Russian agriculture from the global perspective

With the government looking to boost Russian agriculture Business RT spoke with Aleksey Pavlov, Unilever group procurement operations director for Russia, Ukraine and Belarus, about how competitive Russian agriculture is, and what is changing.

RT:How important is Russian agriculture for a large multinational such as Unilever and how competitive and efficient is it?

AP:"The Unilever group of companies regards the Russian agricultural market as a key, fast-growing and strategically vital market. A wide variety of raw materials are produced by Russian agricultural industry, some of them play important role not just in Russian market, but also in global economy. One of the examples is sunflower oil - Russia is one of the world?s two biggest producers of sunflower seed oil, playing an important role in global supply.

Working with domestic producers calls for a specific approach. Russian agriculture has lags behind developed countries in productivity, and include high capital intensity and a long period of under investment following the collapse of the USSR which practically destroyed the production base of Russian agriculture. This is where experience of multinational companies like Unilever plays a major role in supply development programs."

RT:What are the major issues impeding development of Russian agriculture and food production?

AP:"There are a lot of things which restrict Russian agricultural development. For example, local production lags the rest of the world in utilizing the latest practices and technology. That, in turn, lowers the competitiveness of Russian agricultural producers. Domestic agriculture also has a great need of floating capital, which has a long turnover period because of seasonal harvests. Besides in climactic terms big part of Russia is in a region of marginal conditions which means that conditions can vary greatly from year to year and have a very significant impact on production.

Amount of qualified professionals in agriculture is not as good as it should be. There is significant migration from rural areas to urban ones and staying in rural areas is not attractive for young people. Even after graduation from higher education institutions in professions like agronomist, young people rarely return to work in villages.

At the same time, the high degree of state interference in agricultural production shouldn`t be considered as one way good or bad factor. It has effects both ways.

Under current materials supply market economic conditions it`s clear that considerable time will be required to develop Russian agriculture. Industry will need to attract high levels of investments from state and foreign investors."

sections: Society, Economics