of agriculture in all greenhouse emissions in the Russian Federation is 7%. Some experts believe that compliance with these principles can become a competitive advantage of the Russian Federation in the global food market, others fear that they can replace the main goals of the agro-industrial business aimed at providing the country with food.