Russian farmers increase the purchase of mineral fertilizers by 26%

The volume of fertilizers purchased by Russian agribusiness, including exchange purchases, increased by 26% at the beginning of August to 3.72 million tonnes (calculated as 100% of the active ingredient). As such, 83% of agribusiness demand for mineral fertilizers for the whole of 2021 has already been met.

A significant volume of the fertilizer for this year was delivered to farmers in advance during the off-season. As a result, work in the spring season in Russia was carried out on time and to a high standard. Harvesting has already begun in most regions of the country. According to the Ministry of Agriculture, almost 45 million tonnes of cereals have been harvested as of the end of July, which is higher than last year's figures for the same date. Mineral fertilizers are continuously supplied to the regions, so there is no shortage of fertilizers.

Considering the level of global food prices both around the world and in Russia, the availability of mineral fertilizers for farmers today is high. This is the result of implementing the Order of the Russian President from 24^th September 2015 to introduce a mechanism to contain mineral fertilizer price increases amid the changing macroeconomic situation. As a result, the Russian Government developed mechanisms to ensure the affordability of mineral fertilizers for agricultural producers, which, along with the Federal Antimonopoly Service’s principles of economic pricing analysis, are effectively applied by mineral fertilizer producers.

Trading on the SPIMEX plays an important role in further developing the competitiveness of the Russian mineral fertilizer market. For the 7 months of 2021, trade volume was more than 6 times larger than the year before, and the number of supply bases exceeded 200. All RFPA members are represented on the exchange, with PhosAgro, Akron and EuroChem remaining the leading suppliers.

The participation of small and medium-sized agribusinesses in trades will help further increase the number of exchange transactions. To this end, the minimum exchange lot has been reduced from 20 tonnes to 5 tonnes. At the initiative of the Russian Ministry of Industry and Trade, issues relating to the provision of preferential loans by banks regarding exchange contracts are being worked through.

In July of this year, under plans agreed on by Denis Manturov, Russian Minister of Industry and Trade, and Dmitry Patrushev, Russian Minister of Agriculture, large-scale mineral fertilizer producers have made the voluntary decision to freeze prices on their main types of fertilizer products until the end of the autumn season (31^st October 2021), following a meeting with Russian Deputy Prime Minister Viktoria Abramchenko.

These decisions preceded the start of the season of high demand for mineral fertilizers and are additional to already existing measures to support Russian farmers during the autumn season that were taken in response to the changing macroeconomic situation as a result of the ongoing pandemic, and the drought in a number of Russian regions. 

In August of this year, major mineral fertilizer producers Akron, PhosAgro and EuroChem took additional measures to curb fertilizer prices by providing farmers and vegetable growers with discounts on their products. These commitments were made as a follow-up to proposals to control the prices of seasonal food products in the regions, which were formed during a meeting of parliamentarians with members of the Russian Government and heads of the regions. The meeting was also attended by Andrey Turchak, First Deputy Speaker of the Federation Council, Alexey Gordeyev, Deputy Speaker of the State Duma, and Deputy Prime Minister Viktoria Abramchenko. A working group was set up on this issue, headed by Deputy Speaker of the State Duma Alexey Gordeyev.

On the instructions of First Deputy Prime Minister Andrey Belousov, an interdepartmental working group, consisting of representatives from the Ministry of Industry and Trade, the Ministry of Agriculture, the  Ministry of Economic Development, FAS and RFPA, has developed and approved recommendations on methods for monitoring and forecasting mineral fertilizer prices and for analysing mineral fertilizer price growth risks in the domestic market, based on an assessment of the availability of mineral fertilizer to domestic agricultural producers.

In 2021, Russian mineral fertilizer producers will meet increased demand from domestic farmers for 4.5 million tonnes (calculated as 100% of the active ingredient.) and for 5 million tonnes next year fully.

Andrey Guryev, President of the Russian Fertilizer Producers Associations (RFPA) and PhosAgro’s CEO, stated that Russian agribusiness is a strategic priority for domestic mineral fertilizer producers. Together with the Russian Government, the Federation Council and the State Duma, RFPA companies are implementing a set of measures to reliably provide Russian farmers with mineral fertilizers, which will allow Russian agribusiness to harvest record amounts of grain and to maintain its leading global position in wheat exports.

In order to simultaneously maintain its position in the global market and to meet the growing demand of Russian agribusiness for mineral fertilizers, which has increased by a factor of 1.5 over the last 5 years and will double over the next 5 years with the prospect for further growth, our industry invested RUB 1.3 trillion in developing a sustainable production base over the previous 2013-2020 investment cycle alone. Over the next 7 years, during the new investment cycle, total investment is estimated to reach nearly RUB 2 trillion, thanks to measures to stimulate investment activity introduced by the Ministry of Economic Development and the whole economic bloc of the Russian Government, headed by First Deputy Prime Minister Andrey Belousov, he stressed.