Russian Domestic Agrochemicals Ramp Up as Major Players Leave Market
8 November 2022 As Russian President Vladimir Putin continues to push an action condemned by global leaders, most global agrochemicals producers are shutting down business, but continue to support food production to help minimize a global food crisis as 10% of global wheat production comes from Russia according to the United Nation’s Food and Agriculture Organization (FAO).
As of now, domestic players are filling in the gaps created by their departure.
According to some senior state officials of the Russian Ministry of Agriculture, in recent years, Russia has managed to significantly increase the production and export of plant protection products. According to BusinesStat, it is estimated that Russian manufacturers increased their pesticide exports 1.7 times — from 86,800 tonnes to 148,900 tonnes — between 2017 and 2021.
At the same time, domestic pesticide use has also grown. According to the Russian Union of Agrichemicals Producers (RUAP), in 2020, Russian growers applied 188,000 tonnes of product. A year later, that number amounted to 210,000 tonnes.
The departure of multinational manufacturers accelerated the use of Russian-produced pesticides. Only a couple of years ago, the share of product from domestic producers did not exceed 50%. At this point, the largest portion of agrochemicals used in Russia are domestically produced.
According to the Fertility Agency, Russian manufacturers account for 49% of the domestic market for plant protection products.
Russian companies with foreign production (China and India) deliver 22%, while the share that comes from multinationals is down to 26%.
Despite the ever deepening crisis in Russia, analysts of the Russian Ministry of Agriculture continue to maintain optimism, believing in the country’s ability to enter the world’s top 5 providers of agrochemicals sales (in terms of value), behind Brazil, United States, China, and Japan.
Viktor Grigoriev, Deputy Executive Director of the RUAP, says new lands are being introduced into Russian agricultural with the growing use of fungicides, insecticides, and herbicides. The Russian market is one of the world’s seven largest, with a value of $2.2 billion to $2.3 billion.
According to state analysts for the most recent growing season, Russian farmers were fully provided with agrochemicals, that will allow them to treat 207,000 hectares of sown area in terms of single treatment.
Russian manufacturers plan to maintain production at the level of 2021, Grigoriev says. Currently the volume of domestic production along with those, which is still produced at the capacities of multinationals will account for about 70% – 75% of pesticide needs.
The remaining volume is met by import from mostly the European Union and China.
Still, according to farmers, despite the existing optimism from the state, there is a threat of ever rising prices. In addition, in contrast to the fertilizers market, the Russian agrochemical sector remains heavily dependent on raw materials, most of which are imported.
Currently raw materials for pesticide production are almost entirely supplied from China, India, and Europe.
Over the past five years, imports of active ingredients used in the production of pesticides to Russia have almost doubled to 71,800 tonnes, costing $746.9 million.
According to Salis Karakotov, General Director of Schelkovo Agrokim, one of Russia’s largest agrochemical producers, the war with Ukraine destroyed the raw materials sector and is practically absent in Russia today.
Under the former Soviet Union, 23 plants produced more than 40 pesticides — about 300,000 tonnes of finished products, he says. That figure has declined significantly with the collapse of the USSR.
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