NATALIA SHAGAIDA: “THERE ARE NOT SO MANY INVESTMENT OPTIONS ON THE AGRICULTURAL MARKET, SO BUSINESSES CHOOSE FROM THE AVAILABLE ONES”

The agro-industrial complex (AIC) in Russia expects significant growth in 2024, according to the study "Investment Map of the AIC in Russia" conducted by Kasatkin Consulting and LM Investments. The market volume of this sector is expected to increase by 35% compared to 2022. Analysts also forecast a 10% increase in revenue for companies in the sector in 2023, reaching Rb20.1 trillion and Rb24.7 trillion in 2024.

According to Dmitry Kasatkin, managing partner of Kasatkin Consulting, the export of agricultural products and foodstuffs under a favorable exchange rate and price situation on world commodity markets will be an important factor in the sector's growth. In recent years, exports of agricultural products have grown by an average of 5.4% per year driven mainly by grains and oilseeds.

Rising production costs are jeopardizing the efficiency of companies in agribusiness, but the profitability of this sector has shown a steady increase from 7.8% to 14% from 2018-2022, according to the study. The highest pre-tax margins are seen in the fertilizer segment (52%), agriculture (13%), and food production (8%).

The high level of profitability in the agro-industrial complex sector, which exceeds the indicators of the economy as a whole by 5 p. p., will contribute to the consolidation of the industry. Analysts assess the investment attractiveness of this sector as high and forecast further growth of transactions and volume of investments.

Natalia Shagaida told Agroinvestor that there are not many options for investment on the market now, so businesses choose from what is available. "This could be observed when the law "On the turnover of agricultural land" was adopted in 2004. Then a new object emerged - land. It was an undervalued asset. There was money from other sectors of the economy. Whoever bought land - from banks to sports associations. The fate of the purchases was different: somewhere agricultural business was organized with varying degrees of success, somewhere plots of land were re-profiled for construction, somewhere were resold, somewhere were abandoned", said the expert.

According to Natalia Shagaida, the resale of existing modern assets looks attractive at present. "Prices on foreign markets are falling. In September, the FAO food price index was 24% below its record value recorded in March 2022. The situation will normalize over time, profitability is not so big to launch a new business for the sake of it," - noted the expert.