– What is the reaction of world market to limit Russian grain supply? What do your foreign partners on this?

Dmitry Sergeyev: the News were perceived ambiguously. The General tone was alarming, as there were concerns that this measure may lead to a shortage of wheat on a global scale. Later, the market regained equilibrium. The introduction of the quota mechanism has not led to defaults or other negative consequences for Russian exports. The surge of interest in the grain on the wave COVID-19 in April passed quickly.

According to our forecasts, in the current season grain exports from Russia will amount to 43 million tons of grain, and without quotas it would be about 44-45 million tonnes. That is, to a significant reduction in the export restriction of the supply failed.

But together with grain interventions, the operator of which is UGC, it has increased supply in the domestic market stabilized prices and increased availability of grain for consumers. Because the quota is primarily intended to address issues of national food security.

According to the International Institute of food policy research (International Food Policy Research Institute), such restrictions to support the internal market was introduced or considered in 17 countries. Among them the largest suppliers of grain on the world market: Romania, Kazakhstan, Ukraine.

the Russian mechanism is one of the most soft, in my opinion. The quota mechanism has allowed to avoid speculation and hype on the market in April, has enabled millers of Russia and the world to provide themselves with grain as planned. However, none of the foreign customers are not affected.

What happened in the market after the quota on grain exports of 26 April was chosen?

Dmitry Sergeyev: the surge of activity and interest in the export of additional volumes, which we saw at the end of April, was associated with short-term weakening of the ruble to the dollar, and the local strengthening of global grain prices, in turn caused panic on the background of the pandemic.

during the following weeks and rates, and the exchange rate has adjusted, and from the beginning of may, we witnessed a traditional for this time of year activity: the minimum interest in Russian grain on the world market. In some cases, small exporters have suffered losses from downtime of vessels. However, supply of main exports are as planned.

the last time the suspension of Russian grain exports led to the Arab spring. There are no prerequisites for the repetition of the situation now?

Dmitry Sergeyev: In the early 90-ies, one could hardly imagine that Russia, the largest importer of grain crops will become the leading provider of this about��of occii on the world market. We export exceeds import more than 60 times – the ratio is simply enormous.

Quotas of export supply was transparent and not sudden. But, really, in regard to the limits of today have expressed concern, for example, in Lebanon, which is interested in the resumption of supplies. However, the degree of dependence of Arab and other countries from the Russian grain should not be overstated.

the Likelihood of recurrence of the scenario of the “Arab spring” is extremely low, as this and other similar events have a fundamental background and a long stage of development, and the supply of grain is not the main factor.

Who will replace Russia on the world grain market now? Could it be that when we come back with the new harvest, this place will have someone taken?

Dmitry Sergeyev: the padlock on the bins of the Motherland no hang – Russia world grain market has not gone anywhere, and no one had replaced. Traditionally in the Northern hemisphere in may and June, he completes the growing season, producers and importers are waiting for the new crop. In June, the majority of grain elevators and terminals carry out scheduled maintenance works and suspend production activity. This time of low business activity by the trade volume in the world in principle.

as far As Russian wheat is valued on the foreign market?

Dmitry Sergeyev: the Russian wheat is valuable for its quality, high protein. This distinguishes it from the products of other countries. In recent years, American experts have expressed serious concern about the sharp increase in the quality of Russian grain.

This was the result of the state policy on comprehensive support of agricultural producers, including the introduction of modern technologies, provision of modern agricultural machinery, fertilizers and means of plant protection. Add to this a stable volume of supply and a modern export oriented infrastructure – and we have a high quality and highly competitive on the world market the product.

Russian companies-exporters ensure a transparent and timely delivery from the field to the consumer on all target markets, successfully increase the volume and range of supplies. Conveniently located terminal from the main water basins (Azov, Black sea) allow to cover a large part of the market of world exports and major consumers of Russian grain – Africa and the middle East.

Some of the contracts were disrupted due to the fast sampling quotas at the end of April?

Dmitry Sergeyev: contracts, including with government customers in other countries, are executed in a timely manner and in full. “Novorosthe Russian Kombinat KHLEBOPRODUKTOV” (NGP), which is included in the UGC, and other deep-sea terminals produce shipments at previously agreed schedules and contracts. All our obligations under existing contracts will be fulfilled. Now there is a Contracting of the crop of the new season.

In the current season (from 1 July 2019) the UGC group has exported about 2.6 million tons of grain. For comparison, last season there were shipped for export a little more than 1.2 million tons of grain. Our major buyers are Egypt, Sudan, Turkey, Iran and Bangladesh.

an Important achievement in the current season – a significant increase in the share of direct deliveries to the state Agency for the procurement of food of Egypt and the Turkish state grain Board from 7% to 37%, or over 900 thousand tons. It is possible to reduce the amount of sales through international traders. In 2019 for the first time calculations of all the company won tenders for the supply of grain to Turkey was made in Russian rubles.

Your predictions for the new season – how many will gather, how many export?

Dmitry Sergeyev: We expect that the gross harvest of grain and leguminous crops will total more than 120 million tons. According to our forecasts, only wheat in the new season the country will be able to export 33-35 million tons. Sure, the grain is enough for all.

will the grain become the new Russian oil and the main source of foreign exchange earnings in this situation?

Dmitry Sergeyev: the Thesis “grain is the new oil” was not accidental. This contributed, on the one hand, a long and hard work of local farmers and the regulator, to ensure a steady growth of yields of grain crops in the years 2017-2018, and as a result, the increase in export shipments. On the other is the high volatility of the oil market, the sharp exchange rate jumps, etc. All this led to the fact that the cost of grain for export in the ruble equivalent was more than oil.

however, I’ll be careful in assessing the prospects of the primacy of the foreign exchange earnings from the sale of grain in the export portfolio of Russia. And this is for a number of reasons. First, the extraction and sale of oil, production of petroleum products and their price can be regulated in a document (agreement OPEC+) in contrast to grains, the price of which depends on the physical market including the prospects of the harvest, which is gathered only after six months. Secondly, the oil in contrast to the grain is less subject to seasonal factors, and its production does not depend on the time of year in principle. Finally, the rising cost of grain within the country due primarily to the devaluation of the ruble, not the increase in prices on the world market.

Despite this, of course, the growth potential of grain exports there. Russian agricultural producers and exporters using the support programme aboutthecasting agriculture and export of agricultural products, consistently increasing the volume and quality of Russian exports in all categories. Including export crops.

Many experts believe that grain interventions of the past. You have a different opinion?

Dmitry Sergeyev: For nearly 20 intervening years have proven themselves as a mechanism of operational support to the regions and consumers in case of deficiency or of surplus grain on the market. This allows you to protect domestic grain market from price volatility on world markets and export restrictions.

we are Now with the Ministry of agriculture are working on the issue on the formation of grain reserves in the amount of up to 6 million tons on the basis of the state Fund. This amount we plan to create not less than three years. It roughly corresponds to monthly consumption of grain in Russia and is aimed primarily at ensuring the country’s food security in case of repetition of the scenarios of 2010 and 2012.

In those years, grain production in Russia amounted to 61,0 and 70.9 million tons respectively, and now every year our country consumes 76 million tonnes. According to our preliminary estimates, about half of these reserves will support the flour milling industry, which consumes 1.1 million tons of grain per month. That is, we aim to provide a three-month need of the whole country in the grain for bread. The remaining volumes will be allocated to support the livestock sector and especially small producers, do not have their own raw material base.