World meat industry news

The share of profitable farms in the agro-industrial complex of the Russian Federation at the end of 2022 exceeded 90% against 86% in 2021. The risks of partial crop loss are insignificant, the Ministry of Agriculture reports in comments to the study by Yakov and Partners (created on the basis of the Russian assets of the consulting firm McKinsey & Company).

According to the forecast of the company's experts, the final stocks of grain in the current agricultural year (ends on June 30, 2023) may amount to 26 million tons, of which about 17 million tons are wheat. Thus, they believe that at current prices, the risk zone usually associated with long-term storage of grain includes reserves worth about 260 billion rubles.

Experts also noted that the current situation is already negatively affecting the margins of wheat producers. "Compared to last year, it is likely to decrease by 1.6 times and by 3 times compared to the 2020/21 season. In the future, the continuation of current trends may lead to a decrease in grain production, in particular wheat, by 13-19 % already in the 2023/24 season," the report says.

The Ministry of Agriculture emphasizes that agriculture in 2022 has become one of the most dynamically developing sectors of the Russian economy, demonstrating an increase in production by more than 10%. At the same time, in crop production, the indicator increased by almost 16%, due to the record harvest of grain and a number of other crops. "The share of profitable agricultural companies has also grown: in 2021 they were 86%, and in the past - already more than 90%," the agency said.

"Despite a slight reduction in margins in crop production against the backdrop of lower selling prices for products, profitability in the sector, taking into account state support, remains at an acceptable level," the Ministry of Agriculture says, recalling that last year additional measures were largely focused on grain producers. In 2023, it is also planned to subsidize the costs of farmers for the production and sale of grain. Thus, this direction, of course, retains investment attractiveness, the message emphasizes.

The Ministry of Agriculture also notes that in order to ensure the balance of supply in the market and the maximum profitability of crop production, it is planned to reduce the area under wheat this year. The target for wheat production for this year is 80-85 million tons (104.4 million tons in 2022). "This will help maintain the stability of the domestic market in the interests of all participants and realize last year's record harvest," the ministry said.

According to the agency's estimates, grain exports for the first half of this year will be about 30 million tons, or about 5 million tons per month. Since the beginning of the season (since July 1, 2022), 29 million tons have already been exported, which is almost a record figure. The forecast volumes of exports will effectively remove excess grain from the Russian market before the arrival of a new crop, according to the Ministry of Agriculture.

"As for long-term storage, it should be noted that in recent years, many projects have been implemented in the country for the construction of modern elevator complexes, where grain is stored in an underworked form and practically does not lose quality. Thus, the risks of partial loss of crop are insignificant - the entire volume harvested grain will be sent for processing, fodder purposes or export.