The 10th Russian Agricultural Forum recently convened in Moscow, a significant event in the country’s agro-industrial sector. Hosted by Konstantin Babkin, Chairman of the Federal Council of the Party of Acts and President of the Rosspetsmash association, the forum focused on the challenges and future of Russian mechanical engineering in 2023.
Konstantin Babkin opened the plenary session by addressing a prevailing sentiment in Russia—that the mechanical industry doesn’t require governmental support. Contrary to this belief, Babkin emphasized that the type of equipment used in agriculture matters to various stakeholders, including the government and farmers. He argued that the laissez-faire approach, which suggests that consumers should decide what to use without government intervention, doesn’t always work in practice.
Statistical data presented at the forum painted a different picture. Despite a 41% growth in the agricultural machinery market in monetary terms and a 24% increase in production in 2023, the share of domestic producers has declined. Imports from friendly countries have surged by a staggering 63%, effectively sidelining domestic companies. This influx of foreign machinery has filled the void left by sanctions, with China being a notable contributor.
Babkin also drew attention to other contributing factors, such as low levels of customs and tariff protection for the domestic market. Financing for program No. 1432, aimed at supporting the industry, has been slashed from 8 billion rubles in 2022 to just 2 billion rubles in 2023. This reduction has led to negative market indicators and hindered modernization efforts.
The industry also faces “pressure from below,” as Babkin termed it. Rising costs, including a fivefold increase in logistics costs and a doubling of the Central Bank’s key rate compared to last year, have added to the challenges. Despite these hurdles, the industry remains optimistic, with companies showing a willingness to invest in new projects.
Babkin concluded by outlining several proposals aimed at bolstering the agro-industrial complex. These include offering loans at rates between 0% and 1% to industrial and agricultural companies, not restricting access to foreign markets for agricultural products, and guaranteeing minimum prices for agricultural products on the domestic market. He also called for increased preferential transport of products by rail and a boost in the volume of crop insurance.
The 10th Russian Agricultural Forum served as a platform for critical discussions on the state and future of the country’s mechanical engineering sector, particularly in agriculture. The event highlighted the urgent need for government intervention to support domestic producers and ensure the industry’s sustainable growth.
