China may buy more Rus­sian soy­beans

Can't re­place US crop in short term due to limited ca­pac­ity, lack of trans­port

Global Times - - Business -

By Chen Qingqing in Vladi­vos­tok

Rus­sian com­pa­nies are ea­ger to in­crease ex­ports of soy­beans and other agri­cul­tural prod­ucts to China amid the China-US trade war. How­ever, Rus­sia’s soy­bean ex­ports are un­likely to re­place those from the US, at least in the short term.

It is time for China and Rus­sia to in­crease co­op­er­a­tion in agri­cul­tural in­vest­ment and trade, Maxim Basov, CEO of Rus­sia ma­jor agri­cul­tural com­pany Rusagro Group, told the Global Times in a re­cent in­ter­view.

“The fo­cus now is shift­ing from the do­mes­tic mar­ket to the in­ter­na­tional mar­ket,” Basov said, not­ing that the ongoing trade war be­tween China and the US opens op­por­tu­ni­ties for Rus­sia to sell more agri­cul­tural prod­ucts to China and be­come a new part­ner.

For now, only 1 per­cent of China’s food im­ports come from Rus­sia, which is still very low, Basov noted.

Busi­ness rep­re­sen­ta­tives and Rus­sian fed­eral gov­ern­ment of­fi­cials ex­pressed high in­ter­est in ex­pand­ing food trade with China dur­ing the fourth Eastern Eco­nomic Fo­rum (EEF), which ran from Tues­day to Thurs­day in Vladi­vos­tok, a city in the Rus­sian Far East. Some of those par­tic­i­pants said they ex­pect more in­vest­ment from China in Rus­sia’s agri­cul­tural sec­tor.

“We’re now ready to in­vest in more agri­cul­tural projects… China will be an im­por­tant in­vestor in those projects,” Niko­lay Kharitonov, a mem­ber of the State Duma, the lower house of Rus­sian par­lia­ment, who is also in charge of Far East af­fairs, told the Global Times dur­ing the EEF.

Greater acreage and im­proved yields will see Rus­sia pro­duce 3.7 mil­lion tons of soy­beans in the 201819 mar­ket­ing year, up 8.2 per­cent from the pre­vi­ous year, ac­cord­ing to a post on in­dus­try web­site agri­cen­sus in April. Rus­sian soy­bean ex­ports are fore­cast to reach 625,000 tons for the 2017-18 pe­riod, re­flect­ing a good pace of ship­ments to China, the post said.

Many Chi­nese com­pa­nies have also shown an in­ter­est in in­vest­ing

more in the agri­cul­ture sec tor in Rus­sia, with soy­beans be­com in ga ma­jor fo­cus.

In 2017, the to­tal grain out­put of Rus­sia reached 135 mil­lion tons.

The Rus­sian Far Eastern re­gion has great po­ten­tial to ex­pand out­put China Na­tional Ce­re­als, Oils and Food­stuffs Corp (COFCO) said in a doc­u­ment sent to the Global Times.

“We at­tach great im­por­tance to Rus­sia’s soy­bean mar­ket. Re­cently we shipped four 20-foot equiv­a­lent units of soy­beans from Vladi­vos­tok to Qing­dao [city in East China’s Shan­dong Province] by sea for the first time,” COFCO said. The Chi nese com­pany noted that the trial ship­ping route is part of its ef­fort to ac­cu­mu­late ex­pe­ri­ence for large scale grain trade this fall.

How­ever, Rus­sian soy­bean ex ports won’t re­place US prod­ucts in China in the short term be­cause of Rus­sia’s limited pro­duc­tion ca­pac­ity and trans­porta­tion bot­tle­necks, in in­dus­try rep­re­sen­ta­tives said.

In the Rus­sian Far Eastern re gion, there is no mod­ern port that can han­dle bulk cargo like grain, a Chi­nese in­dus­try in­sider who runs an agri­cul­tural busi­ness in Rus­sia told the Global Times. In spite of abun-

“We’re now ready to in­vest in more agri­cul­tural projects… China will be an im­por­tant in­vestor in those projects.” Niko­lay Kharitonov, mem­ber of Rus­sia’s par­lia­ment

dant re­sources in the Rus­sian Far East, the es­ti­mated vol­ume of soy­beans that are avail­able for ex­port is about 400,000 to 500,000 tons per year, he noted.

“Also, Rus­sian soy­beans are non-GMO [ge­net­i­cally mod­i­fied or­gan­ism] va­ri­eties, which are less wel­comed by China com­pared with US prod­ucts as ge­net­i­cally mod­i­fied crop are de­signed for higher yield,” he said.

With more Chi­nese com­pa­nies in­vest­ing in Rus­sian farm­land, there have been re­ports that lo­cal res­i­dents had con­cerns over China’s grow­ing pres­ence in the re­gion.

Rus­sia is not of­fer­ing the land to Chi­nese farm­ers for free, Alexan­der Boriso­vich Lev­in­tal, gover­nor of the Jewish Au­ton­o­mous Re­gion, a Rus­sian fed­eral sub­ject that bor­ders North­east China’s Hei­longjiang Province, told the Global Times dur­ing the EEF.

“While Rus­sia sells soy­beans to China, Chi­nese com­pa­nies in­vest in Rus­sia with tech­nol­ogy trans­fers [to the lo­cal agri­cul­tural sec­tor,]” he said.

To at­tract more for­eign play­ers to the agri­cul­tural sec­tor, a spe­cial agency in Rus­sia has been es­tab­lished.

“This agency in­deed is ready to pro­vide Chi­nese com­pa­nies with land – but only in ex­change for in­vest­ment in high-value pro­duc­tion,” Basov noted.

Em­ploy­ees are busy load­ing im­ported soy­bean meal at a port in Nan­tong, East China’s Jiangsu Province, on Au­gust 6.

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