In our first European Agritel Tour Article we highlighted the fact that Russia was now considered as one of the key players on the international markets due to a massive rise in production during the past years. But this increase mostly due to better agricultural practice has also been followed by an important development in infrastructure all over the country.

Let alone Railway transport has been one of the key sectors in which the government has invested over the past years. From 2013 to 2017 between 365 and 479 billion rubels (at current rate between 5 to 7 billion US dollars)  have been invested each year in the Russian Railway company. The company employs around 800 000 people across the country. With more than 85 000 km of railway tracks the Russian federation seeks to become the main bridge between Europe and Asia.

Despite great investment over the years, this immense train network is  forcibly aging and especially train wagon’s which were merely built in the 70 and 80’s. Therefore, the company estimates that the shortage of grain wagons in 2019 could be displayed at 1200 in 2019 and 6200 in 2020. Indeed, yearly wagon production do not seem to compensate the obsolete ones. This situation is therefore forcing producers and exporters to use truck transport for which trip distances are constantly increasing… The share of truck transportation is reaching almost 70 % for grains against 30 % by train.

Graph showing evolution of Wagon’s Availability in Russia since 2014.

In this context, the rise in agricultural production has been followed every step of the way with new ways to transport and export efficiently agricultural commodities. Another way to support this trend are preferential train delivery tariffs for grain producers of the Oural, Siberia, Volga and Central regions.

The program was launched in January 2018 and consisted in a quota for which preferential tariffs were applied. Main goal of such a policy was to offset the decrease in availabilities seen during this period of the year in exporting regions of the Black Sea and reduce at the same time growing stocks. During the 2017/2018 Marketing year, several remote Siberian regions exhausted the quotas in less than a month calling into question the suitability of such subsidies. In this respect new rules have been set and the quotas slightly revised up for Siberian oblasts.

Graph showing stocks of grains for 1st November in Separate Regions of Russia, x1000 T.

For the new marketing year, the agricultural Ministry is considering setting these subsidies from the 1st of October until the 1st of September and changing by the way the considered regions in order to focus on more remote Siberian regions such as the Altai, Krasnoyarsk and Tyumen areas. Indeed, during past years grain stocks in these regions increased.

In conclusion, Russia has one of the largest railway networks in the world allowing it to transport some of the grain volumes towards exporting harbors. Nevertheless, aging wagons remain a logistical issue for the future…

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