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February 28, 2017
Dubai
Ministry of Agriculture
of the Russian Federation
Supported byGu
lfo
od
2017
Export potential of the Russian agricultural products
State Secretary –
Deputy Minister Of Agriculture of
the Russian Federation
Sergey Levin
2© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Russia is the largest country in the world, rich in natural resources, actively developing its industrial potential
in land area
Sources: World Bank, KPMG analysis
1st worldwide
in population9th worldwide
in farmland area5th worldwide
climate conditionsUnique
in border length1st worldwide
in GDP by purchasing parity6th worldwide 16,376,870 sq.km which is more than one-eighth
of the global surface area
144 million people, which is equivalent to
approximately 2% of the total world population
The farmland area in Russia is 218 million ha \
539 mln acres (over 4.4% of global farmland
area)
Russia has a large variety of climatic zones, from
arctic to subtropical, including moderately
continental and monsoon, which creates
inimitable conditions for crop production and
livestock breeding
GDP equaled USD 3.6 trillion in 2015 (3.1% of
the world`s GDP)
Russia has borders with 18 countries and is
bounded by 12 seas, creating unique logistic and
trading opportunities
3© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Russia in the global balance of resources
20%
80%
14%
10%
7%
69%
NA
TU
RA
L R
ES
OU
RC
ES
Sources: UN Comtrade, World Bank, USGS, FAO, Federal State Statistics Service, Ministry of Agriculture, KPMG analysis
Russia accumulates vast natural and human resources potential for food production and excellence in agricultural
field
Russia controls 10% of all renewable
sources of fresh water in the world
Russia ranks 2nd in the export of potash and nitrogen fertilizers
Arable land
in Russia
of the world`s area
Other countries
USA
China
Russia
10%130million hectares
0.4
2.7
3.0
0.9
5.4
World
Russia
20%
1.1
1.3
2.7
4.9
0.7
Exports of potash, 2015, USD billion Export of nitrogen fertilizers, 2015, USD billion
HU
MA
N R
ES
OU
RC
ES
In Russia there are more than 300 higher
and secondary educational institutions in the
agricultural sector
Total
population
of Russia
Employed
72,3
144million people
7%
million people
Percentage of workforce of the country involved in the agricultural business
= 321 million acres
4© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Russian agricultural sector is growing at higher growth ratesthan anticipated
Growth rates, %
Sources: Bloomberg consensus, Federal State Statistics Service, Ministry of Agriculture
GDP structure, %
-0.2
-2.8
0.7
1.3
5.8
3.5
2.6
4.8
2013 2015
GDP growth rate
2016E
Agriculture sector
growth rate
2014
3.0% 3.2% 3.4%3.8% 4.0%
Other
industries 96.0%
100%
+1%
Agriculture
sector
2016
97.0% 96.8%
2012
96.6%
2013
96.2%
2014 2015
The Russian agricultural sector is a priority sector of present-day state policy
5© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Total commodity & food production(а) , 2017 forecast
million tons
Notes: (a) European Union is considered as 1 country for the purpose of ranking
Sources: USDA forecast, KPMG analysis
Total commodity & food exports, 2017 forecast
million tons
Russia is a leading producer and exporter of agricultural commodities and food
in wheat exports№1
№4 in barley exports
in exports of sunflower seed oil№2
USA 27.9
Russia 28.5
2.0
5.1
Russia
Ukraine
3.9
7.0
Russia
Australia
№2
4.8
7.8
Russia
EU
№2
4.1
5.8
Russia
Ukraine
№2
Russia 17.5
EU 59.8
№6
30.2
India 160.0
№4
Russia 72.5
EU 144.9
№6
3.8Russia
USA 18.7
Russia
in oat production
in sunflower oil
production
in barley production in cow's milk production
in wheat production
in broiler production
№х
Russia`s position in the world:
production
№х exports
leading country
6© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Major states-suppliers to the Middle East, Persian Gulf and North Africa
Total exports of agricultural commodities and food
to the Middle East and North Africa(а), 2015(б)
USD billion
Italy
USA
Spain
5.2
8.8
Argentina
India
Netherlands
Brazil
Canada
7.4
Ukraine
New Zealand
7.1
Germany
Australia
5.4
4.4
3.7
3.4
3.1
2.4
2.2
2.2
2.1
2.0
Russia
China
4.7
France
Notes (а) Excluding commodity turnover in the Middle East and North African countries (b) Excluding countries for which data are not available for 2015
Western Sahara, Iran, Iraq, Libya, Mauritania, Lebanon, Palestine, Syria
Sources: UN Comtrade, KPMG analysis
Target markets
Russia is
the 5th largest exporter
to the region’s markets
Key suppliers of agricultural commodities and food to
the region’s countries
Top-5 suppliers
Top-15 suppliers
Target markets (foreign trade data for
2015 is available)
Target markets (foreign trade data for
2015 is unavailable)
7© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
The trade relationships between Russia and the Middle East, Persian Gulf, North African countries are stable
+29%
2020F
22.0
2016
17.0
2015
16.2
11.0
5.2
Total exports of agricultural commodities and food
from Russia
USD billion
Trade turnover with the Middle East, the Persian
Gulf and North African Countries, 2015
USD billion
Sources: Federal Customs Service of Russia, KPMG analysis
Total exports to the Middle
East, the Persian Gulf and
North African countries
Lebanon 0.6
Iran
0.50.5
Algeria 0.11.2
Egypt
0.1
1.0
Turkey 4.111.7
Kuwait
Morocco
0.3
0.43.3
0.21.0
0.10.3
Saudi Arabia 0.20.8
UAE
ImportsExports
Russian Federation is a reliable trade partner for the Middle East, Persian Gulf and North African countries: total
trade turnover with these countries exceeds USD 28 billion
ТОP-3Persian Gulf
ТОP-3Middle East
ТОP-3North Africa
8© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
1st priority
3rd priority
2nd priority
4th priority
Product attractiveness index for the Middle East, Persian Gulf and North Africa
Ag commodity and food attractiveness index for the Middle East, Persian Gulf and North Africa
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
100 1,000 10,000
Chocolate
Sweet beveragesSauce
Sunflower-seed oil
Wheat
Soya bean oil
Chilled fish
Dough
Chilled beef Condensed and
powdered milk
Apples
Infant food
Fresh potato
Leguminous veggies
Waffles
Yeasts
Barley
Onions
Maize
Spirits
Soya beans
Turnip
Sugar
Dairy butter
Frozen beef
Honey Rape seed
Lamb
Nuts (coconut, brazil, cashew)
Palm oil
Walnuts
Rice
Poultry meat
Imports in Middle East and North African countries in USD million
Coffee and tea
Cookies
Cheese and curd
Frozen fish
Notes: (a) Based on the methodology used to calculate the Herfindahl-Hirschman market concentration index
Sources: UN Comtrade, World Bank, KPMG analysis
The size of a bubble is inversely proportional to the segment concentration
index(а) – the larger the circle, the lower the concentration
Ave
rag
e a
nn
ua
l g
row
th r
ate
of
imp
ort
s fo
r 2
01
0-2
01
5.,
%
9© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
The traditions of Halal production in Russia
Russian Halal food producers comply to requirements of Muslims while exporting to the countries of the Persian
Gulf and Africa
* according to the chairman of the Eurasian Halal Union
— UAE
— Kuwait
— Oman
— Egypt
— Jordan
— Tanzania
— North Africa
23 million Muslims
live in Russia today*
85 million Muslims
on the entire post-Soviet
space
The destinations of current supply of Halal products
from Russia *:
Sources: Interview with the Eurasian Halal Union in Russian
10© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Price drivers for ag commodities and food from Russia
Rouble devaluation Low production costs
Electricity
USD per kilowatt
/ hour
Petrol
USD per liter
Average salary
USD per month
Corn(b)
USD per ton
30
25
0
85
80
75
70
65
60
55
50
45
40
35
х2
2017201520132011
1 2
Note: (a) based on a survey of market players (b) to assess the cost of the fodder base
Source: globalpetrolprices.com, Numbeo, OVO Energy research (2011), the data of commodity exchanges, Central Bank of Russia, KPMG analysis
Exch
an
ge
ra
te R
UB
/ U
SD
0.7
0.7
1.2
1.1
1.0
1.5
Ø 1.02 Ø 0,16
0.19
0.29
0.08
0.17
0.12
0.11
Ø 1,551
1,826
2,872
507
593
2,895
611
148
160
Ø 177,2
183
207
188
Average
level
н/д
The competitiveness of Russian ag commodities and food is driven by rouble devaluation and lower production costs
11© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Russian terms of delivery are comparable to actively exporting countries (based on the UAE case)
USD 2.2 for 1 kg(c)
USD 2,000(a) for dry container
USD 3,400 for a refrigerator
30 days
USD 2.0 for 1 kg(c)
USD 1,480 for dry container
USD 2,800 for a refrigerator(b)
22 days
USD 3.2 for 1 kg(c)
USD 1,600 for dry container
USD 2,800 for a refrigerator
24 days
USD 1.0 for 1 kg(c)
USD 400 per dry container
USD 680 for a refrigerator
3 days
USD 3.4 for 1 kg(c)
USD 1,800 for dry container
USD 3,000 for a refrigerator
21 day
Note: (a) All prices are given as at the end of January 2017 (b) Based on the example of current supplies
of the Russian agricultural producers (c) Delivery on a pallet
Source: searates.com, interviews with experts, KPMG analysis
12© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Food products of Russia: case study (1/4)
“PROSTO MOLOKO” considers pursuing its priority
markets: UAE, Egypt, Sudan, Lebanon, Tunisia,
Algeria, Morocco, etc.
Dairy products (based on the example of the manufacturer's product)
“PROSTO MOLOKO” delivers high quality products that is highly appreciated
by the international experts on the following tradeshows:
Source: the company data
Unique selling points
Export plans Awards
№4
№2
№1
№3
Raw materials for production are purveyed from ecologically clean districts of Tatarstan and
undergo stringent microbiological tests.
40% of consumers have opted for the products of this brand soon after the first batch of
dairy products appeared on the Tatarstan market.
The company is one of the biggest Russian milk processers with seven dairy plants.
State-of-the-art equipment makes it possible to extend the shelf life of the 100% natural
product up to:
— 24 months for deep frozen butter;
— 9 months for milk in Tetra Brik Aseptic package.
13© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Damate turkey exports started in spring 2016. It successfully
sells the product to the Netherlands, Italy, Serbia,
Switzerland, Ireland, Hong Kong, Vietnam, Africa and
the Caribbean. In addition, it has started deliveries to the
EurAsEC and the CIS
Turkey (based on the example of the manufacturer's product)
Winner of the contest WorldFood Moscow in 2014, a regular winner of the exhibition
ProdExpo, winner of "Best Trademark“ award and others.
Source: the company data
Unique selling points
Export examples
Quality
It is produced on a full cycle factory on
the most state-of-the-art equipment in
Europe under the constant supervision
Useful
High standards for the quality of fodder
and the conditions for poultry (fodder
and farm)
Delicious
A unique air-cooling system without
water utilization makes it possible to to
keep the meat juicy and soft
FreshModern packaging lines together with unique packaging solutions make it possible to keep the product fresh up to 10 days
AffordableFederal distribution, partners with all key national retailers
Awards
№2
№1
№3
№4
№5
Food products of Russia: case study (2/4)
14© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Food products of Russia: case study (3/4)
Export shipments:
Azerbaijan, Gabon, Republic of Guinea, the Republic of
Guinea-Bissau, the Republic of Equatorial Guinea, Ghana,
Georgia, Congo, Côte d'Ivoire, Morocco, Liberia, the United
Arab Emirates, Togo
Marbled beef Black Angus (based on the example of the manufacturer's product)
Miratorg – is the only company outside North
America certified by standards
Certified Angus Beef
Source: the company data
Unique selling points
Export examples Awards
Full production cycle. Quality is
ensured by product control from “farm to
fork”
The largest cattle herd of Black Angus
breed: more then 450K animals, including
160K animals of maternal herd – unique
genetic pool
200 days of grains battening
30% of produced premium beef complies to the highest marble grade Prime 5. Wide-ranging product-mix: from premium steaks to meat subproducts
№2
№1
№3
№4
15© 2017 JSC “KPMG”, a company incorporated under the Laws of the Russian Federation, a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Ministry of Agriculture
of the Russian Federation
Gu
lfo
od
2017
Since 2005 AQUA-WHITE has focused on implementation
of wide-ranging export projects. The volume of exported
products has increased by 64% compared to 2015.
Nowadays AQUA WHITE is exporting its products to 15
countries.
Gold and silver medal winner, diploma winner of the international
contest "Best Product 2017" PRODEXPO-2017.
The gold and silver medals, diplomas of the international
professional competition "Best Product of the Year” of the Russian
Research Institute of Brewing, soft drinks and wine industry
Source: the company data
Unique selling points
Export examples
Direct mineral pipeline from the
well to the plantEuropean Certification LATSERT
and permission to distribute to the
EU
Natural ingredients
Wide range of products
Top 3 Russian manufacturers of water
Beverages (based on the example of the manufacturer's product)
Awards
№2
№1
№3
№4
№5
Food products of Russia: case study (4/4)
kpmg.ru kpmg.com/app
© 2016 АО «КПМГ», компания, зарегистрированная в соответствии с законодательством Российской Федерации, член сети независимых
фирм КПМГ, входящих в ассоциацию KPMG International Cooperative (“KPMG International”), зарегистрированную по законодательству
Швейцарии. Все права защищены.
KPMG и логотип KPMG являются зарегистрированными товарными знаками или товарными знаками ассоциации KPMG International.
Настоящее исследование подготовлено АО «КПМГ», компанией, зарегистрированной в соответствии с законодательством Российской
Федерации, членом сети независимых фирм КПМГ, входящих в ассоциацию KPMG International Cooperative (“KPMG International”),
зарегистрированной по законодательству Швейцарии. KPMG International не оказывает профессиональных услуг клиентам. Ни одна из
фирм – членов сети КПМГ не имеет полномочий связывать обязательствами перед третьими лицами KPMG International или любую из
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Персональные данные, содержащиеся в настоящем Исследовании, подлежат обработке в соответствии Федеральным законом от
27.07.2006 N 152-ФЗ «О персональных данных».
Информация, содержащаяся в настоящем исследовании, носит общий характер и подготовлена без учета конкретных
обстоятельств того или иного лица или организации. Хотя мы неизменно стремимся представлять своевременную и точную
информацию, мы не можем гарантировать того, что данная информация окажется столь же точной на момент получения или
будет оставаться столь же точной в будущем. Предпринимать какие-либо действия на основании такой информации можно
только после консультаций с соответствующими специалистами и тщательного анализа конкретной ситуации.
Thank you for your attention!
Ministry of Agriculture
of the Russian Federation