In agribusiness, started the debates on measures to restrict exports of sunflower. Some experts believe that this decision is an attempt to collect margin from farmers and to deprive them of the opportunity full salary, while others insist that such measures will lead to reduction of crops of this agriculture. And many of them are unanimously of the opinion that the government correct itself and to leave the question free market. Take a look at the situation holistically and to appreciate the promotion of agribusiness in domestic and international markets, rather than individual direction.

The role of the state: a passive or active participant?

Today we are forced to work in the new reality of volatile markets in the context of the pandemic and the ongoing "trade wars". Long-term strategy at the state level and the protection of national interests is a prerequisite of survival in the current world situation. Any government has to be proactive and to support their own producers, both farmers and processors. Russia is no exception.

An illustrative example of the regulatory policy of Turkey, by the way, our competitor in the export markets of the oil in North Africa and the middle East. Turkey has a protectionist duty on crude sunflower oil — 36%, and on refined, deodorized of 67.5%. While for sunflower it is very flexible scale — during the year can range from 7% to 26%. The Turkish authorities always retain the spread, stimulating the import of raw materials and make inefficient deliveries to the country of finished products because its raw materials are totally lacking. China, in turn, regulates the market, not only duties, but also rigid certification. And the current situation with Canada's largest suppliers of canola, which closed Chinese market, convincing proof. If agriculture will spontaneously be exported abroad, we will slip to 30 years ago and can get the problem of shortage of raw materials.

The fee discourages grow sunflowers?

The history of the development of the industry says exactly the opposite. A 20% duty on export of sunflower existed from 1999 to 2013 years. Then followed a gradual decline, and by 2019 rate reached 6.5% — the level at which the sunflower is already profitable to export. At this point in time the industry developed as follows: gross sunflower harvest in 1999 was 4 million tons, the processing capacity was 3.9 million tonnes, of which half remained since Soviet times and needed urgent upgrade. Exports then there was virtually no oil shipped only 31 thousand tons In 2013, when the process of gradual reduction of duties, gross yield has reached 10 million tons of refining capacity built for 14 million tons, exported 1.35 million tonnes of oil in bulk and in bottles. In 2019 the capacity increased to 20 million tonnes, the yield — to 15.4 mln tonnes, the Export of oil amounted to 3 million tonnes, of which 2.5 million tonnes of bulk, 0.5 million tons of packaging. Total harvest increased four times processing capacity — five times the export of sunflower oil from virtually nothing came out for one of the leading positions on the world market.

Thus, the period of protective duties not only repulsed the desire of farmers to develop the production of sunflower, but also created the conditions that led to a fourfold increase in yield.

Someone to navigate: exporter-trader or recycler with a plant in the region?

The interest of the farmers to the oilseed forms is not the policy of open export markets and strong domestic processing. Let's see how changing demand from farmers for soybeans in the black earth: agriculture in the macro-region have begun to grow after the "EFKO" has built a factory there. And today the farmers of the Central Russia rely on soy. When the "Solar products" have started to reconstruct Atkarsky MEZ, in the Saratov region has grown 200 thousand tons of sunflower. The crop was, rather, a way of life, not a business. Did not earn almost none. Today in Saratov oblast harvested 2 million tons of sunflower seeds, he was the main agriculture in which the farmer makes a margin.

The main reason for a tenfold increase — not open to the export market, and the construction of two major processing plants in Atkarsk, Balakovo. And this is only a special case. Let's call a spade a spade: to restrict the export of raw materials or increasing the duty really is not beneficial only to traders in foreign markets. Here is their business to trade seeds duty really choking. Only offer not be planted in the same boat traders and growers. They are by nature business models are forced to work on situational interest, not build factories, an advance of seed material are not engaged in, agricultural technologies do not develop. The farmer starts to sow oilseeds, only when the region appears a plant. Turkey buys today, tomorrow will not buy, but plant close by is a guaranteed demand.

Processors and farmers are the elements of a single ecosystem. We are interdependent and mutually beneficial to each other in the long run. Together we have built the industry from scratch together and have a chance to double it in the coming years. To displace Ukrainians from the Indian and Chinese markets in sunflower oil. To begin exporting soybean oil and soybean meal and bring rape to a new level. Soybeans and rapeseed today supported a subsidy to farmers per ton of raw material delivered for processing. Sunflower thus support is too expensive, so prohibitive export duty is simply the most effective tool to stimulate domestic processing and ultimately, the creation of conditions for further development of the agriculture in the country and yet a lot of income for her farmers.