FAO at AGROS 2023

Facing global food crisis, FAO acts as a reliable partner for all member countries in ensuring food security. Being a source of objective and timely information, FAO assumes the role of developer of both specific systemic suggestions to overcome the crisis, and emergency humanitarian responses to situations in countries and regions most vulnerable and suffering from hunger. 

This was the main message of the report by Oleg Kobiakov, Director of the FAO Liaison Office with the Russian Federation, which he delivered on January 25 at the International Exhibition AGROS 2023 at the All-Russian Scientific and Practical Conference “Food Security: New Challenges and Solutions in a Changing World”. 

The forum was organized by Alexander Nikonov All-Russian Institute of Agrarian Problems and Informatics (VIAPI). 

“Conflicts and geopolitical tensions, increasingly frequent extreme weather events, economic slowdowns and economic downturns – including those resulting from the COVID-19 pandemic – and growing inequality are the key causes of hunger and malnutrition in the world,” Oleg Kobiakov stressed. Last year, energy and financial crises were added to this list. 

“These factors continue to reduce the quantity and quality of food that people have access to and worsen the financial situation of many countries, making it more difficult for their governments to mitigate the impact of such factors. 

The conflict in Ukraine remains a significant negative factor aggravating the situation on world food markets: the Russian Federation and Ukraine are major exporters of agricultural products.” 

The head of the FAO Moscow Office noted that a steady increase in prices for most food products has been observed since May 2020. This is due to “the influence of factors such as adverse weather conditions in major exporting countries, rising production and transport costs, supply chains disruptions due to COVID-19, uncertainty about export restrictions from major exporting countries and strong global demand for food and feed.” 

A particular cause for concern is the shortage of fertilizers and their affordability. “Fertilizer prices have risen sharply since the end of 2021 as a result of higher energy and natural gas prices, the COVID-19 pandemic and trade restriction policies imposed by some exporters, as well as anti-Russian sanctions,” the speaker noted. 

“This situation creates an additional burden for farmers who have to deal with rising input prices, leading to a reduction in fertilizer use and therefore an expected decline in production in 2023.” 

What is FAO’s role in managing global food security? 

In the first place among the measures to overcome the crisis that FAO takes as an organization of knowledge, as Oleg Kobiakov explained in detail, is the provision of objective data and information on market conditions to increase the transparency of the food market and substantiate specific measures that governments and businesses can implement. 

In April 2022, FAO suggested establishing a Food Import Financing Facility (FIFF) approved by the World Bank to help countries cope with skyrocketing food import costs. 

Given the emerging negative trends, FAO Director-General Qu Dongyu has recently warned world leaders at the G20 Joint Meeting of Finance and Agriculture Ministers about the risks of the food access crisis escalating into “a food availability crisis.” 

FAO has developed a Fertilizer Trade Tracking Platform, an online tool that allows countries to assess remaining import needs and/or unrealized export opportunities for the current agricultural and calendar year. 

FAO, along with other international agencies, is recommending that countries strengthen their social protection programmes by either expanding the coverage of existing programmes, or increasing the level of benefits, or introducing new measures to maintain household purchasing power and food consumption levels. 

“FAO is providing support in transforming agrifood systems in order to increase their efficiency, inclusiveness, resilience and sustainability – in compliance with the principle ’Leave no one behind’,” concluded Oleg Kobiakov. 

“Difficulties with food availability in the world at large, and in a number of countries, cannot be directly linked to the events of February 2022. The growth of the UN Food Price Index has been observed since autumn 2020 – long before the aggravation of the geopolitical situation, said Academician of the Russian Academy of Sciences Alexander Petrikov, Head of Alexander Nikonov VIAPI  (branch of the Federal Research Centre for Agrarian Economics and Social Development of Rural Territories – All-Russian Research Institute of Agricultural Economics). “In the last 9 months of 2022, according to FAO data, this Index was declining, although its annual average will probably be higher than in 2021 by about 15 percentage points.” 

“In Russia last year, a record grain harvest was obtained, for the first time more than a tonne of grain per person,” continued Academician Petrikov. “This growth allows filling the domestic market with the necessary food products... In Russia, the consumer price index for food products in December 2022 compared to December 2021 amounted to 110.3%, which is not higher than in 2021 (by December 2020 according to Rosstat data), which was equal to 110.62%. Some stabilization of the domestic market allows us to think about new opportunities for exports, although food inflation remains high.” 

“Ensuring food security is a multifaceted process. In addition to production volumes and the state of agrifood markets, and the share of domestic products in commodity resources, other factors also affect food security. The level of income of the population. Territorial accessibility and quality of food products. The level of development of the first sphere of the agro-industrial complex, designed to provide it with the necessary means and production resources. The state of the processing industries. The level of development of agricultural science and education, which form the basis of the technological sovereignty of our country in the field of the agro-industrial complex, and which are also responsible for providing the industry with qualified personnel. And so on. The state of food security is the resulting indicator of all our work in the agro-industrial complex.” 

“With regard to food security, now the biggest risks are associated with the sale of products that we have grown. All our storage facilities are full, said Sergey Lupekhin, Chairman of the Potato Union of Russia and Director General of Malino joint stock company. And that is why every peasant, going out into the field in the spring, thinks about how much to plant.” 

At the same time, “we have practically no risks associated with the use of seeds. None of the major seed companies, including foreign ones, has announced that it is withdrawing from the Russian market. The only problem that is associated with the delivery and provision of seed material is the logistics (financial and transport), which leads to a rise in the cost of the material itself.” 

The government of the Russian Federation has adopted a doctrine on the use of seeds of domestic selection in order to bring its share to 75% by 2030. At the end of last year, a resolution was adopted in which this figure was adjusted to 50% by 2030. “Speaking of potatoes, we have about 95% of domestically produced seeds,” Sergey Lupekhin continued, “but domestically selected seeds account for 7-8% of all seeds planted by producers.” 

In this regard, the Government has adopted a number of federal programmes for the development of domestic seed breeding and “it is taking serious financial measures to support the industry and develop domestic seed breeding.” 

“Our well-known companies, which are engaged in seed programmes and breeding, grow seeds abroad ... We do not have such a concept as “seed zones” in the new law on seed production,” the chairman of the Potato Union stressed. “There is a misunderstanding of how to ensure the quality of seed material if we do not have such zones. They need to be found, tested and protected from the influence of unscrupulous competitors and producers, so that domestic seeds can be produced efficiently in these zones.” 

“Often the concept of food security is associated with the concept of self-sufficiency, which is incorrect,” said Dmitry Rylko, Director General of the Institute of Agricultural Market Studies (IKAR). Basing his idea on the fact that this season Russian farmers have broken many records in the production of cereals and oilseeds, the expert pointed out the need to supply these products, in raw or processed form, to foreign markets. “Otherwise, it threatens us with overstocking and collateral troubles.” 

“At the beginning of the season, we had serious difficulties with exports due to informal restrictions or indirect sanctions against Russia. But since about October, exports have recovered and are already close to record values.  By the end of the season, according to statistics, Russia will be able to export 45 and a half million tonnes of wheat, and in total – about 56 million tonnes of all grain.” 

For the “harmonious development” of the agricultural and food sector, the expert explained, there are such mechanisms as export duties and quotas. It is necessary to harmonize the attractiveness of exports and the interests of the domestic market, the expert stressed. “And this is an extremely difficult task, and the government is forced to walk literally on the razor’s edge.” 

“Moreover, I take into account the fact that we depend on the import of seeds, pesticides: not a single active substance is produced on the territory of Russia, as well as a number of agricultural machinery and technologies. Given the limitations of our resources and time, attempts to produce everything in our country can lead to an absurd outcome,” Dmitry Rylko warned.  

Irina Ganieva, Director of the ANCO “Scientific and Educational Centre Kuzbass”, shared with the audience her proposals on systemic measures of import substitution. “Thanks to the federal subsidy to support agricultural producers,” positive trends have emerged in the agricultural sector. The most striking example of import substitution has been registered in providing combine harvesters – grain and fodder harvesters. According to experts, 75% of agricultural machinery in this segment is Russian-made.

“Nevertheless, we still depend on imported agricultural machinery,” the expert noted. According to statistics for January-August 2022, the “big Three”, i.e., Italy (17.6%), China (19.4%) and Germany (21.1%), which occupied more than half of the market, stood out among the leading suppliers of agricultural machinery. 

Irina Ganieva and the staff of her scientific institute propose to focus on the capabilities of the All-Russian Engineering Centre of Machinery and Equipment for the Agro-industrial Complex, as one of the areas of import substitution. At the first stage, the Centre will identify and describe the “gaps” in technological chains, prioritize and rank agricultural machinery and equipment. At the second stage, search (including patent one) for technologies in Russia and countries, which have not adopted the sanctions, will be carried out to identify the most promising technological solutions. At the following stages, it will be supposed to: search for developers; form scientific and technical consortia; attract R&D financing; transfer R&D to manufacturers. 

Experts estimate the potential growth of this market segment between 7-10%. For this reason, before new logistics routes and commodity distribution chains are established with an emphasis on imported agricultural machinery, it is possible and necessary to take advantage of the window of opportunity that has opened to stimulate the development of domestic producers, Irina Ganieva concluded.

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FAO contributes to the development of global aquaculture 

In 2020, record figures were achieved: the volume of production of industrial fishing and aquaculture products (including algae) amounted to 214 million tonnes (Mt), said Igor Shpakov, consultant of the FAO Liaison Office with the Russian Federation, in his report on “Global trends in aquaculture: the investment potential of the industry” at the AGROS 2023 conference “Eurasian aquaculture and new opportunities for investment in the fisheries complex”.

The “Eurasian Aquaculture Alliance” – its head and moderator of the forum, Alexander Nevredinov, as well as the Fish Association and LLC “Agros Expo” organized the event.

In the total volume of catch, the share of industrial fishing accounted for 90.3 Mt (12.7% – catch in inland waters). For aquaculture 87.5 Mt (62.2% – production in inland waters) and for algae – 36 Mt. 

To date, 59 million people are employed in the field of fishing (in the primary segment). In total, 600 million people in the world depend on this industry (aquaculture – 35% and fishing – 65%). 

The top 10 types of aquaculture products (including algae) include: 1. Carp 2. Red algae 3. Brown algae 4. Shrimp 5. Oysters 6. Tilapia (cichlids) 7. Catfish 8. Bivalve mollusks 9. Salmon, trout 10. Freshwater bony fish. 

Today, 88% of the world’s aquaculture production is concentrated in Asia. Among the leading countries specializing in aquaculture are China, India, Thailand, Indonesia, the Philippines, and Vietnam. Just for comparing: the share of the aquaculture sector in Europe and Asia (16% and 68% – a difference of more than 4 times). 

The growth rate of the aquaculture sector is slowing down, due to: reduction of vacant sites for fish farming enterprises (in particular, in China), shortage of fresh water, tightening of environmental requirements. 

According to statistics, global fish production in 2030 will reach 202 Mt, of which aquaculture will account for 104 Mt (53%), and marine fishing – 98 Mt (47%). 

FAO’s position and policy in the field of aquaculture, Igor Shpakov stressed, is based on the “three whales”: “Sustainable expansion and intensification of aquaculture; Effective management of the fishing industry; Modernization of food production chains based on aquatic biological resources.” 

ADDITIONAL INFORMATION 

The FAO Moscow Office regularly participates in the leading agro-industrial exhibitions in Russia. When delivering speeches, its representatives constantly focus attention of a wide professional audience and specialized press on the pressing issues. 

This year, during the AGROS 2023 exhibition, the FAO Moscow Office took part in two sections devoted, respectively, to the global situation in food markets and current trends in the development of aquaculture from the perspective of attracting investment in this sector.