“Black Sea region determines the grain prices. It is the main region for supply of wheat… Russia is the world’s biggest exporter of wheat because of the extra wheat. Russia will boost the export of wheat. We will make the harvest grow bigger. We will have more extra wheat so we have to supply more grain abroad.”
President of the Russian Grain Union
Russia has managed to capture more than half of the global wheat market in recent years, becoming the world’s biggest exporter of grain, thanks to bumper harvests and attractive pricing. In 2016, the country became the world leader in wheat exports and U.S.,Russia’s main rival in the global grain market, can hardly expect to get back to top place soon. Since the early 2000s, Russia’s share of the global wheat market has quadrupled. Russia produced a record yield in the past agricultural year, collecting a total of 135.4 million tons of grains and exporting over 40 million tons of wheat.
Experts believe that despite damages caused by droughts this year, the country will continue to strengthen its position on the global market. Aggregate cereal exports in the 2018/19 marketing year (July/June) are forecast at about 42 million tons, the second highest volume after last year’s record. Wheat shipments, accounting for about 80 percent of total cereal exports, are expected at 34.5 million tonnes.
Milller Magazine interviewed with the President of the Russian Grain Union, Arkady Zlochevsky, who has a significant role in that success story. Zlochevsky is the president of the Union since 2002. The Union members produce almost half of the general production of flour and animal feed in Russia, and also provide 95% of grain exports.
Speaking to Miller on the sidelines of the Xth International Grain Trading Conference in Antalya, Turkey, Mr. Zlochevsky assesses on conditions of the development of the situation on the global grain market and the prospects of the effective Russian-Turkish cooperation on the grain market. He also emphasizes that Russia has potential and resources to increase its wheat exports.
Here are the answers of Mr.Arkady Zlochevsky to Miller Magazine:
Mr. Zlochevsky could you please give information about Russian Grain Union?
The Russian Grain Union is one of the largest and most influential unions in the agricultural sector of Russia. It embraces more than 400 companies and organizations of other forms of property. More than 50% of the Union members are grain primary producers and companies of grain storage and processing.The operators of the grain market, including infrastructure companies, represent 18% of members of the Russian Grain Union. Union members account for about 25% of Russian grain production, more than half of the production of flour and animal feed, two-thirds of the Russian grain market turnover of grain and over 95% of exports of grain and processed grain products. The RGU activity aims developing and supporting of stable operations of the Russian Grain market; facilitating of productive growth and sales support of grain and its processing products and improving their quality and competitive growth in internal and external grain markets.
Russian wheat export is booming and Russia is number one wheat exporter now. How did Russia achieve this?
Russia is the world’s biggest exporter of wheat. We have much extra wheat because we are the top exporter. Because of extra wheat, we became the biggest exporter. In 2002, we began to export this extra grain; so, for Russia wheat is the biggest producing grain. Canadian wheat has the genetic from Russian cereals.
What are your future expectations about Russian grain industry? Do you think Russian export of grain can be further increased? Where will be the opportunity for Russian exports?
We will boost the export of wheat. We will make the harvest grow bigger. We will have more extra wheat so we have to supply more grain abroad.
What are the main challenges for Russian grain exporters today?
First of all, unstable regulations. It is the main problem. The restrictions are not regarded as problem now.
Do you think there is a quality problem regarding Russian wheat?
We have no problem with the quality of wheat. It is like a move as somebody speculates about quality of Russian wheat. We have wheat any quality in Russia. But we have to keep contracts to follow some terms of contract, and we do it. If the contract we see wheat of low quality, we supply this company with such wheat. We are not producing low quality wheat. It is the question of buyer. If the purchaser can buy wheat of high quality, then he buys it.
What can we expect from the Black Sea Region going forward? How does the Black Sea affect the grain market?
Because the Black Sea grain is a leader of the wheat supply, it determines the prices and balances of the grain and cereals. It is the main region for supply of wheat.
What are the major issues affecting the pricing of grain?
The storage determines the price of wheat. The prices are stable now. The last season the prices were decreasing because of the storage.
The storage capacity is so important. Is there any plan to invest in the grain storage?
We are not an investment company. We have no plans regarding this. Our members have these plans. Many companies have to increase the grain storage capacity. They are very close to this field. (Editor’s note: Russia has about 120 million tons of grain storage capacity)
What kind of changes have you experienced in the grain industry in recent years?
We have so many revolutions in the market. Now, we are developing an evolution of way. The last time we have any politics involved in it, it is a traditional instrument for affecting the grain industry. It is a very free field far from political factors. So, the last time I saw this trend and risks and I was not happy about it. So if we continue like this, we will have that some political factors will make revolution in this area.
Do you want to add anything else?
I think that our relations are quite stable now. We are developing our relations. Turkey is the second buyer of Russian wheat after Egypt and the biggest flour supplier in the world. We had many trade wars and everything has changed. I have known many restrictions. We have no restriction between our countries. I think everything should come down to updating the partnership relations between our countries.
We also suggest you to read our previous article titled "“Mergers in flour industry are inevitable because of fierce competition”".