Pesticide prices in the 2023 agricultural season should be 10% lower than in the previous one.-20%. There are no prerequisites for an increase in the cost of chemical plant protection products (CPP) yet, Mikhail Danilov, General Director of JSC Firm "August" states. Foreign players have not left the Russian market, while at the same time, domestic companies have increased production capacity, competition between drug suppliers persists, and the shortage of active ingredients has been overcome.
“Practically all the resources needed to run an agricultural business are still going up in price in line with the trends of 2022. First of all, this concerns agricultural machinery, its repair and maintenance. However, in the segment of plant protection products, the situation has reversed, and we see a price correction,” says Mikhail Danilov. – It did not lead to a drop in prices to the level of 2021, but for various positions, the prices for drugs in the contracts of manufacturers and dealers with farmers this season should be 10–20% lower than in the past.
As the general director of Avgust notes, not a single large multinational company has left the Russian market, and even those small players who announced their departure are still present in the country. Therefore, there is no shortage of any drugs. In addition, even the simultaneous refusal of all major foreign players to sell CPPP to Russian farmers will not change the situation on the market as a whole, since domestic producers have increased sufficient pesticide production capacities to cover all the needs of farmers. This, in particular, also applies to the Avgusta plants located in the Chuvash Republic, the Republic of Tatarstan, the Republic of Belarus and the People's Republic of China. The company's enterprises annually increase productivity, and its products are exported in significant volumes: for example, Avgust is the leader among CPPP suppliers in Belarus and Kazakhstan, has representative offices in almost all neighboring countries, and successfully continues to work in Latin America and Africa.
Mikhail Danilov emphasizes that the main factor in the growth in the cost of plant protection products in 2022 was not the sanctions and the difficulties associated with them in financial calculations and breaks in the usual supply chains, but the consequences of the energy crisis that began in China in September 2021, then spread to Europe. According to the expert, the increase in pesticide prices in 2022 was 30-40% in annual terms.
“China is the world's leading producer of small-scale chemicals and key raw materials for pesticides. Since the beginning of the crisis, a huge number of chemical industry enterprises switched to part-time work, there were serious interruptions in the production of intermediates necessary for the synthesis of active components of plant protection products, which ultimately caused a shortage of active ingredients. For the first time in my practice, I have observed how such an increase in prices applies to the entire range of chemicals, and not to individual positions, which have been tense in the market before and which, as a rule, was the result of environmental restrictions or accidents. Today, the situation has returned to normal."
Mikhail Danilov notes that all major pesticide producers are ready for the agricultural season. There should be no problems with plant protection, including due to the fact that farmers for the most part understand that the competent use of pesticides does not increase, but reduces the cost of agricultural products, and therefore do not reduce the activity of concluding contracts for the supply of CPPP. Nevertheless, after the record harvest in 2022, the majority of agro-industrial complex participants fear that the cost of crop production will be higher than its selling prices. This may require changes in export duty policies to expand international trade and enable producers to recoup costs. The situation can also be balanced by the creation by the state of a high-quality infrastructure for storing grain reserves, allowing it to carry out purchasing interventions in much larger volumes, which would ensure a steady demand for farmers' products and strengthen the country's food security.