Will Russian grain traders take over Kazakhstan's markets?

The sanctions imposed on Russia have significantly complicated trade relations. The situation on the grain market is quite unstable. At the same time, some experts predict that Russia will redirect its grain to Asia. For example, Tajikistan has already announced its desire to buy grain from Russia. World of NAN journalist spoke with Arkady Zlochevsky, president of the Russian Grain Union, to understand the situation.

- Because of the sanctions and logistical restrictions, where will Russia redirect its grain exports?

- There is no need to redirect it anywhere. Logistical problems only affect the speed of shipments, not the destination. There are no restrictions at the destination. Thus, our basic markets are North Africa and the Middle East, and we will continue to supply them. Something to Southeast Asia, and even to Latin America. We do not see any restrictions on the geography of supplies.

- According to preliminary data, how much grain is Russia planning to harvest this year? Not long ago Vladimir Putin said that a record grain harvest will take place in 2022. Is it true?

- Based on the official data on the areas, yes, there may be a record wheat harvest and there may be a gross harvest of all grains at the level of 130 million tons or so. That is, it is not a record, but it is high enough, and will be included in the three largest harvests, but it is based on calculations based on the information about 19 million hectares of winter crops that were sown. And secondly, the Russian Ministry of Agriculture itself gave out a figure of 18.4 million in December as a total based on data collected from the regions.  There are doubts about these figures.  Of course it would be good to get a record gross harvest of wheat, but I, for example, do not believe that we have 19 million hectares of winter crops.

- Will customs duties on grain exports from Russia be reduced or increased?

- They are calculated according to a formula, it depends on the state of the world market and indicators. For the time being, they are falling. There was a duty of up to $120 per tonne, now it is $111, i.e. the fall is obvious; it is continuing for the past three weeks, but it is likely to reverse later - this is a lagging mechanism because the world prices have risen, which means the rates will reverse later and the growth will return to the indicators. It is only a matter of time. It will only depend on how the world market will behave. If it will continue to rise in price, respectively, the duty will go up, if it will go down in price, respectively, the duty will go down.

- Will Russia sell its grain in rubles?

- Maybe we would like to, but this is not realistic. Firstly consumers are not ready. They are used to, in fact, all the grain is traded within the tender procedures, the official supplies in Tunisia, Egypt, Algeria, a lot of countries that buy through the tender mechanisms, and they have the currency of the tender contracts are dollars, it is not rubles. So to trade in rubles, it is necessary to set some intermediate structure, which would take on currency risks in terms of conversion. Rubles in which they buy into dollars and back. Secondly, a sharp shift in rubles in our sector, does not level out, but rather adds. Because now we have the same export duty denominated in dollars, and therefore we do not know what the rate will be, how to calculate the delivery in rubles, for example, if you do not know the rate at which you have to pay the duty. It is not known by itself at the moment when you make the contract and the delivery will take place 1.5-2 months after the contract conclusion and this duty will be charged at the moment of delivery, not at the moment of contract conclusion, so you cannot predict at what rate they will convert it in order to pay you this duty. So the risks are only added. Therefore, I do not believe it is hardly feasible. As we traded in dollars, so we will trade.

- Tajikistan wants to receive grain from Russia without customs duties. Is this issue being worked out? Is there a risk that Russia could take over Kazakhstan's markets?

- Direct transit through the territory of Kazakhstan will cost us very expensive tariffs, many times more expensive than the cost of transportation itself. I mean Russian shipments, despite the fact that Kazakh shipments to Russian ports are made on preferential terms at preferential tariffs. There is no counter movement from Kazakhstan. This is a long-standing problem which must be discussed.

If we talk about any deviations from the introduced regulatory regimes (in the case of Tajikistan), it is necessary to follow the procedure. Tajikistan should apply to the Russian government at the level of the government and request such a supply bypassing the rules and special decisions - such supplies are, in principle, possible.

Within the quota there is a duty, respectively, there are no problems with the duty at all, there are no restrictions. The question whether to go to the Russian exporters to buy - there is no problem, but we must take into account that this duty will also be reflected in the price. And in order to do it duty-free, respectively, you need an official request from Tajikistan. Then such a shipment is possible duty free, but it will be made out by a special decision of the government and most likely it will be stamped at least for official use, if not "secret.