IKAR in Mass and Industry Media

Russia State Exporters Up Wheat Share as Geopolitics Looms Large

Bloomberg

State first became biggest exporter of Russia’s wheat in 2020
Russian government is becoming more influential in food sector

Russian state-controlled companies boosted their share of the nation’s wheat exports in the first half of the season as the government expands its role in an increasingly strategic sector.

Demetra Trading and OZK JSC, which is also known as United Grain Co., increased their presence in one of the world’s biggest wheat export markets. Prices have since spiked amid escalating tensions over Ukraine, although Russia has repeatedly denied it plans to declare war and grain cargoes are flowing freely.

The Kremlin has long sought to become more influential in Russia’s food sector, promoting greater self-sufficiency in everything from tomatoes to cheese. It’s also taken steps -- including a floating tax on grain shipments and a wheat export quota -- to slow overseas sales to curb domestic food inflation.

State companies “might be less cost/benefit sensitive than private players,” Dmitry Rylko, director general at consultant IKAR in Moscow, said by email.

The Russian state first became the biggest exporter of the country’s wheat crop in 2020. The country is expected to be overtaken by the European Union this season as the world’s No. 1 wheat exporter.

“Both Demetra and United Grain own infrastructure. That could explain part of the increase of their shares and exports,” Andrey Sizov, head of consultant SovEcon said by phone. “There’s also a long-term trend that multinationals’ share of the market is going down, and it has been like that for many years.”

Trading House RIF, a closely held Russian company, topped the ranking of wheat exporters, according to data from ProZerno.

01.02.22

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