2022 will not be an easy year for the agriculture-industrial complex and will challenge the industry in a new way. At the same time, the previously invested funds in development will allow companies to withstand despite export restrictions and actively growing production price. The representatives of the agricultural Group of Companies shared their assessments for 2021 and their future plans at the December Agroinvestors, Russian agricultural groups of companies — 2021.
2021 was not bad, noted Vadim Eryzhensky, Deputy Executive Director of Prodimex. The agricultural Group of Companies receives an income, despite the fact that the investment programs have been cut, they are functioning. As for disadvantages, these are an inability to export sugar, but the company can supply molasses and pulp, although export volumes are small. Sugar prices regulation from the end of 2020 was not enthusiastic, but according to the top manager, it is possible to understand the government's actions.
Plant-breeders say every year: "This year has been tough and different from any other year." The next one will be the same, ironized Valery Redkin, director of AgroTerra's crop production group. The company considers the results of 2021 positive, because the primary scenario consisted in rolling crop production prices back in a more huge way. “If we look ahead to the future, we see a very dangerous situation for crop production, because the costs of fertilizers, seeds and crop protection agents are actively growing <...>. Wheat and soy are exchange commodities, so if prices have risen, they will fall too, and this is a normal cycle", argued Redkin. He thinks that prices will fall sooner or later, but whether all the parts of production price in crop production will do the same is a question. If they do not become cheaper, the agrarians will face the so-called price scissors which mean the rise of production costs with a prices fall for complete products.
AgroTerra is already preparing for this situation: it focuses on added value products. For instance, it is growing not just sunflowers, but high-oleic sunflowers. The company also works with data collected over the years to ensure that investments are cost-effective as much as possible, sees potential in selecting the strongest breeds, hybrids, reducing CO₂ emissions, promoting agricultural education and using modern technologies.
Svetlana Kuznecova, Rusagro's director of investor relations and sustainable development, noted that the group's marginality is still high, "but the happiness will be over not only after rising of prices, but also after rising production prices". She thinks that 2022 will be tougher than 2021 and 2020.
A main income of Progress Agro (formerly Kuban, an agricultural group of company established by Oleg Deripaska) is received from wheat. Moreover, the company plans to increase its processing capacity, said Yozhef Fekete, Deputy Executive Director in research and development department of the Group. "We would like to produce amino acids, but the production requires a multi-billion dollar investment," he added. The company also plans to increase the production of pulp, develop its seed breeding and dairy productions. "2022 is going to be tough because all the fertilizers, plant protection agents and machinery are getting more expensive. We have no idea what the prices will be <...>. All the non-market techniques have a negative impact on us, although I certainly understand the state’s actions. Let's hope that someday Russia will have a free and open market," Fekete added.
"The condition is stable. We develop new projects, breeding, seedage, think about processing, look forward and do not tread water,” — told Sergey Lupekhin, an executive director of Malino. He notes that when all chains (logistics, labor, etc.) are broken not only production prices are rising, but market values are doing the same as well. “Nevertheless, it is not worth of worrying about 2022. This is a challenge for everyone as we work under new terms. But it's very interesting: high-skilled people in marketing and agricultural technologies will win. However, under the current circumstances, small farms may suffer <...>. In general, I think the only trend is the development," Lupekhin said.
The outgoing year was financially worse than 2020 for Kabosh group, told Dmitry Matveev, the company's executive director. "There are some of our shortcomings in it. In general, the government's price regulation had an impact. Milk is a socially significant product. The margin and profitability in the industry are worse now, because the production prices of components have increased, and we cannot raise the prices at the moment," complains Matveev. Despite this, in 2022 the group will invest in processing and start preparing for the construction of two commercial dairy complexes for 13 thd. head of cattle.