Press

Agribusiness investments: the outlook for 2022

Russian online business magazine Sekret Firmy (“Firm’s Secret”) published an article devoted to the investment prospects in the domestic agro-industrial complex. Together with experts, the authors are seeking an answer to the question, whether it makes sense to invest in agriculture now, and if so, on what terms? Yuri Voronov, the Head of the Credit Management Department at ECO-Culture holding, shared his opinion with the reputable magazine’s audience.

Background: The global agricultural business has been in a prolonged crisis since the pandemic in 2021. First, the fertilizer prices went up, followed by the prices of agricultural equipment. The spring of 2022 brought unprecedented sanctions against Russia, a major exporter of grain as well as other types of foodstuffs. International transactions have virtually stopped. Today, the Russian agricultural industry stands to face a shortage of spare parts for agricultural equipment and crop protection agents, while the global market risks being hit hard by the suspension of fertilizer supplies from Russia.

And yet investment climate in the agro-industrial complex remains strong. Sekret Firmy magazine, with the support of invited experts, analyzes how promising the sector is for investors and which segments now have the greatest potential to offer.

According to Yuri Voronov, ECO-Culture holding, along with other Russian agro-industrial enterprises, could not help but notice the consequences of sanctions and the global economic crisis. Negative processes in the macroeconomy boost production expenses and significantly increase the cost of building new facilities. On top of that, logistics chains are becoming more complicated and laborious. And while no new sharp rise in prices is expected, the cost for seeds, equipment, and supplies used in the greenhouse industry will continue to rise. As for the transportation routes, they will also become more and more sophisticated, and therefore more expensive. All this only leads to additional losses and expenses.

Nevertheless, Russian agribusiness representatives remain optimistic. Despite all the difficulties, this year’s harvest is predicted to be record-breaking due to an expansion of not only the cultivated areas but also of greenhouse production capacity.

Yuri Voronov, the Head of the Credit Management Department at ECO-Culture, notes that the modern indoor vegetable cultivation industry mainly relies on high-tech next-generation greenhouses. It is their operation that ensures high production efficiency. Besides, the development of the sector itself is a prime priority of the Ministry of Agriculture of the Russian Federation. In recent years, the commissioning of new facilities is carried out with active and systematic support from the federal government. Not only does this ensure a favorable interest rate on loans, but it also provides subsidies and incentives for greenhouse enterprises.

Other experts also find the domestic agricultural industry rather attractive in terms of investment. After all, the real sector of the economy is most likely to bring a steady return. In the current environment, grain and other agricultural products can be considered a “second oil”. Which is why, despite logistics and foreign supply difficulties, the Russian agro-industrial complex will continue to develop and implement investment projects. The important thing now is that the government takes comprehensive measures to support the sector. As for the changes in the market conditions amid sanctions, this opens up new prospects for Russian agricultural producers both in the domestic and international markets.

For the full text of the article, please visit the Sekret Firmy official website.