Russian agribusiness increased purchases of mineral fertilizers by 20% in 2021

In 2021, Russian agribusiness increased purchases of domestic mineral fertilizers by nearly 20%, to 4.7 million tonnes (calculated as 100% of the active ingredient).

Taking stockpiles of 0.3 million tonnes into account, the total volume of purchases reached 5 million tonnes. Thus, purchases of mineral fertilizers in 2021 exceeded the target for the year, revised by the Russian Ministry of Agriculture from 3.8 million to 4.5 million tonnes of active ingredient, and also exceeded 2020 purchases by more than 20%.

The total volume of mineral fertilizers produced by members of the Russian Fertilizer Producers Association (RFPA) increased by 5% to 54.7 million tonnes (in gross weight).

Andrey Guryev, President of the RFPA and CEO of PhosAgro, said: “Last year, RFPA members met and even exceeded the goals of providing mineral fertilizers to our priority domestic market. While many countries are already facing shortages, and a spike in prices for agrochemicals has become a real test for farmers elsewhere, there are no shortages in Russia, and the price controls that companies voluntarily introduced as a preventive measure in the middle of last year will remain in effect until the end of May 2022.

“Producers are now working to build up stockpiles of product in Russia’s regions and are planning their subsequent delivery to farmers before spring sowing. As in previous years, Russian producers will meet in full the demand from domestic agribusiness for 2022 in the amount of nearly 5 million tonnes of active ingredient.”

By mid-January of this year, the volume of mineral fertilizers purchased by farmers (including stockpiles) exceeded 0.7 million tonnes of active ingredient, an increase of 60% year-on-year.

To alleviate the concerns of farmers regarding the availability of mineral fertilizers for spring sowing, temporary export quotas were introduced, in effect from 1 December 2021 until 31 May 2022, which will not result in a decrease in production capacity utilisation.

In order to plan further long-term investments in the development of the industry, which will exceed RUB 2 trillion in the next seven years, maintaining market mechanisms for the functioning of the mineral fertilizer industry is essential. As a result of RFPA members’ investments since 2013, the industry’s production capacity is expected to nearly double by 2026.

Last year, the RFPA members invested almost RUB 150 billion to develop the industry, including capital investments as part of major projects to increase production volumes and expand the range of products for Russian farmers.

PhosAgro, for example, successfully completed a large-scale development programme at its Cherepovets production site worth over RUB 120 billion. The company is also completing the construction of a new facility in Volkhov (the Leningrad region), with an investment of RUB 30 billion, and is considering the possibility of building a new facility for the production of ammonia and urea in Cherepovets.

Eurochem opened a new facility for the production of nitrogen solutions in Novomoskovsk and started a project to build an ammonia and urea plant in the Leningrad region at a cost of RUB 125 billion.

In 2021, Acron Group completed a full-scale upgrade of its urea production unit No. 6 at its site in Veliky Novgorod, which made it the largest urea producer not only in Russia but also in Europe. USD 85 million was invested in the project. The company has started construction of a calcium nitrate production facility and began upgrading its ammonia units No. 2 and No. 3 and urea units Nos. 1–4. The total planned investment is USD 304 million. Acron has also stepped up construction of the Talitsky potash mine in Perm Krai, increasing its capex budget for 2021–2022 from USD 60 million to USD 222 million.

Kemerovo Azot plans to build state-of-the-art units for the production of ammonia and urea with capacities of 3.5 thousand tonnes per day and 4.2 thousand tonnes per day, respectively, a porous ammonium nitrate unit with a capacity of 1.5 thousand tonnes per day, a liquid carbon dioxide unit with a capacity of 32 thousand tonnes per year, a granulated sulphate unit with a capacity of 250 thousand tonnes per year.

KuibyshevAzot has put into operation a facility for the production of ammonium sulphate nitrate, with an investment of RUB 4.3 billion, and is completing construction of a urea production facility with a capacity of 525,000 tonnes per year (1,500 tonnes per day). The total investment in the project is RUB 19 billion. Through VEB.RF’s Project Financing Factory, a project was launched to build a nitric acid production facility with a total investment of RUB 18 billion.

Shchekinoazot launched a new methanol production unit and is preparing to launch a facility for the production of nitric acid and ammonium nitrate.

RFPA Executive Director Maksim Kuznetsov said: “Taking into account the fact that, by 2025, according to the targets set by the Russian Ministry of Agriculture, domestic agribusiness is going to procure at least 8 million tonnes of mineral fertilizers by active ingredient, the production facilities that have been built and upgraded will be able to meet the challenge of ensuring that product is readily available for our farmers.”

The development of exchange trading has improved the availability of mineral fertilizers in Russia. Last year, more than 1 million tonnes (about 540 thousand tonnes of active ingredient) of mineral fertilizers was sold on the St Petersburg International Mercantile Exchange (SPIMEX).

On 1 March 2022, a law on agricultural products, raw materials and improved foodstuffs (initiated by Russian President of Russia Vladimir Putin in February 2019) will enter into force. The federal law will create a separate segment – differing from both organic products and mass-market products – for Russian green products grown using uniquely eco-efficient Russian mineral fertilizers.

“The Green Brand will become an important selling point for Russian agribusiness abroad. In the face of stiff competition, it will make it possible to confirm the environmental friendliness and quality of agricultural products for deliveries to both Russian and foreign markets, to monetise the potential of Russian agribusiness in the shortest time possible and to provide an incentive for further development due to environmental benefits in both domestic and foreign markets at the forefront of green agenda,” said Mr. Guryev.

In Russia, everything is ready for the full-scale introduction of the new national standard, and the process for product certification has been tested and is running smoothly. In March 2020, the first federal standards in Russian history to specify benchmarks for the environmental safety of food products entered into force. In the autumn of 2021, PhosAgro became the first Russian company to be assessed by Roskachestvo for compliance with the requirements of the national standard for high-performance mineral fertilizers.