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Mineral fertilizer export quotas to make supplies to domestic market more reliable

04.11.2021 | News

Quotas for mineral fertilizer exports will ensure that supplies to the domestic market are more reliable while also allaying the concerns of Russian farmers regarding the supply of mineral fertilizers for spring sowing.

The Executive Director of the Russian Fertilizer Producers Association, Maksim Kuznetsov, said: “The government’s decision has in fact entrenched the existing balance between domestic and export market sales of mineral fertilizers.

“Therefore, we don’t expect this quota to have a negative impact on capacity utilisation, which is now close to 100%. Fertilizer production is increasing — growing 5.6% from January to September, according to Rosstat.

“We also don’t see any risks to the further implementation of the industry’s investment programmes, which amount to RUB 2 trillion, and are mainly aimed at fully meeting demand from the industry’s priority domestic market.

“On the other hand, export quotas will support a favourable situation in global markets; therefore, in value terms, Russian non-resource, non-energy exports will only benefit.

“In this context, producers have been voluntarily keeping mineral fertilizer prices down in Russia, which later on will enable crop exporters to enjoy success in global markets. Thus, quotas will be an additional means of improving the performance of Russian agribusiness.”

The domestic market has always been a priority for Russian mineral fertilizer producers. Over the past five years, Russian agribusiness has practically doubled its consumption. In 2021, this volume has increased by 13% to 4.52 million tonnes in nutrient content, 97% of which has already been supplied to farmers. There is not now, nor is there expected to be, a shortage of mineral fertilizers.

Having fully met their phosphorus needs for autumn fieldwork, farmers have already begun preparing for the spring and are buying nitrogen-based fertilizers. A significant portion of purchases were shifted from spring to autumn. Due to increased demand, Russian producers have continued to keep prices for mineral fertilizers down until the end of the year, ensuring stable conditions to build up stocks necessary for spring fieldwork.

Over the past seven years, the industry has invested over RUB 1.3 trillion, and about RUB 2 trillion more will be invested in the next seven years to meet growing demand from Russian farmers as well as to maintain and improve positions in foreign markets. As a result of investments since 2013, the production capacity of companies in the industry will practically double by 2026.

Thanks to these large-scale investments, the sector remains one of the flagships of Russian industry. In 2020, the industry increased its output of finished product by 5%. From January to September 2021, the production growth rate rose to 5.6%, which exceeds the average rate, 4.7%, for Russian industry as a whole.

 

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