Flour production in Russia has become unprofitable

The margin of flour production in Russia has fallen to a minimum, and in some cases even became negative. This was reported by Dmitry Rylko, Director General of the Institute of Agricultural Market Conditions (IKAR). According to him, the average profit of flour mills is currently at a critically low level, which threatens the stability of the industry.

The main reason for this decline is high credit rates and reduced state support. The lack of preferential lending forces enterprises to take commercial loans at more than 25% per annum, which makes production economically unprofitable. The Union of Flour Milling Enterprises has already appealed to the Minister of Agriculture with a request to restore support, otherwise the industry may face mass bankruptcies and a reduction in exports.

In addition to financial difficulties, the situation is complicated by unequal competition. There are a large number of small enterprises operating in the market that produce products of dubious quality and dump prices. As a result, large producers face strict regulatory requirements, while the “gray” sector remains out of control.

Flour exports were previously supported by subsidies for product transportation, but this assistance is now significantly limited. In 2024, Russia exported about 1.17 million tons of flour, but without government support, it will be difficult to reach even this level in 2025.