Cargill's cessation of grain exports from Russia will not impact export volumes - AgMin
MOSCOW. March 29 (Interfax) - The cessation of grain exports from Russia by American company Cargill will not have an impact on export volumes, the Russian Agriculture Ministry said.
The Ministry has received a notice from Cargill on the cessation of grain exports from Russia in the new agricultural year (starting July 1, 2023).
"The cessation of export activities in the Russian market will not affect the volume of domestic grain supplies abroad. The company's grain export assets will continue to function regardless of whose management they will be under," the Agriculture Ministry said in a statement.
The ministry stressed that it is ready to work with all foreign companies whose operations contribute to the development of both the domestic Russian food market and its export potential. At the same time, vacated market niches are promptly occupied by Russian players, the ministry said.
Business daily RBC reported on Wednesday that the company has notified First Deputy Minister of Agriculture Oksana Lut about its plans via a letter. The letter says that Cargill LLC has no plans to export grain from Russia in the next agricultural season. At the same time, the company promised that shipments planned for the current 2022/2023 season will be fulfilled "in full in accordance with the existing quota."
Furthermore, the Russian subsidiary of Cargill reported that it is beginning to review its portfolio of grain export assets. However, changes regarding "any other activities and assets of Cargill in Russia are not being planned or considered."
Cargill owns a stake (25% plus one share) in the KSK Grain Terminal in Novorossiysk, part of DeloPorts, a company in Sergei Shishkarev's Delo Group and Rosatom. The group considers transshipment of grain as a strategic line of business, Delo Group's press service told Interfax. "We are interested in assets in this business segment, but we are not currently in any negotiations," the group said.
Cargill is among the major exporters of Russian grain. According to one of the participants of the grain market, the company will export about 2.2 million tonnes in the current agricultural year, or about 4% of all Russian grain exports. Cargill ranks sixth among exporters in terms of volume of shipments. The leader, RIF, accounts for 18%. The source believes that Cargill decided to curtail grain exports from Russia amid increased regulation and pressure on this market from the state.
According to the Union of Grain Exporters, Cargill accounted for 1.5 million tonnes, or 3.9% of all Russian grain exports in the last agricultural year (38.1 million tonnes at the time). For the last three years, the company's share in exports has been declining: in the 2018/2019 farming year, it accounted for 5.4% of exports, or 2.3 million tonnes.
"Cargill has decided to close one of its business lines, but not to leave the Russian market," head of the Union of Grain Exporters Eduard Zernin said. The company has a diversified capital-intensive business in Russia, which includes several processing facilities. Amid geopolitical tensions in Russia, Cargill decided to review its portfolio of Russian assets and get rid of potentially problematic ones. "The grain business has become overly politicized and risky. This season we have repeatedly encountered situations of discrimination not only against Russian exporters, but also against international companies trading Russian grain. I believe, having weighed the pros and cons, the company decided to minimize the risks and get rid of potentially toxic business," he said.
The union chief believes that the closure of Cargill grain trading will not affect the overall volume of Russian exports. "The company is among the major exporters, but still not in the top 5 exporting the bulk of volume. Given the planned decline in next season's harvest, the departure of one of the players will even make things easier for the remaining players, allowing some of them not to lose business in volume terms," Zernin said.
Cargill has been operating in Russia since 1991. Apart from exporting grain and sunflower, the company is engaged in the production and trading of vegetable oils and fats, molasses, starch products and other food ingredients, and animal feeds. The company has production plans in the Volgograd and Tula Regions.
The group's grain division includes a trading company in Krasnodar, grain elevators in the Krasnodar Territory and in the Voronezh Region.
In March last year, the company announced that it was ceasing investments in Russia. Its enterprises will continue to operate.
