“The West Ceded the Russian Market to China, We are Also Pleased to See”

Russia’s Self-Sufficiency in Grain Amid the Russia-Ukraine Conflict

GUANCHA.CN:

The data shows that last year, Russia achieved complete self-sufficiency in potatoes, and its self-sufficiency in meat and fish exceeded 100%. While these figures may seem ordinary, they carry significant meaning. Since the outbreak of the Russia-Ukraine conflict, Russia has faced comprehensive sanctions from the West. With that in mind, could you please explain how Russia has achieved food self-sufficiency since the beginning of the Russia-Ukraine conflict? What measures have been taken to reach this goal?

Dmitry Reva:

In addition to the food categories you mentioned, Russia has also achieved near-complete self-sufficiency in eggs, sugar, wheat, grains, and vegetables, while actively developing greenhouse-grown vegetables. Russia remains a global leader in the export of wheat, sunflower oil, and mineral fertilizers, which is crucial for ensuring global food security.
In terms of fertilizer production, Russia ranks second only to China, surpassing both the United States and India in recent years, with a continuous annual increase of 10%. As for meat and sugar, production has quadrupled in recent years. Russia now produces about 17 million tons of slaughtered live-weight meat annually, surpassing India and ranking fourth in the world.

Russian sugar production has a surplus in recent years. (Source: Czapp)

It’s important to note that in 1999, Russia’s production of slaughtered live-weight meat was only 4.3 million tons, with 70% of it being imported, primarily from the United States. That imported meat, known as “Bush legs,” was a direct consequence of the disintegration of the Soviet Union, the breakdown of Eastern European trade ties, and the overall economic collapse that followed.

In the 1990s, Russia’s economic contraction was even more severe than during World War II. After the ruble devaluation in 1998, agricultural production in Russia started to become profitable. With the sharp rise in oil prices at the beginning of the 21st century, Russia allocated part of its revenue to restore its agriculture. The government implemented measures such as import tariffs and import quotas (a trade restriction tool where a country sets a limit on the number of goods imported from a specific country during a certain period; once the limit is exceeded, companies in the importing country can no longer import that specific product). These measures, along with preferential financing and subsidies for target industries, helped stimulate the recovery of Russia’s agricultural sector.

The recent achievements can be attributed to the first national projects implemented in 2007 and beyond. In the meat industry alone, thousands of new enterprises were established, leading to the rise of powerful agricultural holding companies with hundreds of thousands of hectares of land and export volumes reaching billions of dollars.

After the Ukrainian crisis began in 2014, the conflict between Russia and the West became inevitable. Since then, Russia has actively pursued an import substitution policy in the food market, introducing new national support programs and measures. Over the course of eight years, Russia successfully achieved self-sufficiency in all basic food products.

Giant retailers in Russia

GUANCHA.CN:

Since the Russia-Ukraine conflict began, Western countries have accused Russia of threatening global food security. However, data shows that in the 2023/2024 season, Russia’s grain exports exceeded 89 million tons, a 21% increase compared to the previous year. Exports of wheat flour, oats, rye, buckwheat, sunflower meal, and mustard seeds also saw significant growth. What is your perspective on these Western accusations and the sanctions imposed on Russia?

Dmitry Reva:

There’s a well-known Russian proverb that says, “The one who shouts ‘stop thief’ the loudest is usually the thief.” If I remember correctly, China has a similar saying: “A thief crying to catch a thief.”
This perfectly illustrates the West’s behavior. Their media is filled with lies. We still remember how, in the early 1990s, the Soviet Union voluntarily withdrew its troops from Europe and was assured that NATO would not expand eastward. But what happened instead? Every former Warsaw Pact member has since joined NATO, and the Ukraine conflict is a direct consequence of this deception.

Over the past three years, Russia’s global grain exports have increased by 25%. Additionally, Russia’s mineral fertilizer exports have grown by 25%, making it the world’s largest fertilizer exporter, accounting for 25% of global fertilizer imports. These exports are shipped to numerous countries, including Brazil, India, and the United States.

Talking is one thing; doing business is another. The United States prioritizes sourcing from the most cost-effective suppliers, while only its European allies persist in upholding sanctions that are crippling their own economies.

Moreover, Russia is actively exporting not only raw materials but also value-added processed goods, such as meat, dairy products, and confectionery, with export volumes amounting to billions of dollars.
Clearly, the West has failed to study Russian history. When Russia is under threat, its people unite, work harder, and fight for their country, including competing in international markets.

Countries buying Russian and Ukrainian wheat in 2020 (Source: oec.world)

China-Russia Trade Cooperation to Counter the West’s Sanctions

GUANCHA.CN:

Currently, China is the largest importer of Russian agricultural products. In 2023, agricultural trade between Russia and China increased by 36%, surpassing $10 billion. Meanwhile, Russia’s agricultural exports to China grew by 52.6%, reaching $7.586 billion. In recent years, Chinese food consumption patterns have changed. Has there been a shift in the structure of Russian agricultural exports to China? What new market demands have emerged?

Dmitry Reva:

Yes, Russia’s export structure is gradually changing. Sweet exports have grown rapidly, and Russia has become China’s largest supplier of chocolate. Over 80 Russian companies now supply meat and by-products to China, and recently, Russia was authorized to export pork to China, with volumes steadily increasing.

You might be surprised to learn that Russia is China’s sole supplier of imported turkey, with an annual trade value of about $50 million. Russia is the leading turkey producer in Europe and the second-largest globally. Turkey meat is of excellent quality and a very healthy low-fat option, and we hope more Chinese consumers will come to appreciate it.

Fish exports are also steadily increasing. Russia exports nearly 1.5 million tons of fish to China, with a trade value exceeding $2 billion. These are all wild-caught fish from the ocean, not farmed ones. Notably, Kamchatka crab is considered one of the world’s finest delicacies.

In 2023, Russia sold the most aquatic products to China. (Source: General Administration of Customs of China)

Exports of traditional products such as soybeans, soybean oil, soybean meal, and flaxseed are also on the rise. All soybeans and wheat produced in Russia are non-GMO, which is a significant advantage. Unfortunately, not all Russian wheat is currently approved for export to China, but in this area, Russia has the full capacity to significantly increase supply and, if necessary, even replace Australia as a major supplier.

In addition, exports of ice cream, canned foods (such as pickles), honey, and cheese to China are also increasing, along with the growing supply of dairy products. Over the past 20 years, the rapid growth of dairy production and consumption in China has been nothing short of a miracle, with China developing globally renowned dairy brands. As a major global dairy producer, Russia also sees significant opportunities for collaboration in this sector, which holds great potential for further development.

GUANCHA.CN:

Currently, both Russia and China are facing an increasingly unfriendly market in the West. Europe has recently imposed tariffs on Chinese electric vehicles, prompting China to introduce countermeasures, including anti-dumping investigations into European pork and brandy. Will China’s demand for these agricultural products shift to the Russian market in the future? Or, in addressing Western sanctions, what areas of cooperation and mutual complementarity could Russia and China explore?

Dmitry Reva:

In niche markets such as the automotive sector, there is an excellent example of interaction between China and Russia. When all Western international manufacturers exited Russia, a gap emerged in the Russian market—an opportunity worth over $50 billion annually. Chinese truck and car manufacturers seized this opportunity, positioning themselves effectively. Together with Mexico, China has now become a global leader in automobile production.

Visitors look at a car from Chinese car brand Li Auto during the CarX exhibition forum in Moscow, Russia, on Oct. 10, 2023.

At the same time, all European car manufacturers are teetering on the brink of bankruptcy. After spending 30 years cultivating the Russian market and investing tens of billions of dollars in production and marketing, they surrendered all their achievements in just two years. This serves as an excellent example of Russia’s resilience in countering sanctions.

Now, let’s talk about pork. Russia is one of the countries with the lowest pork production costs in the world. If necessary, we could fully meet Europe’s demand for imported pork. Within three years, we could supply 1 million tons or more of pork annually.

We are fully capable of replacing Spain’s exports of 600,000 tons of pork to China (in 2023, Spain exported approximately 560,000 tons to China). However, at present, China may not be very interested in this option.

Currently, fewer than five Russian companies are authorized to export pork from Russia to China, as China is the world’s largest pork producer and aims to protect its domestic industry. However, Russian alcoholic beverages, particularly vodka, are of very high quality, and we will certainly work to supply them.

There are also great prospects for cooperation between Russia and China in areas like soybeans and corn. China has been purchasing large quantities of these crops from the United States, and in this context, a trade war is almost inevitable, as they will always find reasons for it. Therefore, we need to reach agreements in advance, with Russia to increase the acreage of these crops. However, this will take several years to implement, so we must start preparations now. Most importantly, logistics will be key. Fortunately, we don’t rely solely on maritime transport, as we share a common land border.

Russia has vast arable land, clean water resources, self-sufficient fertilizers, and powerful agricultural machinery (Rostselmash, a leading global agricultural machinery manufacturer). Additionally, Russia benefits from cheap energy, particularly natural gas. Here, we can identify areas of complementarity: we can prepare logistics channels in advance, expand logistics infrastructure, and support each other in international markets. We can discuss this in more detail later.

The Combine harvester manufactured by Rostselmash

The world is transitioning towards a multipolar structure, and the strategic partnership between China and Russia is one of mutual support. For victory, we must actively support each other and not wait to be defeated. In the 1930s and 1950s, the Soviet Union provided significant assistance to China—first in helping to fight Japan and later in aiding China’s industrialization by building factories, despite the Soviet Union itself having just come out of a tough war. Russians have always been willing to help others and never forget those who have supported them.

Broad Prospects for Far East Development and China-Russian Cooperation

GUANCHA.CN:

At the Eastern Economic Forum in September this year, Russian President Vladimir Putin emphasized the crucial role of the development of the Far East for Russia’s future, believing that its development will strengthen Russia’s global standing. From the perspective of agricultural development, what are the advantages and challenges of the Far East?

Dmitry Reva:

I also attended the plenary session of the Eastern Economic Forum. The Far East is Russia’s largest region, and its most important feature is its abundant resources. For example, in fish processing, we can build processing plants, develop aquaculture, and mariculture. The cold water here is a huge advantage, and places like Sakhalin Island, the Primorsky Krai, and Kamchatka are very suitable for fish farming. All we need to do is start investing and export the products to China. The Far East’s port infrastructure is well-developed, especially the gateway port of Vladivostok.

Agricultural land also urgently needs to be developed. For example, the Amur region, which serves as the granary of the Far East, has about 1.6 million hectares of available arable and fertile land, with three hydropower plants and a fourth under construction. The region benefits from cheap energy, fertile soil, and a favorable climate, and nearly 40% of Russia’s soybeans are produced here. It also has large processing capacities for turning soybeans into oil, and is home to leading food production companies, with their production facilities located just a few kilometers from China.

In terms of transportation, there is a bridge connecting Blagoveshchensk and Heihe, and the Primorsky Krai has good interaction in the agricultural sector. In the Transbaikal region, there is an excellent transit hub that can transfer millions of tons of agricultural products from central Russia. The area has some investments in logistics and the dairy industry, but there are no large dairy production enterprises locally.

Of course, the Far East region also has its shortcomings, such as labor shortages, harsh climate conditions, and underdeveloped infrastructure (though improvements are being made). Additionally, the region’s gasification is not yet complete. For example, we are currently looking for investors to establish a dairy farm in one area, with an annual production capacity of 25,000 to 30,000 tons of milk, and to set up a similar-scale farm in another region. We are prepared to sign contracts for at least 10 years to purchase all the milk produced at prices higher than the market rate.

In addition, there are state subsidies and the TOR (Territory of Advanced Development) preferential system, which provides certain advantages to businesses in the Far East, such as favorable tax conditions, simplified administrative procedures, and other privileges. For dairy farm construction, the Far East offers up to 50% rebate compensation, and in some areas, this figure can be even higher. For every liter of milk produced, a compensation of 8 rubles is offered, and for the first 10 years, there are virtually no taxes, along with preferential interest rates. The Far East faces a milk shortage of up to 500,000 tons, meaning that while this product is produced locally, much of the raw material still comes from imports.

There are no issues with sales, as all products will be purchased by the processing associations. We are also looking for investors to fund a poultry farm with a capacity of up to 20,000 tons. The Far East has a shortage of 200,000 tons of refrigerated poultry, and there is huge export potential (poultry farming has great room for development). Currently, the entire eastern part of Russia has only two poultry farms, which can meet less than 20% of the market demand. The remaining poultry demand has to be transported from the western part of Russia in frozen form, but what we need is fresh, refrigerated poultry.

Therefore, we are ready to sign 10-year contracts to purchase all of the above products. In addition to us, Russian chain stores like “Pyatyorochka” (part of X5 Group, the largest food retail company in Russia) are also preparing to do the same. They are equally troubled by the lack of refrigerated poultry and are ready to confirm the purchase of these products. Furthermore, the Far East also lacks greenhouse facilities, and there is considerable investment potential in this area as well. These are ready-to-go investment projects supported by governors and local governments.

Resource reserves in Russia’s Far East region (Source: GUANCHA.CN)

GUANCHA.CN:

But we also know that there are some stories circulating in both China and Russia about the “China threat” in the development of the Far East, such as concerns that Chinese immigration and technology could pose a threat to the region. Have you heard of these rumors? What is the real situation? What kind of cooperation can China and Russia have in the development of the Far East?

Dmitry Reva:

This is absolutely false. We are not concerned at all about the “threat” of investors or technology. On the contrary, we are eagerly awaiting Chinese investors to invest in ready-to-go projects that are highly profitable for them.

You are right. China has the technology and resources, including financial resources, while we have the demand and ready investment projects. I personally came to the Far East from southern Russia, but I have not seen any so-called threats.

The number of tourists traveling from Russia to China is also increasing. I believe that the people of Russia and China will always be brothers, and such rumors are baseless. However, so far, trade between Russia and China has been limited to Russia exporting raw materials (such as oil, natural gas, coal, gold, timber, fish, fertilizers, and agricultural products) to China, and Russia importing equipment, machinery, consumer goods, home appliances, etc., from China. The number of joint ventures, factories, farms, and IT projects between the two countries is still very small.

So, we are actually waiting for active investors and offering assistance in every possible way. The first investors to enter usually reap significant profits. For every project, the government almost always sends officials at the level of Deputy Prime Minister to act as guarantors.

GUANCHA.CN:

What are your ideas for the development of the Blagoveshchensk-Heihe border region?

Dmitry Reva:

Trade between Blagoveshchensk and Heihe is becoming increasingly active, with the flow of goods steadily rising. Russian companies have started leasing warehouse complexes in Heihe, including Ozon (Russia’s first e-commerce company and one of its top three e-commerce platforms). Agricultural trade is also developing rapidly, and tourism is booming. The world’s first cross-border cable car is under construction and is expected to be operational by 2025. By then, if you visit Heihe again, you can take the cable car to reach Russia, and vice versa. This experience will be truly unique in the world.

Before that, the first bridge between these two cities—and also the first bridge between China and Russia—was constructed. The banks of the Amur River (Heilong Jiang) also jointly host the “Taste Buds of the Banks” culinary cultural festival. The Amur Economic Forum, held every May, has officially become a sub-venue of the Eastern Economic Forum.

In my view, if the “Two Countries, One City” project becomes a reality, it will serve as a global model. When residents of these two cities can freely travel, shop, invest, dine, study, and seek medical care in both cities without needing a visa, it will undoubtedly become a benchmark for the entire world.

Development Plan of the Blagoveshchensk-Heihe border region (Image: Amur Region Agency for Investment Attraction)

Challenges and Future Prospects in China-Russia Agricultural Cooperation

GUANCHA.CN:

As far as I know, China and Russia have already embarked on very concrete agricultural cooperation efforts, such as exchanges of experts and techniques, joint breeding programs, and market research. Could you provide more details on these initiatives? What outcomes can we expect to see in the future?

Dmitry Reva:

Of course, both sides are actively studying each other’s markets. Additionally, several working groups have been established at regional and provincial levels to promote exports and expedite collaborative projects.
The Russian Federal Service for Veterinary and Phytosanitary Surveillance is closely working to inspect companies exporting to China, and customs authorities from both countries maintain open communication. Efforts are also being made to help Chinese entrepreneurs resolve import-export business issues more efficiently. The Russian Chamber of Commerce is performing well in facilitating these activities, while the Export Center and the border region governments are also cooperating smoothly.

I am unsure what the final outcomes will be, but I hope legislation can be coordinated more swiftly, aiming for the ideal scenario where both sides remove tariff barriers and significantly increase mutual economic investments. Of course, the primary challenge lies in payment issues, and the situation is worsening—trade volumes between the two countries have started to decline, for the U.S. secondary sanctions have scared Chinese banks, which fear repercussions, leading to problems with payment transfers in goods trade.

The common adversary has disrupted bilateral trade, but unfortunately, this is the current reality. We understand that China exports globally, and engaging in trade with Russia carries significant risks for them. However, we believe that if the Chinese business community advocates for solutions, the Chinese government will find a way to address this issue.

GUANCHA.CN:

How optimistic are you about China’s economic prospects?

Dmitry Reva:

Over the past 35 years, China has undergone tremendous changes, with its economy growing dozens of times over. In many industrial metrics, China has surpassed the United States. By purchasing power parity, China’s economy is the largest in the world, but in nominal terms, comparing a haircut priced at 40 yuan in China to one costing $1,000 in the U.S. is not an accurate comparison. Of course, China still needs to accelerate its development in areas such as semiconductors, chip manufacturing, civil aviation, and computer software.

And we, Russia, chose the path of “democracy and free markets,” rejecting planning and market regulation, believing in the deceptive narratives of the West about freedom of speech and other such ideals after 1990. The disastrous results were clear to us. Now, we are striving to restore and develop our economy, while they (the West) are trying to hinder us through wars and sanctions. Here, we have only one choice: either we achieve victory, or nuclear war erupts, leading to the end of human history.

So, China is walking on the right path.