The new accord, in conjunction with a previous grain deal between FET and the Chinese government enterprise China Chengdong, culminates to a staggering 100 million tonnes of Russian grain scheduled for Chinese consumption.
A Russian agri-business firm has struck a monumental US$46 billion grain deal with China, threatening Canadian dominance in the international marketplace.
According to a press statement on FET's official website, they signed the agreement with the Chinese commerce entity Noble Home, and Trans Eurasia (Tianjin) International Logistics, a Chinese logistics firm, at the VIII Eastern Economic Forum.
Formalized in September, Food Export Trade LLC (FET) will trade 70 million tonnes of grain, pulses, and oilseeds to China over the 12-year duration of the transformative deal. The new accord, in conjunction with a previous grain deal between FET and the Chinese government enterprise China Chengdong, culminates to a staggering 100 million tonnes of Russian grain scheduled for Chinese consumption, reported Producer.
FET operates as a key component of the New Land Grain Corridor (NLGC), a venture valued at US$480 million — an initiative tabled by Russian President Vladimir Putin in 2016, with the backing of China. It involves other significant parties, including Grain Terminal Zabaikalsk, Container Terminal Zabaikalsk, and Siberian Grain Project LLC, as stated on its website.
As part of the deal, grain and other agriculture products will be transported via Grain Terminal Zabaikalsk, a strategic railway terminal located at the frontier between Russia and China's Inner Mongolia.
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According to a FET press release, the trade corridor aims to bolster grain production within Russia's Far Eastern, Ural, and Siberian federal districts. It boasts a transshipment threshold of eight million tonnes annually and can store up to 80,000 tonnes. It is equipped to handle as many as 128,000 grain hopper cars a year.
Marketfarms analyst Bruce Burnett said the deal poses a "competitive threat to Canada," and that "obviously the Chinese are looking to diversify their sources." According to Statistics Canada, the People's Republic of China imported $4.93 billion in Canadian crops from January to August of this year — only second to the $7.5 billion purchased by the U.S. during the same period.
In October 2022, Russia and China established a landmark phytosanitary agreement for Chinese imports of Russian peas. AgPulse Analytica's analyst, Gaurav Jain, anticipates that Russian pea exports to China will reach 1.2 million tonnes this fiscal year, surpassing the expected Canadian contribution of one million tonnes.
As reported by Reuters, Russia's cumulative grain exports to China also reached a historic high. During the first three quarters of 2023, Russian grain exports surpassed 3.5 million tonnes — a significant increase of 2.2 million tonnes last year.
Burnett expressed concern over this development, noting the climatic similarities between those Russian districts and the Canadian Prairies, which are known for cultivating similar types of crops. He said this is "going to be an issue."
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