The Vice-president of “Infrastructure Economics Centre” Pavel Chistyakov participated in the plenary session and roundtable discussion at the Russian-Arab Investment Forum in Abu Dhabi (27-30 October 2015).

1. PRESENT AND FUTURE OF RUSSIAN AGRICULTURE
PAVEL CHISTYAKOV

2. 1. Facts and figures about agriculture in Russia
2. Regional dimension
3. State support
4. Market gaps and opportunities for investors
2
CONTENTS

3. Total area =1 910 000 ha
3
AGRICULTURE LAND USE IN RUSSIA
Source: State Statistics Committee of the Russian Federation
Agricultural lands by category of use, 2014
28%
9%
2% 1%
24%
9%
7%
6%
2%
12%
60%
Pastures
Meadows
Grassland
Gardens
Cereals
Forage crops
Fallow areas
Technical crops
Potatoes and vegetables
Other

4. SPECIALIZATION OF AGRICULTURE IN RUSSIA
4
49%51%
Livestock
Crops
$63,3
mln
CropsLivestock
28%
16%
15%
10%
7%
5%
4%
15%
Wheat Sugar beet
Potatoes Barley
Vegetables Corn
Sunflower seeds other
2%
19%
33%
46%
Sheep and goats Cattle
Pigs Poultry

5. RUSSIA IS THE FOURTH LARGEST GLOBAL WHEAT PRODUCER
5
Source: FAO, Foreign Agricultural Service, USDA,
State Statistics Committee of the Russian Federation
Top-5 largest global wheat producers, 2013/2014
121.7
93.5
58 52.1
38.5
0
20
40
60
80
100
120
140
China India USA Russia France
mlntonnes
CAGR
Yield
dt per ha
winter wheat 28,5
summer wheat 14,1
2%
Third part of all produced wheat is exported
56.2
37.7
52.1
59.7
15.2 16.0 13.8
22.1
2011 2012 2013 2014
mlntonnes
Total production Export

6. 6
RUSSIA IS ONE OF THE FIRST LARGEST GLOBAL BARLEY, OAT AND RYE PRODUCERS
Barley
1st place2013/2014
Oat
1st place
Rye
3rd place
Production mln
tonnes
4,9
CAGR % 0,0
Production mln
tonnes
15,4
CAGR % 6,5
Production mln
tonnes
4,6
CAGR % 3,4
2013/2014
2013/2014
2011-2014
2011-2014
2011-2014

7. 7
8.4 8.0
3.3
2.4
1.6
0.0
2.0
4.0
6.0
8.0
10.0
Ukraine Russia Argentina China France
mlntonnes
Top-5 largest global sunflower seeds producers, 2012/2013
Yield
dt per ha
sunflower seeds 13,1
RUSSIA IS ONE OF THE FIRST LARGEST GLOBAL SUNFLOWER SEEDS PRODUCERS
CAGR
6,3%
Production of sunflower seed and oil
9.7
8.0
10.6
9.0
1.4
2.1
1.9
2.4
2011 2012 2013 2014
mlntonnes
Seed Oil
Source: FAO, Foreign Agricultural Service, USDA,
State Statistics Committee of the Russian Federation
Export 1,7
Sunflower
oil
mln tones

8. 8
RUSSIA IS THE FIRST LARGEST GLOBAL SUGAR BEET PRODUCER
Russia
39,3
France
33,6
USA
29,6
Top-3 largest global sugar beet producers, 2013/2014, mln tones

9. 9
VEGETABLE AND POTATOES PRODUCTION IN RUSSIA
9Source: State Statistics Committee of the Russian Federation
Vegetables and potatoes production
Yield
dt per ha
vegetables 149,6
potatoes 217,8
31.53.6
3.5
2.7
2.5
2.3
2.3 1.1
Potatoes
Other fresh vegetables
Cabbages
Roots
Frozen, preserved and
dryed vegetables
Tomatoes
Onions and garlics
Cucumbers
Production by type, 2014, %
46,9 21.1
32.7
29.5 30.2
31.5
11.6
14.1 13.5 13.5 14.2
0.6 0.6 1.1 1.2 1.3
0
5
10
15
20
25
30
35
2010 2011 2012 2013 2014*
mlntonnes
Potatoes Open ground Greenhouse
million
tones

10. 10
LIVESTOCK AND POULTRY
2010-2013, mln heads
2010 19,9
2014 19,2
2010 17,2
2014 19,5
2010 19,7
2014 22,5
2010 2,1
2014 2,2
2010 385,1
2014 433,0
2010 8,8
2014 8,5
Source: State Statistics Committee of the Russian Federation
Cattle stock... Pigs Sheep
... Including cows Poultry Goats

11. 11
RUSSIA IS ONE OF THE TOP GLOBAL MEAT PRODUCERS
Meat and poultry
producers, 2013/2014, mln
tones
0.0
1.0
2.0
3.0
4.0
2010 2011 2012 2013 2014
mlntonnes
Sheep and goat Cattle Pigs Poultry
CAGR, % 2,6 0,6 7 9,1
China
81,5
USA
42,3
Brazil 25
Russia 8,1
Germany 8,1
Meat and poultry production in Russia
25.2
53.8
61.6
0.3
1.5
2.0
0
10
20
30
40
50
60
70
2012 2013 2014
mlntonnes
Poultry Meat
Meat and poultry export

12. 12
90.9
54
37.8
32.3 31.5
USA India China Brazil Russia
mlntonnes
4,02,5
2000 20142005 2010
3,1 3,7
RUSSIA IS THE FIFTH LARGEST GLOBAL MILK PRODUCER
Top-5 largest global milk producers, 2013/2014
Export: 0,6 mln tones
Source: FAO, Foreign Agricultural Service, USDA,
State Statistics Committee of the Russian Federation
Milk
yield
thou kg
CAGR
-0,9%
Imported
31.6 31.8
30.5 30.8
7.9 8.5 9.4 9.2
2011 2012 2013 2014
mlntonnes
Total production Import
30,8

13. 41.1
42
41.3
41.9
2011 2012 2013 2014
billionegs
Egg and egg production
China 497 Japan 41,8
USA 92,3 Brazil 41,7
India 65,5 Russia 41,9
Mexico 46,4
13
RUSSIA IS ONE OF THE TOP GLOBAL EGG PRODUCERS
Import 0,3
Export 1,2
Eggs
and egg products
billion eggs
CAGR
0,6%
Top-7 largest global egg producers, 2013/2014, billion eggs

14. 1. Facts and figures about agriculture in Russia
2. Regional dimension
3. State support
4. Market gaps and opportunities for investors
14
CONTENTS

15. 15
VALUE ADDED IN AGRICULTURE IN RUSSIAN REGION

16. 16
TOP AGRICULTURE PRODUCERS

17. 17
DIFFERENT PATTERNS OF RURAL LIFE RELATED WITH THE SPECIALIZATION OF
AGRICULTURE
Picturesque
countryside in
Tatarstan with
Islamic population
has mixed
specialization
Villages at the
North (near
Vologda) have a
long tradition of
milk production
Seasonal
vegetables and
fruits at Caucasus
villages
Modern
ecofarms not far
from Moscow
(near Kaluga)

18. 1. Facts and figures about agriculture in Russia
2. Regional dimension
3. State support
4. Market gaps and opportunities for investors
18
CONTENTS

19. 19
2013 - 2017
Average annual financing,
million $
Subsidies for credits in the livestock breeding 496,2
Subsidies for crop growing 349,9
Interest rate subsidies for crop growing 349,6
Interest rate subsidies for milk production 264,1
Interest rate subsidies for SME in agriculture 92,6
Subsidies for pedigree cattle breeding 79,9
Interest rate subsidies for beef production 68,8
Subsidies for gardening and viticulture 50,8
Subsidies for seed production and selection 50,1
Other support 168
GOVERNMENT SUPPORT FOR AGRICULTURAL PRODUCERS

20. 1. Facts and figures about agriculture in Russia
2. Regional dimension
3. State support
4. Market gaps and opportunities for investors
20
CONTENTS

21. 21
6 MAJOR OPPORTUNITIES
TO CATCH IN AGRICULTURE
Extensive
growth
Grain
storages
Import
substitution
Ecologic
agriculture
Selective
breeding
Bioengineering
and
biomedicine

22. 22
MOST OF THE AGRICULTURE LANDS ARE ALREADY BUSY BUT THERE ARE STILL SOME
REGIONS THAT HAVE THE POTENTIAL FOR EXTENSIVE GROWTH
Regions with the largest grassland areas in
European part of Russia, 1000 ha
460
186,9
180,2
156,1
141,3
134,6
113,7
105,4
• Since 2005 large «agroholdings» involved most of the
available land into agriculture production.
• But in some regions with good agroclimatic conditions there
are still some land reserve which could be used for farming
• Some of this regions could have the lack of workers in the
non-urban areas or could be rather fragmented
• According to the map the most attractive regions with the
traditional specialization on wheat are:
• Samara region
• Penza region
• Kurgans region
• The most attractive for animal farming regions with good
natural pastures are:
• Bryansk region
• Nizhniy Novgorod region
• Maryi El Republic
Source: Rosreestr, IEC analytics

23. 23
TOMATOES, APPLES/PEARS, BEEF AND DAIRY PRODUCTS ARE MOSTLY
EXPECTED FOR IMPORT SUBSTITUTION
-
200
400
600
800
1 000
1 200
1 400
1 600
1000tonnes
Vegetables
Import of the agricultural products, 2014, 1000 tonnes
Source: Federal Custom service,
IEC analytics
Fruits Meat and
meat products
Milk and
milk products

24. 24
SUCCESSFUL IMPORT SUBSTITUTION GIVES EXPORT OPPORTUNITIES
Loose cattle breeding at Bryansk region.
“Miratorg” company
More than 50 hectares of modern industrial
greenhouses at Altai region

25. High productive cattle is one of the most
important task for beef producers.
25
SELECTIVE BREEDING OF PLANTS AND ANIMALS
Lack of high quality seed material and small number of studies
in the field of selective breeding causes high rate of import of
the seed material
Import of seeds, 2014, % of used seeds
sugar beets 65% 53% potatoes
corn 34% 5% grains
More than 80 000 heads
of pedigree cattle and
10 000 heads of pigs is
imported every year
Most of the plant breeding
centers make a specialty of
grain selection

26. • Total grain storage capacity in Russia is 118 million tones including
o 52 million tones of industrial storage (for example, at mills)
o 66 million tones of agricultural storage. 70% of them are outdated and works with 10-20% loss of grain and extremely high
costs
o Simultaneously 20-60% of storages are not used depending of the region because of high cost
o Modern big storages can reduce operational costs due to less energy and materials consumption and offer affordable price
26
RUSSIA FACES 50 MILLION TONES DEFICIT OF GRAIN STORAGE CAPACITY
Region with high
volumes of wheat
production
Total capacity,
million tones
Deficit /
proficit,
million tones
New built capacity
in 2010-2013,
million tones
Altai 5023 + 744 83
Belgorod 2587 - 678 47,5
Krasnodar 4 902 - 5 038 94,7
Tambov 1 724 - 501,4 89,3
Tatarstan 2482 - 2767 88,6
0
0.3
0.6
0.9
1.2
1.5
2012/13 2013/14 2014/15
Source: Ministry of Agriculture
Wheat price difference in south of
Russia (May to August)
Source: Infrastructure Economics Centre

27. 27
AGRICULTURAL SCIENCE IN THE RUSSIAN REGIONS
Spatial distribution of patents in
agriculture; forestry; livestock; hunting and
trapping of animals; Fisheries
The list of the innovative technologies approved by the Government and connected with agriculture includes:
· Biomedical and veterinary technologies
· Genomic, proteomic and post-genomic technologies
· Cellular technologies
· Bioengineering technologies
· Energy-saving technologies in production and bioenergy
3,3%
The majority of «agricultural» patents generated in
Moscow, St. Petersburg, Krasnodar region, Rostov
region, Stavropol region, Saratov region and
Kaliningrad region
738,3 th.*
*post-Soviet period
Patents

28. 28
137 148
167
225
0
50
100
150
200
250
2011 2012 2013 2015
mln$
Organic food
market size in
Russia
Source: Research Institute of Organic Agriculture,
League of the national health

29. Thank you for the attention!
29
Pavel Chistyakov
vice-president of Infrastructure Economics Centre
e-mail: pachistyakov@infraeconomy.com
mobile: +7 916 461 51 51