- A global shortage of plant protection products (PPPs) in the agricultural season of 2022 in the Russian Federation is not predicted, experts from the August company, a leading domestic pesticide manufacturer, say. The production process provides for the purchase of all components for the formulation of preparations, usually 6–8 months before the start of agricultural work, so that the necessary stock of PPP to preserve this year's crop has actually already been formed. In addition, the energy crisis in the countries of the European Union and China in the second half of 2021, which resulted in local shortages of raw materials and their rise in price, stimulated pesticide manufacturers operating in Russia to shift the purchases of active substances, intermediates and other components to an earlier date, which additionally secured them .
In turn, amid the energy crisis, many agrarians also decided to contract earlier than usual and now receive plant protection products at last year's prices.
“The food security of the country today is a more important issue than making a profit. Therefore, we are ready to meet the needs of the farmers in such a difficult time. Under the concluded and paid contracts, Avgust fulfills all its obligations at the prices set in these contracts, although, of course, we partially lose margin. For our part, we asked our partners to pay for the concluded loan contracts ahead of the terms stipulated by the agreements in order to be able to maintain the previous cost of drugs for them. Our partners, understanding the situation, agree with this,” says Mikhail Danilov, General Director of JSC Firma August.
As for new contracts, it is no longer possible to keep prices for pesticides at the level of the beginning of the year when they are concluded. The cost of products is largely determined by exchange rates: suffice it to point out that the predominant share of all active ingredients for pesticides in the world is produced at enterprises in the PRC. However, according to the experts of "August", the increase in prices for plant protection products will not lead to a significant reduction in their use and serious threats to the harvest this season: firstly, many farmers made purchases earlier than usual, and secondly, the use of pesticides pays off even when significantly higher prices.
“We can state with a high degree of probability that a global shortage of plant protection products in the 2022 season in Russia cannot be expected. According to our information, the largest producers and suppliers of pesticides operating in the country have already imported and produced for the domestic market a significant share of products for the upcoming field work. At the same time, we do not rule out that local shortages are possible, but for the bulk of crops, as well as harmful objects, we proceed from the fact that the availability of drugs will be at a technologically acceptable level,” comments Mikhail Danilov.
Although it is unlikely that a number of American and European companies leave the PPP market for political reasons, such a development of events should be taken into account. In this case, domestic producers will need to significantly increase the volume of output. The company "August" has three plants in the territory of the Russian Federation and the Republic of Belarus, where the formulation of preparations for plant protection is carried out. One of the most modern production sites, the August-Alabuga enterprise in the Republic of Tatarstan, was launched in the summer of 2019 and has not yet reached its design capacity, which is 50 million liters of drugs per year (more than a quarter of the entire volume of the Russian pesticide market). The plant has significant reserves for increasing production - both for itself and on terms of outsourcing for other companies in the industry. Now "August-Alabuga" is intensively increasing the production of the products most in demand by farmers. So, in February 2022, the production volume was a record for the site and exceeded 2,3 million liters of finished products, and in March this figure should be more than 2,5 million liters.
In addition to the large-scale production of finished products, a joint Russian-Chinese venture "Augusta" Hubei Avgust Pesticide Co. operates in the PRC in the province of Hubei. Ltd, specializing in the synthesis of active ingredients for pesticides. In 2021, shipments of two active ingredients for the manufacture of fungicidal preparations at the Avgusta factories in Russia and the Republic of Belarus have already been completed, and in the future there will be more than thirty of them.
“Now the delivery of goods from the EU, of course, has become more complicated, but, nevertheless, what we import from China through European ports, as well as what we buy from European partners, for the most part continues to be shipped to us. It is obvious that logistics has risen in price, there have been difficulties with crediting money to a number of European banks from a number of Russian ones, but we manage to solve these mostly technical problems today,” Mikhail Danilov sums up. – To the credit of our partners from Europe, not a single company has refused to cooperate with us, referring to any sanctions or political motives. As for our counterparties from China and India, it seems that they did not even consider such a possibility: these countries support us both economically and politically. In addition, we have been contracting with the PRC in yuan for a long time, and the policy of its government today is aimed at further expanding cooperation with Russia.”