According to experts, import substitution and agribusiness development in Russia depends, in the first place, on effective financing and availability of affordable loans.
Today, Russian Agricultural Bank (RusAg) is the only financial institution that meets these criteria. It is 100% state-owned. During the years of operation it has extended about RUB 3 trillion to agrarians. In 2013, the Bank provided more than RUB 0.5 trillion in loans to agribusiness which is almost 50% of all the industry investments.
RusAg unlike Sberbank works not with the crème de la crème of the corporate sector but with a wide range of agricultural producers whose projects are not intended for making on-the-spot profit. According to Nikita Krichevskiy, a well-known economist, the Bank allows rural population to subsist, creates jobs and ensures social stability through internal agribusiness development and increasing import substitution.
Moreover, against a background of current geopolitical situation RusAg’s role in agribusiness development is undisputed. The country’s success in import substitution depends on the Bank’s competent management, financial stability, thorough work with each client, and, what’s more important – on efficiency of state participation in the food production chain at all stages ranging from the Bank to the Ministry of Agriculture.
RusAg’s efficiency is the factor underlying the ability of agrarians to satisfy internal demand for high quality foodstuffs and the chance for Russia to become one of the leading global food exporters. Experts also point out that agribusiness is capital intensive. 94% of agricultural producers have to attract loans. Agribusiness unlike other strategic sectors has high demand for long term investments and a significant amount of overdue loans. Nikita Krichevskiy says the reason for that is the sector specifics and not the high debt leverage. Some regions have a lot of arable land, other regions have a high rainfall, still other regions have strong potential for fodder production. Besides, experts say that amounts and payback periods of investments in agriculture depend on different production cycles. It is because of risk exposure that private banks are wary of lending to agribusiness.
The full version of the article in Russian is available at: http://www.bfm.ru/news/274423