By Kestér Kenn Klomegâh
Russian Agriculture Ministry’s Agroexport Federal Center for Development of Agribusiness Exports in close partnership collaboration with Trust Technologies and the business expert community drew up a concept for the development of exports of major agricultural products (grain, dairy, butter, meat and confectionery products) to promising markets of African countries.
The goal of the project is to prepare a practice-oriented model for increasing supplies and enhancing the competitiveness of Russian agricultural goods in the African market.
According to the business concept report, nine African countries have been identified and chosen as target markets for the delivery of agricultural products. These are Angola, Cameroon, Ethiopia, Ghana, Kenya, Mauritius, Nigeria, Tunisia and South Africa.
These countries account for 40% of the continent’s population and one-third of all African imports of agricultural products. According to ITC Trade Map, the total volume of imports of agricultural products in these countries in 2021 amounted to almost $33 billion.
Russian grain is competitive in the markets of target African countries and is already in demand. At the same time, grain crops have a high potential due to the expected increase in their purchases. Due to a growing population and limited opportunities to increase domestic production, grain imports are expected to grow by 8 million tonnes from 2021 to 2030.
The African countries that are being studied together import more than 1.3 million tonnes of meat products a year. The leaders by volume of imports are South Africa, Ghana and Angola. In Nigeria and Kenya alone, the baking market has grown at an average annual rate of 38% over the past 5 years.
Within the framework of the business concept, another strategic area is the deepening of cooperation in the trading of oil products, primarily vegetable oils. Since 2016, oil imports in the target countries have grown twice as fast as agricultural imports overall, and by 2025, oil sales to the target countries will grow another 67%.
“Analysts estimate that consumption of meat products is expected to increase in many countries of the African continent. And while poultry meat will account for the bulk of growth as the most affordable and technologically advanced, organic growth will also be seen in all other types of meat,” Konstantin Korneev, executive director of Rincon Management, said and quoted in the report.
According to estimates, the potential supply of meat products from Russia to priority African countries by 2030 could reach 148,000 tonnes. There is also potential for boosting the supply of Russian dairy products. The first dairy product for which stable supplies from Russia have been established was ice cream. However, significant opportunities are opening up for shipments of milk powder, whey, cheese and butter, experts said.
According to forecasts, the milk deficit in Africa in 2025 will increase to 12.9 million tonnes (in milk equivalent) from 8.9 million tonnes in 2019. In 2030, it will reach 17 million tonnes. Africa currently imports $4.8 billion worth of dairy products, with the target countries among the top 20 importers.
As for the supply of finished food products, experts believe that for a long-term presence in Africa, the optimal scenario is to localize production to meet market needs. South Africa, Ghana and Kenya are identified as priority countries for this scenario. The volume of consumption of finished food products in the target countries exceeds $29 billion a year.
“The African continent is an interesting and promising area for the development of Russian food exports. However, when working in this market, it is important to take into account a number of factors: strong differences in the level of welfare of the population, political instability in some countries, state regulation of prices for a number of goods, et cetera,” Agroexport head Dmitry Krasnov was quoted as saying in the statement.
According to Krasno’s explanation, the materials of the concept can help Russian businesses determine priority countries for the organization of supplies and choose the focus range taking into account market peculiarities.
In a related development, Russia’s Industry and Trade Ministry has drafted a list of special economic zones (SEZ) in friendly countries where Russian companies could potentially set up production amid sanctions and sent it to business associations.
The ministry decided to compile the list due to the sanctions imposed by “unfriendly” countries and difficulties with purchases of imported raw materials, components and equipment that are used by Russian manufacturers, the letter said.
“As a result of the Industry and Trade Ministry’s work with Russian trade missions abroad, information has been compiled on special economic zones in friendly countries (95 potential sites). Information about the sites abroad has been conveyed to major Russian industrial companies and business associations,” the ministry said.
“Localization of production in the following areas is being considered: transport engineering, energy equipment, construction materials, chemical products and so on,” the ministry said.
Russia has embarked on a “special military operation” aims at “demilitarization and denazification” of Ukraine since February 24, and is currently experiencing a raft of sanctions imposed by the United States and Canada, the European Union, Japan, Australia, New Zealand and a host of other countries.
