Pavel Kosov: "The regions of the South of Russia are leading in the purchases of agricultural machinery"
Pavel Kosov, General Director of Rosagroleasing JSC, — on the efforts on import substitution in the agricultural machinery segment, demand for equipment and the role of YugAgro exhibition in the farmers’ life
Import substitution and the course on independence from foreign suppliers became some of the key trends of the agro-industrial complex in 2022. This issue became especially relevant in import-dependent segments, and the sector of agricultural machinery was among them.
Last year, Russian farmers faced a shortage of spare parts for foreign machinery, the share of which in the fleet of some companies reached 30–40%, as well as with the necessity of finding new partners and suppliers. The current year was difficult in terms of demand for agricultural machinery. In monetary terms, sales are growing, but the market has not recovered from the decline of the first quarter. During the "Strong Russia: how does the village ensure the country's food security today and in the future?" Plenary Session at the YugAgro 2023 exhibition in Krasnodar, experts, representatives of government and agribusiness concluded that in these conditions one of the drivers is the use of financial instruments.
Pavel Kosov, General Director of Rosagroleasing JSC, discussed in the studio of RBC TV Yug at the exhibition why the course for import substitution is triggering the development of domestic agricultural equipment and what is the role of YugAgro in it.
The outgoing year 2023 was turbulent for many industries. How did it impact the agricultural machinery market? How productive and constructive was this year in general?
It can be definitely said that this year is not easy at all, although in 2021, 2022 we went through certain difficulties as well. They have only changed slightly, transformed. If in 2022 the Russian agricultural machinery manufacturers had difficulties, then this year we see a different situation, due to the fact that the machine builders have sorted things out with the parts supply chains.
For some ranges of items, we see growth of production. Specifically, this concerns combines. Of course, we must not forget that last year the base was low, but nevertheless the growth is present. There are certain nuances, because last year there was, among other things, a record grain yield, and the market has changed in general. If in 2021 it was safe to say that 50% of the market were covered by imported machinery, and our farmers were choosing suppliers from North America and Europe, then nowadays these suppliers are not in the market anymore. And this is a very good reason to develop the domestic equipment. At the same time, the machinery prices have increased dramatically — this is a serious issue that needs to be discussed, and some actions must be taken. Certainly, the government is making efforts to mitigate this price increase. Among others, we try to ease this debt burden with our programs. This is a serious question, because the price for some items has increased by 2 times or more. However, it seems that there are no global reasons for this.
The market is turbulent, but there is a demand for machinery. And with our programs, we see an increase in relation even to the last year's record figures. This year, our investments have increased by 40%: to date, almost 13 thousand units of machinery at the total cost of 90 billion roubles have already been provided to farmers. We have never had such figures.
Some people buy machinery at their own expense, and for me, as a financier, this is amazing. It seems to me that there is a more efficient way to spend money. There are programs such as bank financing, including concessional financing, which are offered by dozens of banks. And there is a market of agricultural machinery leasing, in which 62 companies work, and Rosagroleasing occupies 62% of it.
How actively do farmers in the Southern Federal District and North Caucasian Federal District buy machinery?
For obvious reasons, farmers of the Southern and the North Caucasian Federal Districts are among our most active customers. The Krasnodar Territory, for example, is always among our leaders. If in some years the Territory does no take the first place, it is always in the top 3. This year, the Krasnodar Territory is No. 1. The Stavropol Territory purchases a lot, and the North Caucasian republics have also begun to delve into this subject. Generally, the entire southern region is one of our main consumers. In addition to the Southern and North Caucasian Federal Districts, we distinguish central Russia and the Volga region. And in no case we can forget about everything beyond the Urals. Siberia and Far East are no less important to us than all other regions. We have exactly the same programs for them, but with certain incentives, because the logistic chains from plants to end users are more complex.
Can you comment on the activity increase in the North Caucasus?
Yes. Not so long ago, we opened one of the largest machine technology companies (MTC) there, which provides a range of agrotechnological services, including tillage. We have one of the largest MTCs in Chechnya. I visited it a couple of months ago — all the machinery works and is in demand not only in this Republic, but also in the neighbouring regions.
Foreign players
In your opinion, how large is the share that Chinese manufacturers are occupying in our market? How competitive are they now?
I have already said that traditionally we had 50% of imports. I cannot say that this niche is fully occupied by the Chinese colleagues right now. But here the situation is as follows — the domestic agro-industrial complex market is so interesting and attractive that it would be a crime not to try to enter it. That is why I say that those who exit this market will have problems trying to return.
We pay serious attention to China, we see India, colleagues from Turkey, Iran and other countries. All of them really want to enter this market.
If we take our portfolio, the share of Russian and Belarusian machinery still takes up 90% of our supplies.
Our main mission and task is to help farmers. At the same time, we are the largest buyer of agricultural machinery, and in this way we support the development of the domestic machine building.
Potential of the South
How do you think the sowing campaign will develop? And what do you expect from 2024 in general?
I think that we are quite well prepared technically, and next year we plan to continue along the tendency existing today. Last year, the harvest was record-breaking, and this year we have very serious results as well. I think that 2024 will also be interesting in these terms, based on the tendencies that I have told you about.
So can you say that there is no stagnation, but development?
I really would like to say that there is development, and it seems to me that this is absolutely possible. Once again — the machine builders are ready. I think that the situation with agricultural product prices will stabilize in one way or another, which will cause an increase in demand, and then, consequently, the market mechanism will start to work.
At the same time, we must not forget that the state has been supporting, is supporting farmers and will continue to do so through a huge number of programs.
This year, the YugAgro international agricultural exhibition, in which you participated, celebrated its anniversary. In your opinion, how productive is the work here? What are your impressions of the exhibition?
A lot of exhibitions are held in different regions each year. Of course, we try not to offend anyone — our experts are present at all exhibitions. But, in my personal opinion, YugAgro is, if not the main, then one of the most important exhibitions of the year. After all, major crops are here, in the Southern Federal District.
Personally, I have not seen such a number of people at other exhibitions. I have yet to miss YugAgro even once, and I hope that I will visit it many times in future. For me personally, for Rosagroleasing and for everyone who is somehow involved in the agro-industrial complex, this is the most important and very significant exhibition.
