Investment activity in the Russian soybean growing
Soy is considered especially valuable culture not only in the Russian plant growing, but also in animal breeding, generally at the expense of its unique biochemical composition and high protein content. Soybeans are processed and used as one of compound feeds component for birds and cattle, and products of deep processing are applied in the food industry (including confectionery, bakery products, meat products production). The main regions of soy cultivation are the Far East, Central and Southern Federal Districts traditionally. Over the last 5 years its gross collecting in Russia has increased almost twice to 2,8 million tons.
However this volume is not enough for animal breeding and food industry requirements satisfaction so, as a result, protein deficiency problem arose in Russia (1 million tons per year according to all-union scientific research institute of food of the Russian Academy of Medical Science). According to the Russian Soy Union (RSU), annually about 10 million tons of soy should be collected for forages production, 3 million tons more are necessary for food production. Also taking into account the low level of seed farming development and lower average parameters of domestic seeds productivity, Russian companies are forced to buy soy from foreign suppliers annually: in 2015 soy import content on the market made about 50%. Export content in production, on the contrary, was insignificant (about 10%), and almost all exported products were bought from regions of the Far East to Asia.
In 2014 the Ministry of Agriculture has adopted the industry program "Development of Production and Processing of Soy in the Russian Federation for 2015-2020" prepared by RSS for import substitution policy realization and support of the Russian soy growing. According to this program, by 2020 it is planned to increase gross soy collecting 3 times to 7,2 million tons, and also to increase production of soy processing products (soy oil, meal, proteins, isolates and concentrates). Subsidizing of 923 investment projects is provided and 195 billion rubles will be allocated for this purpose. Vnesheconombank, Vneshtorgbank, Sberbank and Rosselkhozbank became financial institutions of the program.
The Far East is considered to be the most perspective region for soy growing development in Russia. Its appeal is caused by favorable climatic conditions for soy cultivation, and also considerable production potential increase due to productivity increase and free arable lands development in northern areas. Besides, close arrangement to Asian sales market (China, South Korea) can be considered a strategic advantage of the region where it is profitable to export soy and products of its processing due to constantly growing prices for these goods and a guaranteed demand for them.
Until recently in the Far Eastern federal district only local enterprises were engaged in cultivation and processing of soy, however in the last 2-3 years the largest agroholdings of Russia have paid attention to this culture. They are United Grain Company (OZK), "Yug Rusi", "Solnechnye produkty". So, OZK have plans for soy cultivation in Amur region, Primorye and Khabarovsk Territories. According to the estimates of the company, the area of the bought lands of 100 thousand hectares will bring about 200 thousand tons of soy annually that is equal to about 15% of all soy production in the Far East in 2015. Investments into this project will make from 3,5 to 6 billion rubles, and its implementation is planned to be started within 2 years.
One of the largest projects in the Far Eastern federal district is construction of deep soy and other oil-bearing crops processing complex, including oil refining and packing production organization with the capacity of 3 thousand tons a day. "Yug Rusi" Company declared about the Investment of 12 billion rubles into this project in September, 2015. The first enterprise stage is planned to be started in 2019.
Another company considering the possibility of soy growing investing of the Far East is "Solnechnye produkty" holding which has started soy cultivation and its processing in 2013 after acquisition of 38 thousand hectares of lands in Saratov region. The company plans to construct a plant on soy processing in Amur Region with further prospect of production export to China and Southeastern Asia countries.
Investment into the seed farming development is not less important for the branch development. In Amur Region two seed plants creation is worked through which will become a part of selection and seed-growing center. So, in 2016 "Amuragroholding" plans to start the work of a seed-growing plant in Ekaterinoslavk. The plant will receive original seeds of domestic selection from scientific institutes, and then at the request of farms will produce and deliver them in necessary volumes. "Vegalon" agroholding, implementing the second project, states reainess to deliver up to 10 thousand tons of soy seed material to regions of Russia already with the prospect of 50 thousand tons in the next years.
The first positive results of investment projects implementation and the state support of soy farming development in the Far East can be already observed: the tendency of gross soy collecting growth due to arable lands and productivity increase is noticeable, soybeans and soy processing products production and export increased along with noticeable import decrease. Nevertheless, enterprises of the branch have definitely a room for improvement: in the Far East and in Russia in general production of deep processing products with a high value added (soy isolates, concentrates and so forth) is poorly developed so food industry enterprises have to import them. Further long work of the state and private companies on this branch development is required to provide the industry with domestic goods production.