By John Helmer, Moscow
The soybean is an edible legume native to East Asia. For Russians
that means it’s a native of Siberia. Eighteen months ago, President Vladimir Putin declared  Russian soybeans to be the best in the world.
The president was on a tour of the Russian Far East, the region of the country where most Russian soybeans are grown. He promised to increase federal budget support to accelerate the rate of growth of the soybean harvest until Russia can become self-sufficient in soybeans, and do without imports from the world’s two largest sources, the US and Brazil. The Russian harvest has been breaking records, but for the time being, it is far short of the domestic requirement. Can the annual import volume of two million tonnes – roughly one-half of consumer demand, and equal to the domestic harvest – be grown at home, and how quickly?
“There is a lot of pressure on the administration in the Far East to make something happen,” confirms Philip Owen of Volga Trader, a leading analyst and broker for the Russian farm sector and food trade. “They are taking risky approaches. Usually this is unacceptable for public money. But when innovation is on the agenda, then you must take risks. If you don’t have failures and some half-baked schemes, you are not doing your job.” Volga Trader provides companies in the food supply industries with the means to enter the Russian market by finding importers, or by organizing investments. It has an operations centre in Saratov, and a sales office in Bridgend, Wales. According to Owen, “soybean has its origins in the [Siberian] area. It is a native plant. Given this advantage, it should have been in production a long time ago. However, transport costs have held it back. A third of a pig’s diet by weight is soybean. If grain [soy] can be grown it may be worthwhile to rear pigs for China. But the support structures do not arrive overnight.”
“Any industry needs a system of suppliers and skilled employees and routes to market before it can be established. Development of the Russian Far East is challenging.”
In June of 2014 the federal Ministry of Agriculture finalized a new five-year plan for soybean production to the year 2020. The plan called for the soybean harvest to triple – from 2.6 million tonnes to 7.2 million tonnes. Imports which totalled 2.03 million tonnes in 2014 are to be replaced by the domestic soybeans, taking into account an increase in demand for animal feed and for human products. The government plan calls for 923 investment projects, and investment of Rb195 billion ($2.9 billion) to come from the state banks – Sberbank, VTB, VEB, and Rosselkhozbank (RSB, the state agricultural bank).
The rate of growth in planted area and harvest has more than doubled since 2008, as the chart illustrates.
PLANTING OF SOYBEANS IN RUSSIA – BY AREA AND HARVEST
Key: brown = ‘000 hectares, green = ‘000 tonnes
Source: http://www.rbc.ru/business/17/11/2015/564b19ae9a7947719352ac15 
Most of the soy which is grown in the world comes from the US, Brazil and Argentina, so at the current output level of 2 million tonnes per annum, Russian soybean production is dwarfed by the others.
TOP 10 SOYBEAN PRODUCING COUNTRIES
November 19, 2014 – source: http://www.mapsofworld.com/world-top-ten/soybean-producing-countries.html 
For its import requirement, Russia has depended on three countries, two of which are now at war with the Kremlin. In 2013, the main soy suppliers were Paraguay, the US and Ukraine. The latest Russian customs figures show that Paraguay continues to lead, followed by Brazil. Imports of soybeans from Paraguay are roughly double last year’s volume. Imports from Ukraine were cut in 2014; they have been eliminated altogether this year. Shipments from the US have continued: they totalled 208,274 tonnes in 2013; 390,008 tonnes in 2014; and 256,134 tonnes in the first half of this year. This means the volume of US soybeans imported to Russia is growing by about 30%.
For Russian consumption of soybeans, about 95% goes to feed animals; 5% to such products as soy milk, tofu (soybean curd), and okara (used in the manufacture of vegetarian soy burgers). The proportion is roughly the same in China, but significantly less than the US proportions, where human consumption of soy amounts to roughly 50% of demand. The Kremlin plan is for expansion of the human food proportion as the volume of the home-grown harvest increases.
THE REGIONAL SPREAD OF THE RUSSIAN SOY HARVEST, 2013
As the chart indicates, Amur leads the country in the Far East (24.4%), followed by Krasnodar in the southwest (19.2%). Other fareastern producing areas include Primorsky Krai (10.3%) and the Jewish Autonomous Region (3.7%).
Among the major agro-industrial companies engaged in crop cultivation, soybeans are relatively new. Rusagro, United Grain Company, Yug Rossii, and Miratorg are the largest growers. Sodruzhestvo (“Commonwealth”) of Kaliningrad is the largest processor of soybeans into meal. But it doesn’t grow its own, and only 5% of its throughput comes from domestic growers. Efko is a leading processor of soybeans for oil. The major growers are all announcing plans to expand their sowing of soybeans, and expanding the acreage for the soybean crop in the Far East. The processors appear not to be interested in moving upstream to farming. Bunge, the US-based international food combine, has reportedly  acquired a 25% stake in Efko, for $16 million; that was in 2006, but five years later Efko repurchased  the stake and bought Bunge out. A reported  Bunge interest in a 25% shareholding in Sodruzhestvo has not materialized.
The experts agree that Russia will see accelerating growth in livestock and meat production, and so in soybean meal for feedstock, as well as in human consumption. But will soybean production grow faster than consumer demand, so that imports will shrink?
Dmitry Rylko, general director of the Institute for Agricultural Market Studies (IKAR) in Moscow is confident that soybean production in Russia will increase, but not as rapidly as projected in the state programme. “There are major constraints that will hinder the development of this crop in Russia. The first is natural and climatic characteristics: in some regions of the country it is too dry for soybeans, in others, too cold. Growing crops in the Far East have their own special conditions.”
Andrei Sizov, who heads the Sovecon consulting company in Moscow, cautions that just because officials and industry groups want to see significant production growth doesn’t mean this will materialize. But he acknowledges that soybean production “is a very profitable business, which is interesting for many companies.” He estimates  the profit margin for soybeans at “several tens of percent.”
At IKAR, head of research and forecasting Irina Kuguchina (right) said: “For the future we see the same conditions for the development of soybean production as in the past; that’s growth in consumption and demand from the livestock sector, and the great potential for import substitution. Regarding the regional spread of soybean cultivation, the [Russian] Far East is a potential market for exports, mainly to China. But self-sufficiency is unlikely to be achieved. We buy imported soybeans with high protein content. Due to the climatic conditions, we can’t produce the same quality of soybeans in Russia. We cannot expect completely to abandon imports.”