Due to an embargo on foreign food, huge subsidies and a weak ruble to do business in some agricultural industries of Russia became more profitable than producing oil, according to Bloomberg, reports RT.
Moreover, the excess of grains has helped Moscow to increase export of food and to the amount in excess of its revenue from the sale of military equipment.
Stung by the fall in oil prices, the ruble depreciation, Western sanctions and the longest recession in 16 years of his rule Vladimir Putin is trying to minimize Russia’s dependence on uncontrolled markets, writes Bloomberg. Due to an embargo on foreign food and unprecedented subsidies, many sectors of agriculture began to bring much more revenue than oil production.
As an example, the publication presents the group of companies of billionaire Vadim Moshkovich’s Rusagro, which produces sugar and meat. Last year it received state support of about $ 3 billion and have not paid any taxes with revenue. As a result of its net profit grew by 33%, we are up by 28 points in comparison with the indicators of “LUKOIL”.
According to the publication, even war in the middle East, Putin made a blessing to farmers. After Turkey shot down a Russian plane, Moscow responded with a ban on the import of certain products of its erstwhile ally.
However, the main achievement of Putin’s strategy of food associated with grain. Russia surpassed the U.S., becoming this year’s biggest exporter of wheat. This is a “landmark event” was accompanied by high yields of corn, rice, soybeans, and buckwheat. Large fees and financial incentives resulted in a desire to get land in the fertile black earth region and other regions.
Rich Russians rush to invest in European hotels and farmland, says the head of Sberbank Private Banking Evgeniya Tyurikova. According to her, this is a completely new trend.
The head of “FosAgro” – the oligarch Andrey Guriev, the largest property owner is Samvel Karapetyan, General Director of “RUSAL” Oleg Deripaska and “a close associate of Putin” Gennady Timchenko is only a small part of wealthy Russians are riding a wave. Perhaps, another major beneficiary from the agricultural boom has been the Minister of agriculture Alexander Tkachev. As the article States, owned by his family firm Agrokompleks increased the size of the cultivated land 200 to 456 thousand hectares and in 2013 has tripled the net profit.
The leadership of the largest country in the world has long wanted to turn it into “food of the colossus”, are constantly faced with many difficulties. Soviet leaders from Lenin to Khrushchev, tried to introduce radical changes to the industry that often had tragic consequences. After the collapse of the Soviet Union, agriculture has undergone a “chaotic privatization”. Many large farms were divided into small plots whose owners are putting great efforts to overcome the technological gap.
Today, many farms have been ineffective. So, according to the CEO of the Russian direct investment Fund (RDIF), cows in Russia give 2.5 times less milk than some other countries. Roads and infrastructure are in poor condition, modern equipment is rare, and such key products as beef and cheese, are produced in insufficient quantities.
Many of the farm “hung with debt, are not in very good form and often in the wrong place because of questionable Soviet planning,” the expert believes the British analytical center Chatham House Richard Connolly. “They need more than just people willing to invest,” he said.
And yet an excess of grain, coupled with a weak ruble helped to increase food exports to a record $ 20 billion in 2015. This is more than the country received from the sale of weapons. The total volume of agricultural production increased by 3%, mitigating the overall decline of the economy. And while exports increased, imports reduced. Russia has reduced the purchase of foreign products supply about 40% in 2013.
“If I were asked what the most reliable and profitable business, which is now to invest, I’d have to say agriculture”, − stated the former KGB officer and now businessman Alexander Lebedev, who owns the largest potato farm.
Putin relies not only on rich Russians. Russia attracts companies from Asia and the Middle East. RDIF together with China to create a Fund in the amount of $ 2 billion for investment in agricultural projects, and last month was formed the Russian-Thai firm, which is to build the largest complex for the production of dairy products. Moscow is also working with Egyptian banks on the project of export of Russian grain through the Suez canal. If successful, these efforts will bring Putin to the stated goal of the economic shift from the West towards emerging markets.
But although the Russian President intends to achieve its goal with the help of magnates, the main burden of transformation of Russian agriculture, as always, falls on the shoulders of ordinary workers. “We are working tirelessly to execute the plans,” the publication said one of the workers of the greenhouse complex “southern”, which is owned by billionaire Vladimir Yevtushenkov. − I just want to get me a raise”.
