Turkish millers plan to build sites in Russia

Against the background of restrictions on the export of Russian wheat, large buyers – Turkish millers – are thinking about organizing production in the Russian Federation. Thus, the MonDef company plans to build in the south of the country a complex with a mill with a capacity of 1,000 tons of grain per day for subsequent deliveries of flour to foreign markets. Experts believe that the project can be successful only if export duties on grain are preserved, and they note the absence of a niche in the domestic market.

Large Turkish flour producers can organize production in the Russian Federation. As a source told Kommersant, the issue was discussed on June 11 at a meeting with Marina Afonina, director of the food and processing industry department of the Ministry of Agriculture. The Turkish MonDef may act as the developer of the project. Kommersant confirmed that they are planning to create a network of flour mills with the participation of Turkish flour producers. The pilot project of an export-oriented complex near the Black Sea coast should include an elevator with a capacity of 50 thousand tons and a mill with a processing capacity of 1,000 tons of grain per day. Construction may take up to two years, MonDef said. The name of the millers participating in the project was not disclosed there.

The Ministry of Agriculture told Kommersant that they know about the project. They recalled that flour mills in Russia can use a preferential short-term loan for the purchase of grain and an investment loan for up to eight years for construction, reconstruction, modernization of sites and the purchase of equipment.

Turkey is one of the largest buyers of Russian grain. According to the Center for Grain Quality Assessment, from the beginning of the season to June 10, the country accounted for 18% of all shipments, or 10.2 million tons. For comparison: Egypt, which ranks second among importers, purchased 8.09 million tons of grain. Dmitry Rylko, general director of the Institute for Agricultural Market Studies, notes that Turkey is the largest exporter of flour in the world, and the country imports about 70% of wheat for processing from Russia. According to him, the decision to build a flour mill in the south of the Russian Federation may be associated with the unstable economic situation in Turkey and the high volatility of the Turkish lira. As a result, it may turn out to be economically more profitable to produce and export flour from the territory where the bulk of raw materials are produced, explains Mr. Rylko.

Turkish companies may also be interested in restrictions on grain exports from Russia. From February 15 to June 30, Russia has a grain export quota of 17.5 million tons, and from June 2, a floating duty on the export of wheat, corn and barley came into force. Duty rates are calculated weekly. So, from June 17 to June 22, a duty on wheat exports was set at $ 33.3 per ton with an indicative price of $ 247.7 per ton. At the end of May, the deputy head of the Ministry of Agriculture Oksana Lut said that the quota for grain exports from the Russian Federation and the “floating” duty would be permanent mechanisms for the next few years.

According to the director of Sovecon, Andrey Sizov, in the current conditions, the construction of a plant in the south of Russia will give Turkish millers access to “artificially cheapened” grain. But with the abolition of duties, such an enterprise will lose competition to Turkish sites, which are located near the main markets for flour – the countries of the Middle East and Africa, he points out. Russian millers do not see any particular risks in the arrival of new foreign investors. President of the Russian Union of Milling and Groats Enterprises Arkady Gurevich, in particular, recalls that wheat prices in the south are the highest in Russia due to the proximity to ports, which increases production costs. According to the Ministry of Agriculture, wheat of the third class in the center of the country as of June 4, on average, cost 15.91 thousand rubles. per ton, in the south – 16.47 thousand rubles. per ton. In addition, adds Andrey Sizov, the Russian flour market is oversaturated and additional 200-250 thousand tons in the south will not find a Russian consumer.

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Tags: Russia, Turkey, Turkish millers