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The Breadbasket of the Asia Pacific: Increasing Food Exports from the Far East
5 September 2019
11:30—13:00
KEY CONCLUSIONS
Far East has a huge export potential for agricultural products and foods

The amount of agricultural production export has reached USD 25 billion, and we now have the next ambitious goal – 45 billion. I am certain that the Far East will play a key role in meeting this challenge. For example, its share in the total amount of fish and seafood export is more than 60%. <…> The Far East offers incredible opportunities — Nikolay Kharitonov, Chairman of the Committee for Regional Policy and Issues of the North and Far East, State Duma of the Federal Assembly of the Russian Federation.

Cooperation between the Far East and China is demonstrating a very good level: the trade volume between them has reached 820,000 tonnes and is constantly growing; more and more farmlands are used to produce for China. <…> Corn farming in the Far East has a huge potential — Yu Xubo, President, COFCO.

The share of the Far Eastern Federal District in our export structure is pretty large: by 2024 it is to reach around 13%. And the challenge that the region is facing is also big: it has to increase the export of agricultural products by 60% – to almost USD 6 billion — Sergey Levin, Deputy Minister of Agriculture of the Russian Federation .

Three years ago, we discussed that export is a key growth area for the region from the agricultural point of view. <…> In fact, export in the Far East is developing even a little faster than in the presidential agenda that was set later — Ilya Strokin, Director of the Agribusiness Center of Excellence, KPMG in Russia and the CIS.

ISSUES
Absence of necessary infrastructure

As for agricultural raw materials, soya and grain, if I am not mistaken, we are talking about increasing export from the Far East to 3 million tonnes. It would be really hard to do, as there is no technological and port infrastructure in Primorye. <…> I think that construction of this much needed port infrastructure in the Primorye Territory will take many years — Alexander Sarapkin, General Director, Amuragrocenter .

If we talk about some global development of grain export, there is almost no primary port infrastructure. We tried direct transhipment at our port, but it did not work. There is an alternative: grain transportation in containers. As of today, this all looks hopeless, because there is no infrastructure for real and large-scale export — Aidemir Usakhov, Member of the Executive Board, Vice President of Railway Division, Far Eastern Shipping Company (FESCO).

It is really about logistics. There is no solution for efficient transportation of goods from Russia to China. Chinese consumers are very spoiled: they are used to 2–3-day delivery and are not willing to wait for a week — Sergey Lebedev, Director for Government Relations, Alibaba Russia .

Strict tariff policy

Tariff policy is a challenge that inhibits agricultural export through the Far East. Current 10-01 tariffs are non-competitive, and because of them, cargo transportation and transfer through the Far East becomes non-competitive — Eduard Zernin, Executive Director, Russian Union of Grain Exporters.

Harsh climate and severe geographic conditions in the region

The climate in the Far East is not improving; the number of emergencies and losses, especially of crops, is growing. At the same time, the level of agricultural insurance penetration is pretty low — Irina Zhachkina, Member of the Board, First Deputy Chairman of the Board, Russian Agricultural Bank.

We cannot find the land; it is there, but actually it is not: land plots and hills are flooded and need melioration — Ali Uzdenov, Managing Partner, JSFC Sistema; Chairman of the Board of Directors, Steppe Agroholding.

SOLUTIONS
Development of transport and logistics infrastructure

We need to increase infrastructural capacity of ports in order to ensure transport accessibility for product supplies from Russia to China, and provide export and import opportunities — Yu Xubo, President, COFCO.

In the context of export expansion, we need to think of increasing capacities of Trans-Siberian Railway and Baikal–Amur Mainline. We know that there is such programme, and it is planned to increase them to 210 million tonnes by 2025. Then a ‘window’ for grain transportation might emerge, as now maximum capacities are used for coal transportation — Eduard Zernin, Executive Director, Russian Union of Grain Exporters.

Processing development

The first and the most important thing is the increase of level of processing and intensification of agricultural production. For example, by increasing the level of processing, the cost of a tonne of exported fish can grow threefold, which is around 5 billion of additional export income with the same amount of captured fish. We expect that on average the increase of level of processing will be no less than 30% by 2024, which will result in additional USD 4,3 billion — Sergey Levin, Deputy Minister of Agriculture of the Russian Federation .

Ideally, we need to sell baked bread rather than raw materials, grain or flour. But it is impossible to deliver fresh bread to China — Nikolay Kharitonov, Chairman of the Committee for Regional Policy and Issues of the North and Far East, State Duma of the Federal Assembly of the Russian Federation.

Creating a system to promote Russian agricultural products abroad

The first stage has been implemented: a subordinate enterprise, AgroExport Competence Centre of the Ministry of Agriculture, has been created and launched this year. Also, a Presidential Decree was drafted <…> on creation of the National network of agriculture representatives abroad within our embassies, according to which over the next two years agricultural attachés will start working in 50 countries and promoting our products — Sergey Levin, Deputy Minister of Agriculture of the Russian Federation .

So far, we have our representative offices only in China, but these are also a kind of representations with a function of trade ambassadors that are intermediaries between our clients; they help them and organize interaction and contract signing with potential buyers in China. Now we do that only in China, but we plan to expand to other countries of Southeast Asia — Irina Zhachkina, Member of the Board, First Deputy Chairman of the Board, Russian Agricultural Bank.

The material was prepared by the Russian news agency TASS