MOSCOW (Reuters) – As the world’s largest wheat exporter, Russia is expanding its Baltic Sea ports with the goal of increasing agricultural exports by 50% by 2030 and decreasing reliance on traditional Black Sea routes, according to officials and industry executives.
Having exported at least 72 million metric tons of grain during the 2023/24 season, Russia is targeting new markets in Latin America and Africa to diversify beyond its conventional grain customers in North Africa and the Middle East.
Historically dependent on Black Sea ports for its agricultural exports, the ongoing conflict with Ukraine has rendered the area perilous for shipping, with both sides frequently attacking each other’s facilities and infrastructure.
“Last year’s record harvest revealed that we lack sufficient capacity to meet export demand,” stated Ksenia Bolomatova, deputy head of state-controlled agricultural conglomerate OZK, which manages several Black Sea terminals, at an industry conference in Sochi.
In the past 18 months, Russia has inaugurated two significant ports—Vysotsky and Lugaport—in the Gulf of Finland, near St. Petersburg, President Vladimir Putin’s hometown. Vysotsky commenced grain shipments in April 2023, while Lugaport began operations in June and is projected to reach a capacity of 7 million tons by early 2025, according to its owner, Novaport.
Dmitry Rylko of IKAR agricultural consultancy noted that these two ports could handle up to 15 million tons of agricultural exports annually, which would represent a quarter of Russia’s anticipated 60 million tons of grain exports for the 2024/25 season. Additionally, private firm Primorsky UPK is planning a grain terminal at Primorsky port with a capacity of up to 5 million tons.
EXPORT CHALLENGES
Putin has set a target to boost agricultural exports by 50% by 2030 as part of a strategy to solidify Russia’s status as an agricultural powerhouse alongside Brazil, the United States, and China.
Over the last decade, Russia has emerged as the leading exporter of wheat, corn, barley, and peas, but further growth may face challenges due to shipping capacity constraints. Many Russian ports have announced plans to increase their capacity following record harvests in the past two years, with Baltic Sea terminals expected to expand more rapidly.
“The expansion of Baltic Sea terminals is crucial for economic, transport security, and sovereignty,” Novotrans stated in an email.
So far, Russian trade flows and shipments in the Baltic have not faced major disruptions, despite 96% of the coastline belonging to NATO countries, including Finland and Sweden. In contrast, disruptions are escalating in the Black Sea, which could impact global grain supplies, as reported by the World Bank. Recently, a Ukrainian vessel carrying grain to Egypt was struck by a missile, and Ukrainian authorities indicated that a ferry carrying fuel tanks was sunk by Ukraine in Port Kavkaz, which also facilitates grain transshipments.
ECONOMIC ADVANTAGE
In the 2023/24 season, Russia exported 62 million tons of grain by sea, with 90% routed through the Black Sea, primarily to Middle Eastern and North African markets. This share is expected to decline as Baltic Sea infrastructure develops.
Last season, Baltic Sea ports loaded 1.5 million tons of grain, marking a three-fold increase from the previous year, but still accounting for only 2.4% of overall Russian exports, based on Reuters calculations.
“Logistically, the Baltic offers numerous advantages for grain exports,” said Darya Snitko, vice president at Gazprombank, one of Russia’s largest banks and a major lender to farmers. She added that the capacity of Baltic terminals to accommodate larger ships should help lower overall costs.
“Shipping from the Baltic Sea is more economically favorable than routes from the Azov-Black Sea region when trading with countries in Africa outside the Mediterranean and with Asia,” she noted.
According to logistics company Rusagrotrans, Vysotsky has begun exporting grain to Algeria, Brazil, Cuba, Mali, Mexico, Morocco, Nigeria, and Tunisia.