Battle of yields. Latvia wants to ban Russian grain imports

In Latvia on February 5, thousands of farmers reached protests throughout the country, demanding to ban the import of Russian grain and food to the EU countries. “The EU allows you to import Russian grain to our common market and transport it through European ports and terminals,” the france Presse agency, at a rally in Elgava, told the organizer of the protest campaign, Juris Lazdins. “We help Ukrainians with one hand, and with the other we allow the aggressor to steal grain in Ukraine and sell it in Europe with huge profit. We demand that we cut it off. Russia from such methods of financing its hostilities. ”

Latvia is a major importer of Russian agricultural food products, including cereals and oil crops. Can this country abandon supplies from Russia?

Bonfires on the roads

In early December, in the account of the social network X (former Twitter), the owner of the agricultural holding of AGRO BALTICUM Gatis Ausins appeared and the video from the nodal railway station, along which the cargo moves from the eastern border to Riga. The video with the composition consisting of hopper wagons with a Russian inscription was equipped with a comment: "Russian bloody grain at Krustpils station!"

Krievu Asiņainie Graudi Krustpils Stacijā! Latvieši sāk organizētieslabdien, Visiem! Esam Diennakti nodežūrējuši pie krustpils dzelzceļa stacijas. Rezultāti. Uz rīgasi iebrauku 208 vagoni ar Krievu vai zagtiem ukranas grandema. No Latvijas izbraukuši Virs 350 vagoniem⬇️ Pic.twitter.com/H8usu5aqln

- Gatis auzins (@gatis_auzins) December 2, 2023

Activists on duty at the station calculated that 208 wagons “with Russian or stolen Ukrainian grain” went towards Riga per day. They demanded that the government not let him into Latvia and were preparing to block the paths.

Popular indignation was supported by President Edgar Rinkevich, who called on Latvian entrepreneurs, still importing Russian grain into the European Union, to think about "whether this money is worth it."

The general requirement of the peasants of both countries is an immediate ban on grain imports from Russia

In early January, Lithuanian farmers lit bonfires of protest on the sidelines. They opposed the bureaucracy and indifference of the authorities, plans to expand natural meadows at the expense of agricultural land, refusing to support the dairy industry. Lithuanians were also excited by the government’s intention to increase the excise tax on gas, which is used in the production of mineral fertilizers. Latvian colleagues in the border regions supported the action. The general requirement of the peasants of both countries is an immediate ban on grain imports from Russia.

Anita Leshinsk, an agronomist from the peasant cooperative of Damnieki in the Dobel region, said: "Our ports are full of Russian grain, but we have a nearby warehouse, which lies 600 tons of grain, which is not realized, because now no one accepts it."

“Mineral fertilizers are very expensive, and the grain costs nothing more. And it comes to the point that we can no longer make ends meet,” the owner of the farm of the farm of Malini Ainars Mikelons, the owner of the Latvian public television.

Since the end of 2022, Latvian peasants have abandoned the use of cheap Russian fertilizers and pesticides, so the cost of their products increased significantly. Meanwhile, according to central statical status, purchase prices, for example, wheat, in the IV quarter of last year, compared with the same period of 2022, decreased by more than 66 euros - from 282.78 to 216.15 euros per ton.

Crystaps AMILS, the head of the largest grain processor in the Baltic countries of Dobeles Dzirnavnieks, believes that after the import of Russian grain should be prohibited through Latvian ports, which is also unprofitable to Latvian farmers, as it provides more favorable logistics opportunities for Russian goods.

On Monday, January 5, peasants all over Latvia brought agricultural machinery on the roads. If in a week the government does not satisfy their requirements, they promise to get to the capital on tractors.

Dizzying success

By the 3rd quarter of last year, Latvia, being the exporter of grain, became the EU leader in their imports from Russia (though Italia overtook her by the end of the year), and she turned out to be the champion in growth. 87 percent of the total volume then amounted to corn, mainly fodder culture.

By November, almost 383 thousand tons of food grain from Russia were imported into the European Union through Latvia. In turn, his transit through the Latvian ports over 11 months of last year amounted to 1.94 million tons.

Why does the grain from the eastern border come in such quantities? In Russia, there is a steady tendency to increase grain production, caused by both the expansion of sown areas and the growth of yields. Over the past ten years, grain production has doubled. As a result, Russian wheat, for example, this year amounted to 24% of world exports.

Grain prices in the Russian province fell below the break -in

According to the US Department of Agriculture, already in the 2022–2023 marketing year, grain production volumes increased in all basic grain and oil cultures, reaching the second indicators in the history of observations. At the same time, the American rating of the record wheat harvest is more careful than the Russian, since Crimea does not take into account. Rosstat gives even more impressive numbers taking into account Crimea (but without taking into account the occupied Ukrainian territories). And the crop of last summer blocked these indicators, reaching an absolute record.

Loading grain on a ship in the Ukrainian port of Izmail, April 26, 2023

At the same time, in connection with Western sanctions in 2022, Russia introduced measures to limit export, which led to overstocking of warehouses. Grain companies managers recognized the danger of loss of excess and the need to export grain on disadvantageous conditions in unprecedented quantities. In April 2023, the President of the Russian Grain Union Arkady Zlochevsky said that grain prices in the Russian province fell below the breakest point, and because of the "Black Sea transaction", Russian farmers were forced to sell grain with a discount of 10 to $ 20 to world prices.

Ethics or economics?

Western sanctions do not affect food supply from the Russian Federation. Such a decision of the country "Big Seven" was made to minimize the risk of hunger for third countries. However, the issue of ban on the import of grain from Russia and Belarus in Latvia has been discussed for a long time. Until now, the ruling coalition believed that the sole ban on Latvia of Russian grain imports would not bring the proper result, since it is easy to circumvent, importing goods to the country through other EU countries.

This is rather a symbolic step designed to give an example to the allies

“We believe that this is wrong,” the Minister of Agriculture Armands Krause told reporters, belonging to the political association of the “Union of Green and Peasants,” because there is no hunger in Europe, and we do not need Russian products here. ” Krause undertook to lobby for the ban on the import of Russian grain (and, in general, agricultural products) in the European Union Council. In his opinion , the import of this raw materials into the European Union and its use are both an ethical problem, since the grain is imported into the EU from the aggressor country and economic, since Russia sells them below market prices.

As a result, the Ministry of Agriculture prepared, and the coalition at the end of January agreed to support the bill on the ban on the import of Russian grain into Latvia, without limiting the transit. During February, he must approve the Sejm. According to the Minister of Economics, Viktor Valainis, the Sopartian Krause, is rather a symbolic step, designed to give an example to the allies, because it will hardly affect prices.

In order to reassure farmers requiring immediate actions, and as a way to implement the decision of the coalition, the Ministry of Agriculture proposed to deprive the peasants who continue to order raw materials from Russia and Belarus, the right to apply for state support.

Meanwhile, the European Union became a key importer and a transshipment point for Ukrainian grain as part of the “Solidarity Way” initiative, which caused farmers' protests in the region, especially in Poland, and as a result forced the government to freeze Ukrainian imports.

Protest of Polish farmers on the border with Ukraine

Do Latvian grainmen compete in the home market with Ukrainian? Let us take one of the main positions for the analysis-wheat and wheat-rusty mixture that Russia delivered to Latvia before the war, but Ukraine does not.

The idea of his transshipment through the Baltic ports was unsuccessful

According to the central statistical administration, in 2022, its imports from Russia amounted to 83 thousand tons against 16 thousand in 2021. In 2023, according to preliminary data, deliveries from the Russian Federation amounted to 49 thousand tons. From Ukraine in 2022, 11 thousand tons of this goods were received, in 2023 (preliminary data) - already 45 thousand tons. Latvian experts believe that there is little Ukrainian grain to the domestic market. And the idea of his transshipment through the Baltic ports was unsuccessful due to the high cost of this process. But, even getting to Europe through the Romanian Constanta, it presses on world prices and "spoils the market."

Painful choice

Latvian crops are the alleged beneficiaries of the ban on Russian grain. However, there are industries that will lose from him.

The Ministry of Railways objects against transit restrictions because it will damage railways. Since March last year, as international sanctions came into force, the volumes of freight rail transportation have seriously fallen in almost all segments. Meanwhile, last year from January to October from Russia, 2.96 million tons of grain and products of its processing, as well as seeds and fruits, were transported through Latvia by ground and sea transit. This is approximately 25% of the total cargo transported by the subsidiary of the Latvian railways LDZ Cargo.

It is noteworthy that the Minister of Railways Caspers Briskens (the Party of the Progressive ") went against his ministry, supporting the ban on both imports and transit, since" it is high time to reorient to Western goods. " “We must defend the choice that strengthens Ukraine, and not Russia,” the minister said, “as well as a choice that is economically painful in the short term, but morally true and visionary.”

Presidents of Ukraine and Latvia Vladimir Zelensky and Edgar Rinkevich after negotiations in Kyiv, November 24, 2024

Industry experts believe that for domestic consumption to Latvia from Russia, mainly forage grain and other products intended for animal feed are imported. Thus, livestock breeders may turn out to be the injured party. The responsible ministry does not know the number of farms affected or the volume of potential damage. Neither entrepreneurs themselves nor the organizations representing them publicly at the ban on speaking - apparently, they are afraid that their opinion may turn out to be unpopular.

Most of the turnover was provided by trade with the UK, Sweden and Spain

The head of the Council for Cooperation of Agricultural Organizations Guntis Gutmanis to the corresponding question to the correspondents of Latvian television replied that he did not know a single case so that some Latvian animal breeder purchased feed directly from Russia. Janis Sholks, Chairman of the Board of the Latvian Central Union of Domestic Economy, said to them: "I asked this question to those who are close to me and who I trust. They assured me that they did not need it at all and they do not think about it. If one of our farmers is doing this, then this is shameless, to put it mildly."

Meanwhile, journalists found in Latvia the company of the corresponding profile, which since the beginning of the war has increased the turnover of more than three times - from 53 million euros in 2021 to 180 million in 2022. Avrora Baltic LLC, selling Russian corn, peas, wheat, until March 2021 was the "daughter" of the Russian company September, based in the Lipetsk region, and the Russians also led them, then it was re -registered to Latvian citizens. Most of the turnover was provided by trade with Great Britain, Sweden and Spain, however, Latvia also accounted for 42 million euros.

"The market works as communicating vessels"

We talked about the consequences of the ban on the import of Russian grain in the region with Nikita Kalashnikov, the owner of the Latvian company Graudu Sabiedrība, which is engaged in the export of Latvian and Ukrainian grain products.

- Is there enough grain in Latvia if Russian imports are blocked?

Some volume will be replaced by deliveries from the same Ukraine, although there are logistics problems with this

- In Latvia, about three million tons of grain per year are grown. Of these, about 30 percent goes to domestic consumption, and 70 is exported. Of course, Latvia is enough. Question in price. From Russia, but not only and not so much grain was imported from Russia as processing products: a spray, sunflower cake, and so on. And not only wheat, but also barley, other crops - basically everything that can go to animal feed, because the cheaper, the better. In principle, there is also something to feed animals in Latvia. Some volume will be replaced by deliveries from the same Ukraine, although there are logistics problems with this. But the volume of different crops necessary for the manufacture of compound feeds also comes from there.

- Ukraine can completely replace the need for the raw materials that came from Russia?

- From the point of view of potential, it can: Ukraine is a large manufacturer of agricultural products. The problem is in logistics. There is no direct railway message-there were some one-time trial supplies, but they are economically unprofitable and complex. Removes remain, but it costs 120 euros per ton from the Ukrainian-Polish border, it is expensive.

- That is, it increases the cost of products in Latvia?

- On the one hand, it increases the cost, on the other, it reduces the interest of Ukrainians. The market of agricultural products is quite open, prices correlate throughout Europe, grain and rapeseed in general exchange products. If the grain costs 220 euros in Latvia, it costs so much in Poland. Only before Latvia you need to take it for half the price. The Ukrainian farmer, thus, should give for a hundred what costs two hundred. He has an alternative to sell it in Poland or Germany: transportation costs are less, the price is the same. The Latvian farmer will also not buy grain for three hundred. Moreover, there are few convenient solutions. If today you want to buy some product in Ukraine 3 thousand tons, cars will take it for six months to you-if the Polish farmers are not worried, who overlapped roads a few months ago and blocked completely transit to Latvia. And if you want to buy 3 thousand tons of something by rail from Russia, then this is one composition, you can bring it within a month or two. Therefore, entrepreneurs are likely to use more expensive products of local, Lithuanian, Polish origin.

Protests of Polish farmers. End of January 2024

- Will the seizure of Russian imports increase market prices, which Latvian peasants hope so?

-Latvian farmers-growers are faced with the fact that they cannot sell the grain of low quality, they cannot sell to other Latvian farmers, because they buy Russian. In this case, of course, having removed cheap raw materials from the market, they will be able to sell compatriots at a higher price. But still, this economic problem will remain inside Latvia: meat and milk products rise in price.

- That is, Russian grain is the only cheap product in the entire region?

- Yes, since this product is from another economic reality, which is determined by the ruble rate, the presence of laws that limit grain export. All this affects pricing in the most non -resident way.

-Is it possible to assume that the forage grain, which will cease to go to Latvia from Russia directly, will go from somewhere from Poland?

No one is ready to give the market to Poles or Lithuanians

- Of course, it will go. The market works as communicating vessels. But, as far as I know, the Estonians no longer import him, they will probably refuse him in Lithuania. Baltic countries usually synchronously introduce such restrictions. Here is Poland - yes, it may not be banned. If you can bring Russian grain through Belarus, theoretically, it may be in Latvia. How does this usually happen? The streams of goods are managed by the seller. The company, for example, imported Russian grain, and at some point it is forbidden to it, but it has customers, obligations, ready-made sales. No one is ready to give the market to Poles or Lithuanians. And the seller is very interested in finding an alternative. The company will begin to look for a workaround. It will be more expensive, it will affect the price, but still the same Latvian company will continue to make profit from this business. Just part of the profit will settle in other transport companies, and Latvian railways will lose this.

- So, it will still not be possible to get rid of Russian imports?

– Его можно затруднить до такой степени, что альтернативная логистика станет невыгодна. Это точно приведет к уменьшению размеров поставки. Может быть, альтернативы и вовсе не будет, если Польша тоже перекроет ввоз.

– О каких препятствиях идет речь? Дополнительные пошлины, проверки?

– Дополнительные пошлины на товар российского происхождения обсуждались, но можно же всегда замаскировать, оформить его как казахстанский. И тут нужно понимать, как все выглядит с точки зрения закона, Латвия же не Россия. Если Сейм может что-то запретить законодательно – это одно дело. А другое – вводить какие-то ограничения. Это сложно, ведь Латвия – член ВТО. Поэтому я думаю, что запрет на импорт будет эффективен, он снизит объем ввозимой в Латвию российской продукции значительно, если не полностью. Но оставят транзит, чтобы железная дорога и вся портовая инфраструктура, которая исторически построена так, чтобы обслуживать транзит из России и в Россию, могли получать деньги. При транзите тоже остается теоретически какое-то окошко для фальсификации документов.

– Вы упомянули Казахстан. Можно ли представить российскую пшеницу как казахстанскую?

– Да, это сложно будет проверить. Казахстан в основном специализируется на твердых сортах, которые не выращивают в России, но у них есть и мягкая пшеница. Объемы фальсификаций мы, наверное, увидим через некоторое время, если будет всплеск импорта сельхозпродукции из Казахстана, – говорит Никита Калашников.