Quiet breakthrough: Russian agriculture is becoming the locomotive of the economy

Why the agricultural sector will continue to grow, Novye Izvestia figured out.

Yelena Ivanova, Natalia Seibil

Alexey Burkov moved from Moscow to Kryokshino near Moscow twenty years ago. Alexey is a design engineer, graduated from Baumanka, and defended his thesis there. When the daughter was born, they decided to live in the village. The godfather gave the daughter a goat, and it all started with her. They ate the goat, bought a cow. In 2008, Aleksey Burkov first bought 3 cows, then 4 more. Now Burkov has a herd of 90 cows. His land is 1.6 hectares, he rents the same amount from a neighbor. He also leased 2.5 hectares of pasture, where his cows "exercise". The farmer employs 10 people, including a shop assistant. They themselves make soft and hard cheese, cottage cheese, sour cream.

Alexey tries to produce organic products, although he honestly admits that the line between organic and inorganic products is quite thin.

- I don't feed the cows with silage. Silage is a preservative. I buy hay. They give me vegetables from vegetable stores. I buy scraps of waffles at Rot-Front and soak them with whey. Milk yield is not record, but I do not strive for high milk yield, so that the cow does not squeeze out like a sponge in two or three years. I gave up artificial insemination, says Burkov.

Artificial insemination is hormones, I don't want to inject hormones into cows, says the farmer. Plants burkov and vegetables, berries. But plant growing in the Moscow region is a purely unprofitable business. Large areas are needed to get at least some profit, and there is nowhere without fertilizers.

- We do not have black soil, and without fertilizers nothing will grow at all. It will grow in the Voronezh region, but not in our country. This is one hundred percent. I use manure. But since I am an engineer, I built a manure treatment plant. I add phosphoric flour from Voskresensk to the substrate to deoxidize the soil - that's all.

Burkov sells his products in his own shop, and via the Internet, and at interregional fairs in Moscow. He sets the prices so that people buy. Cottage cheese costs 390 rubles, cheese - from 600 rubles for soft cheeses to 2.5 thousand for hard goat cheese. Eggs are more expensive than in the store, but the egg is so large that it won't fit into the box. More expensive or not - the people are buying up, everyone is short, the farmer is going to expand. And all because laying hens walk on the ground, and eggs go to the buyer in a maximum of a day or two, and they do not lie in the refrigerator for weeks. For Burkov, bio-production is a business for the domestic market:

- If you call yourself a farmer, work for the local market. Agricultural holdings work for export. What is a Farmer? It's not just when you're little. This means variety. They come to me, or I distribute products. I have milk, cottage cheese, duck, chicken, and jellied meat I can make, I bake bread, I will put carrots.

Organic farming is a new business for Russia, at least from the point of view of legalization. The law on organic farming came into effect this year. There is no market for organic products as such - either $ 120 million, or $ 190 million, says Yakov Lyubovedsky, an expert on organic farming, head of the organic certification and trade program. There is no federal program for supporting organic matter, as, for example, in Europe, in Russia either:

- We are often cited as an example of the European experience of state support, when huge amounts of money are poured into agriculture per hectare. They forget about the following: the European Union spends more than half of its budget on supporting the agro-industrial complex, in Russia - 2%. Therefore, they can spend a thousand euros per hectare of wheat. And in Russia you can't even earn a thousand euros per hectare on wheat! You won't even make money, let alone get subsidies of this size!

Nevertheless, or perhaps due to the fact that the state has not gotten to agriculture, the industry is showing steady growth.

In spite of the virus and the state

In a country where GDP is down 5% a year or less this year and industrial production is shrinking, the news that an entire sector of the economy is outperforming sounds like a miracle. Market experts expect a second crop after 2017 and a three percent increase over the year. The peculiarity of the agricultural sector is that, unlike offices and management, it will not be possible to switch to home mode. Wheat needs to be sown and harvested on time, without looking at the rising covid numbers, and the demand for agricultural products is not diminishing.

- This is one of the most protected sectors, because people do not eat less. Yes, restaurants have huge problems, but globally people have not eaten less. Everything remains the same: men consume 2.5 thousand kilocalories, women consume 2 thousand kilocalories, which someone has to supply them, and this someone is agriculture, ”explains Andrei Sizov, director of the Sovekon analytical center, on his fingers.

A good grain harvest is expected this year. Wheat alone will be produced 84.4 million tons. This is 10 million more than last year. In general, grains will be harvested 133 million tons against 121 million in 2019. This is the second crop ever, second only to the 2017 crop.

Russian agriculture is not reported from every iron, like hypersonic missiles or planes in the skies over Syria. And in vain, because if we talk about the grain business, then it has become competitive on a global scale without any fools, despite the actions of the state, experts say. And animal husbandry is also catching up. This is because, unlike the stifled and regulated Russian economy, agriculture remains one of the few sectors where the state's presence is limited.

- We do not have state-owned companies, we have a high level of competition, which manages to show dynamics that have outstripped GDP growth for a long time, and this is not the story of this year, this is the story of many years when, in terms of growth rates, agriculture demonstrates higher growth rates compared to the rest of the economy, - says Andrey Sizov.

Not by bread alone - in some types of vegetables Russia has reached almost complete self-sufficiency. In 2019, 7.5 million tons of potatoes were harvested, says Dmitry Vostrikov, executive director of the Rusprodsoyuz Association, and only 290 thousand tons were imported, and that was only in the spring. This covers 96% of the country's demand. Half of the greenhouse tomatoes and almost 90% of the cucumbers are also produced domestically.

Russian agricultural exports are based on three pillars: grain, fish and vegetable oils, meal and oilseeds. Last year, Russia exported almost half of all oil produced. This worries some market participants, because it is not only about the danger of overstocking and lower prices, but also about the fact that sunflower dries soils more than wheat, and drought has been raging in the South of Russia for the second year already. But the power of private management lies in the fact that land owners do not need the pointing finger of the state. Since sunflower is a highly profitable crop, it will be sown as often as possible, but not due to the fertility of the land, Andrey Sizov is sure:

- Why should we proceed from the assumption that land owners are idiots who will cause damage to their assets? This is exactly the question why we have growth. Because the state has not yet laid its paw, has not completely strangled the sector. When our state determines the crop rotation, then we will not have any growth.

Climate change and organic agriculture

So far, climate change is having a positive effect on Russian agriculture. The winters became milder, the plants began to freeze less. As a result, the share of winter crops in the sown area increased significantly. But along with the rise in temperature, drought came to the Russian south. In the Krasnodar and Stavropol Territories, in the Rostov Region and in the Lower Volga Region, a drought has been observed for the second year, which has not happened for many years. This leads to a decrease in the yield. There were losses for winter crops, for spring crops, that which is sown and harvested late. There is a noticeable shortage of corn.

So far, there is no need to talk about a reduction in areas or the movement of crops from south to north, says Ivan Starikov, an agricultural economist and professor at the Institute of Economics of the Russian Academy of Sciences. But if this happens, in the Moscow region, in the middle latitudes and to the north, we will never be able to grow grain with a yield comparable to Krasnodar. The soils of the non-chernozem zone are poor. For crops such as sugar beets or sunflowers, there is little organic matter in the soils north of the chernozem zone. Therefore, for their cultivation, significant investments will be required in order to increase the humus content. Climate change is taking place all over the world. But Russia has a great chance to gain a foothold in the world agrarian table of ranks, and not on its intensive path, but on its extensive one. Our country's chances are extremely favorable.

- Russia has competitive advantages: land, its relative cheapness, large-scale farming inherited from socialism (former collective and state farms), when we can introduce unified technological methods of organic agriculture over large areas, without coordinating this with a large number of small owners with different motivations for economic and market behavior, - says Ivan Starikov.

And most importantly, in Russia the herbicide load per hectare of arable land is significantly lower than in the West. According to FAOSTAT, pesticides are used 16 times less than in the EU, and fertilizers - 8 times less. In addition, the production of GMOs is prohibited by law in Russia. This means that the transition to organic farming will be significantly shorter than in any European country. Ivan Starikov gives figures:

- Market capacity for organic agricultural products in 2019 was $ 98 billion. Scientists predict it will double by 2030 and reach $ 200 billion.

There are very few lands suitable for organic farming in Europe, so the EU imports 50% of the organic products consumed. And the price for it is much higher. Thus, in Germany, “bio” meat and vegetables cost one and a half times more, and confectionery - 2.6 times.

- If we take toxic farming and organic farming, with dead soil and living soil, then in a period of 10 years the yield levels out. In Europe, yields from organically grown crops are now on par with toxic crops. Therefore, Europe and China are actively abandoning toxic farming, says organic farming expert Yakov Lyubovetsky.

Small farmers again

In Russia, only 0.3% of the area is occupied by organic products. Large agricultural holdings are afraid of loss of profitability and are in no hurry to go into “green farming”. But small farms, like "Lyubavsky Farmer", have been working in this direction for several years. The owner of Lyubavsky Farmer, Alexander Lagutin, started organic farming 10 years ago, right after graduation. Only family members work on the farm, only 5 people. Local people are involved in cleaning, but they try to do everything themselves.

Farmers grow potatoes - no pesticides and no fertilizers. They completely abandoned fertilizers, they do not use either manure or chemistry. Productivity is maintained through crop rotation.

- The difficulty lies in the fact that with this method of cultivation, the yield is much lower, and the cost is higher. You have to explain to consumers, tell what the difference is, but people, if your product is even one ruble more expensive, try to buy what is cheaper. Moreover, in a pandemic situation, - says Alexander Lagutin.

They manage to save money due to the fact that they do not spend money on fertilizers, roundup and other pesticides. The seeds use their own. But with this method of cultivation, the yield is halved. This year all new potatoes have already been sold out. Compared to last year, the yield was lower, and for people, potatoes are the second bread.

According to experts, now the area of unused but suitable for organic farming arable land in Russia is from 10 to 12 million hectares. Small farmers, with all their ardent desire, will not overwhelm Europe with organic products. This requires large players who are now working according to their usual patterns. We need collective certification, a system of quality assurance, benefits and subsidies from the state, say proponents of organic farming. Investments in organic farming are profitable because they have a strict time frame and the demand for organic products is growing steadily. The contribution of Russia to the world organic market is 1%, Ukraine - 8%, Kazakhstan - 2%. There is something to strive for.