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Sustainable Partnership in Agriculture: Institutions, Tools, and Guarantees
24 October 2019
13:00—14:30
KEY CONCLUSIONS
There is a huge potential to increase turnover between Russian and African countries

Our cooperation with the African continent in terms of trade is on the rise: over the last three years – in 2016–2018 – Russian export to Africa has seen an increment of over 70%; at the same time our import from Africa has grown as well. <…> There is still room for growth: last year, we supplied USD 4.6 billion worth of goods, but quality-wise this is only 5% of total food import in Africa — Sergey Levin, Deputy Minister of Agriculture of the Russian Federation .

Our and Russian goods are no competitors. They benefit each other, that is why we are so interested in doing business with Russia — Angela Ndambuki, Chief Executive Officer, Kenya National Chamber of Commerce and Industry.

A fast development of African countries helps strengthen cooperation in agribusiness industry

Why is now the time for cooperation? Because we see fundamental change in Africa’s food and agricultural industry. <…> You can see a revolution in consumption: a growing middle class and an urbanizing continent. <…> What is crucial here is that Africa is getting a large number of mid-sized farms. They are very different from small ones. They invest in capital. They are interested in services, digital and other things — Kray Holger, Head of the Africa Policy Unit, World Bank Group.

We have the EBA index [Enabling the Business of Agriculture, – Ed.]. This index is measured in 35 African countries. <…> In 2019, they show the highest reform rates in agriculture — Kray Holger, Head of the Africa Policy Unit, World Bank Group.

In order to improve agriculture’s performance and added value, <…> we are interested in producing equipment and cutting-edge technologies. And of course, Russia is one of those countries we are really interested in cooperation with — Angela Ndambuki, Chief Executive Officer, Kenya National Chamber of Commerce and Industry.

Demand for produce in Africa is growing fast and it is growing faster than the population. <…> Consumers’ tastes also change. Consumers go from maize to wheat — Selim Basak, Managing Partner, Gemcorp Capital.

In order to raise direct investment, <…> our ministry of agriculture is introducing initiatives that aim to help investors feel confident. <…> Today, the World Bank has made a decision to take Nigeria 15 points up. <…> Now we have reached number 130 — H.E. Otunba Adeniyi Adebayo, Minister of Industry, Trade and Investment of the Federal Republic of Nigeria.

Today, Africa is one of the world’s fastest growing regions. Today, its population is 1.2 billion people, and according to the World Bank it will go 40% up to 1.7 billion. The food market that already exceeds USD 300 billion today will reach USD 1 trillion by 2030 — Sergey Levin, Deputy Minister of Agriculture of the Russian Federation .

Russia is ready to supply produce and agribusiness technologies to Africa

Over the last 10 years, the volume of agricultural production in our country has more than doubled, which allowed us to launch large-scale export of our food to global markets. <…> Last year, we exported USD 26 billion-worth of agricultural produce. <…> In comparison with 2000 our export has gone up almost 20 times. <…> Russia has been the world’s number one wheat exporter over the recent years — Sergey Levin, Deputy Minister of Agriculture of the Russian Federation .

We deliver it through platforms. <…> When a farmer gets the knowledge about what a field needs for a specific crop, he can run the equipment with this app. <…> We are talking about pinpoint farming, because land is different everywhere. <…> We want to help with logistics, financial banking services and creating an agricultural ecosystem around the farmer — Dmitry Konyaev, Deputy Chairman of the Board of Directors, URALCHEM.

Russian companies today <...> are ready to provide all partners with a huge number of services in support of agricultural machinery, selection and genetic development, soil maps, and selection of the optimal composition of fertilizers — Albert Davleev, President, Agrifood Strategies.

ISSUES
Lack of food

250 million people in subequatorial Africa are largely starving. Calorie consumption is half as low as in Europe, with 1,500 calories per day. <...> While the population is expected to grow by 40% in the coming years. We need to figure out how to feed this population — Dmitry Konyaev, Deputy Chairman of the Board of Directors, URALCHEM.

Impoverished soil

As of today, 10 times less plant nutrition is introduced in Africa: <...> 15 kilograms per hectare on average, while the global average is 150 kilograms per hectare, and in America it is 200 kilograms — Dmitry Konyaev, Deputy Chairman of the Board of Directors, URALCHEM.

Lack of financing

After the global financial crisis, traditional investors either left the market or reduced their appetite. Financing became less available under growing demand — Selim Basak, Managing Partner, Gemcorp Capital.

Excessive requirements to imported produce

Some countries basically have protective requirements in terms of phytosanitary control. Algeria is among them — Eduard Zernin, Executive Director, Russian Union of Grain Exporters.

How can we find mutual understanding – the closest contact between the services? <...> Unfortunately, even our attempts to find out what the requirements for imported produce are sometimes do not get a response — Vasily Lavrovsky, Advisor to the Director of the Federal Service for Veterinary and Phytosanitary Surveillance.

Environmental constraints for agricultural intensification

When it comes to crops, sooner or later intensification is hampered by natural constraints. <...> And first of all, I would like to address potential clearcutting for the expansion of arable land. It is in the interest of the international community to ensure that Africa's demand for crops is met in a stable manner — Ksenia Bolomatova, Deputy Director General, United Grain Company.

SOLUTIONS
Expanding the geography of the Russian agricultural export and its list of items

What do we need to develop and strengthen this cooperation? First of all, to expand the geography. Traditionally, the largest volume of our export falls on <...> North Africa, being 2/3 of Russian agricultural exports. To be exact – USD 1.568 billion, and half of it is Egypt. It is also necessary to diversify the food portfolio of our export — Sergey Levin, Deputy Minister of Agriculture of the Russian Federation .

Developing PPP and special economic zones in Africa to attract foreign investors

Kenya is creating 6 agricultural hubs in the form of PPPs. <...> Companies will be involved in large projects, in the creation of industrial parks. <...> In Kenya, there are free export zones which Russian companies can join. There are also special economic zones where we have tax breaks and privileges — Angela Ndambuki, Chief Executive Officer, Kenya National Chamber of Commerce and Industry.

Using high-quality and environment friendly fertilizers

As Russian fertilizer producers, we base our production on the world's most environmentally friendly phosphorous feed stock. <...> It contains no heavy metals at all. <...> Speaking of sustainable development, first of all, we need to think about the health of the population — Andrey Guryev, Chief Executive Officer, Chairman of the Management Board, PhosAgro .

Creating joint ventures and investing in infrastructure

We would like to go further into processing by creating joint ventures. <...> I would like to jointly construct infrastructure, like ports and storage facilities, in order to further go into processing or small-batch distribution — Sergey Kislov, President, Chairman of the Board of Directors, Agroholding Yug Rusi.

Today we signed a joint venture agreement with EFKO. <...> We supply high value-added products in cooperation with EFKO, which majors in this segment, has advanced technologies in the production of vegetable fats. That is what we want to introduce to the Egyptian market and to the African market as a whole — Yehia El Shafei, Chief Executive Officer, United Oil Processing and Packaging.

Signing such an agreement as today's one is a model for working in remote markets. Instead of just selling sunflower oil <...> it is an investment in creating our own operation there and promoting our own brands — Sergey Ivanov, Executive Director, EFKO Management Company.

We provide a combination of a financial company and a commodity trading company. This is a rather unique combination in the market. This means we finance trade flows, but also support efficient logistics. <...> We work with governments to provide credit opportunities to finance long-term programmes — Selim Basak, Managing Partner, Gemcorp Capital.

As far as Tropical Africa is concerned, it is the second fastest growing grain market. <...> Here, considering that in some countries the share of Russian produce exceeds 50% of supplies, it is time for investing in the infrastructure of the receiving country: grain terminals, distribution warehouses, organization of processing operations — Eduard Zernin, Executive Director, Russian Union of Grain Exporters.

The material was prepared by the Russian news agency TASS