Russia does not have a culture of manufacturing quality products to-be exported

20 june 2016 | RBC-TV

For the first time in recent years Russia has become a leading exporter of wheat, said the Deputy Head of the Department for Expert Analytics of the Analytical Center Elena Razumova in a live interview for RBC-TV. “The US and Canada will not catch up with us because all key contracts for this year have already been signed,” the expert added.

Elena Razumova
Elena Razumova
Department for Expert Analytics

 “For the past two years we have enjoyed the advantage of a weak currency - our prices in dollars have declined sharply,” Ms. Razumova explained. “But a lot has been done by grain producers as well, a lot of money has been invested in export infrastructure. State support that was provided in past periods also played a role.”

According to Ms. Razumova now the question is when Russian investors are going to invest in alternative crops. It is also going to be important how much return Russian companies will be able to get on those investments as well as future demand for them in the global market and changes in the demand in Russia, the specialist noted. “The meat sector is growing now, but competition between producers is getting really cut-throat there. And if meat products do not get exported we may end up with a shortage of feed crops, such as maize,” said Ms. Razumova.

As for the export tariff, it has played its role in straightening out the situation in the domestic market, Ms. Razumova noted. “Russian export prices denominated in rubles were different even for 5th class feed wheat, but there was a significant change in dollar prices and that had quite a significant impact on the cattle breeding sector,” the expert said. In her opinion, in the end the government may be able to keep the export tariff in place, but the administrative mechanism must be revised and improved.” “Nobody benefits from the export tariff, neither bread manufacturers nor the cattle breeders,” the expert explained. In addition, its contribution to the budget is not that great either, she believes.

It does create difficulties for exporters, though, Ms. Razumova noted. “It is difficult to compete with Turkey in the flour mill sector because developing flour production is very expensive. It is cheaper for us to simply export the grain at this point,” the expert said. Ms. Razumova believes that the main problems stem from lack of investments and new technologies and in the fact that Russia simply does not yet have a culture of manufacturing quality products that can be exported.

Source: RBC-TV