Russian Government Considers Subsidizing Input Purchases
1 February 2011 The Russian government is considering allocating up to $200 million to subsidize the purchase of fertilizers and crop protection products for the Russian farmers in 2011. This is expected to help farmers to produce higher crop yields, especially during spring sowing of 2011.
This initiative was recently put forward by Vladimir Putin, Russia’s Prime Minister, due to significant crop losses, observed in the Russian agriculture this year, caused by summer heat and the following drought.
Because of adverse weather conditions, the acreage of winter crops in Russia this year will exceed 15 million hectares, compared to initially planned 18 million hectares, according to the First Vice-Prime Minister Viktor Zubkov. In this regard, the government plans to increase the area of spring crops by 25 percent in 2011, which would require additional financial resources.
According to Russia’s plans, in order to secure a good harvest next year, it is necessary to provide domestic farmers with agrochemicals, prices for which in recent years have significantly increased.
As part of the project, the government plans to increase the control of over pricing in the market in order to prevent unjustified rise in prices for agricultural chemicals in Russia, as well as combat numerous market resellers.
Andrew Zelyatrov, chief specialist of Agrorus Company, one of Russia’s largest producers of pesticides, believes the decision will have a positive effect on the activities of the company and the Russian pesticides market as a whole.
“In recent years the Russian government has subsidized nearly all the segments of the domestic agriculture: the purchase of equipment, the construction of livestock farms, except the crop protection product,” Zelyatrov said. “Perhaps this decision will lead to increased purchases of agricultural chemicals by farmers.”
After the collapse of the Soviet Union, the consumption of fertilizers and crop protection products in Russia declined from 10.8 million to 1.5 million tons per year, resulting in an almost complete cessation of state subsidies.
Because of the drop in consumption, Russian agrochemical manufacturers were forced to shift to new markets, in particular overseas, where they were able to occupy about 10 percent of the global market. In the case of fertilizers, exports account for about 80 percent of total domestic production.
By 2020, the consumption of fertilizers and crop protection products in the country is expected to increase from the current 2.0-2.2 million tons to 8 million tons.
Currently, the volume of use of agrochemicals in Russia is still five times less than in 1990, while the share of fertilized area in total crop area is less than 50 percent. The application rate of fertilizers in Russia is estimated at 27-30 kg, far less than Europe’s rate of 250 kg per hectare.
In addition to high costs, a large number of counterfeit products remains one of the major problems for farmers and producers.
Presently, the government decided to postpone the implementation of such measure, because local producers are able to fully meet local demand, eliminating the need for additional supplies of agrochemicals on the domestic market.
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