World meat industry news

Sanctions against European food products are putting Russian farmers in the Kremlin's spotlight. Government grants to help farmers set up in business are growing.

Yury Orlov from Mordovia runs a dairy farm. He has recently received a Russian government Beginning Farmer grant as a new farmer of 1.5 million rubles ($23,000).

With this money, he has equipped a milking shed and purchased 15 cows. Yury is now planning to enter a competition for a grant as a “family farm" - worth between 3 and 7 million rubles ($47,000-$110,000), which would enable him to significantly increase capacity and production.

Natalia Zvereva, director of regional social program Our Future, says that small farmers are now increasingly registering as individual entrepreneurs - small businesses - in order to be eligible Beginning Farmer grants.

According to Russia's Federal Tax Service, in the first quarter of 2015 the number of farming entrepreneurs grew by 4,670 compared with 3,000 for all of 2014.

Olga Bashmachnikova, chairwoman of the Agrarian Party of Russia and deputy director of the Association of Farms, adds that the Beginning Farmer program was set up in 2012, but interest in it has increased this year.

Individual grants average 1.5 million rubles. Sixty percent of those who apply for the grant are cattle farmers, while 40 percent run arable farms (25 percent of which are grain farms).

Business boost

Farmers interviewed by RBTH say a grant of 1.5 million rubles represents a major boost in setting up a small farm.

Yelena Shcherbakova, who has a poultry farm in the Altai region, registered as an individual entrepreneur on July 15.

“My main goal is to apply for the Ministry of Agriculture's Beginning Farmer grant,” Shcherbakova said.

“For us it is a chance to get funds from the government to help purchase items we cannot afford – expensive incubators, including industrial ones, which can cost as much as 540,000 rubles.”

Farming has become a potentially profitable business thanks to the current embargo on foreign foodstuffs and demand from Russian consumers had increased.

“The food embargo made room for Russian entrepreneurs on the shelves of major supermarkets,” says Mikhail Nikolayev, managing partner of the company Nikolayev and Sons and the winery Lefkadia.

“Demand for Russian products has grown dramatically since the introduction of sanctions in the summer of last year,” he says, adding that Russian demand for Russian cheese has doubled to 40% percent of the market this year.

Growing fund

Experts say Russia has as much as 40 million hectares of land suitable for agriculture lying idle. In 2014, more than half of all Russian farms were individual homesteads - 51.4 percent, according to the Association of Farms.

Farmers admit that this figure can be increased, but this requires more funding and the preservation of the food embargo.

The Agrarian Party's Bashmachnikova says the volume of state subsidies is not yet sufficient to support all who want to start a farm business. This is despite the fact that this year's funding for the grant program has been increased from 1.9 billion to 3.2 billion rubles ($29.7 million to $50.1 million).

Over next five years, the Ministry of Agriculture has pledged to allocate about 2 trillion rubles ($31 billion) to support the agricultural industry.