Russia expands Baltic ports as it eyes new grain markets By Reuters

By Olga Popova and Gleb Stolyarov

MOSCOW (Reuters) – Russia, the world’s biggest wheat exporter, is expanding its Baltic Sea ports as it aims to boost agricultural exports by 50 percent by 2030 while reducing reliance on traditional Black Sea routes, they said officials and directors.

The country, which exported at least 72 million metric tons of grain in the 2023/24 season, is looking to new markets in Latin America and Africa to diversify away from its traditional grain markets in North Africa and the Middle East.

It has relied on its Black Sea ports to handle booming agricultural exports in recent decades, but the conflict with Ukraine has made the area risky for shipping, with both sides regularly striking the other’s facilities and infrastructure.

“Last year, with its record harvest, showed that with the pace of export cargoes, we don’t have enough capacity,” Ksenia Bolomatova, deputy head of state-controlled agricultural conglomerate OZK, which owns several Black Sea terminals, said at an industry gathering in Sochi in southern Russia.

Over the past 18 months, Russia has launched two major ports, Vysotsky and Lugaport, in the Gulf of Finland, not far from St. Petersburg, the hometown of President Vladimir Putin.

Vysotsky delivered its first grain in April 2023, while Lugaport began operations in June this year, and capacity is expected to reach 7 million tonnes by early 2025, according to its owner Novaport.

Dmitry Rylko of agricultural consultancy IKAR said the two ports will be able to handle up to 15 million tonnes of agricultural exports, including grain, per year.

This would represent a quarter of Russia’s estimated 60 million tonnes of grain exports for the 2024/25 season.

The private company Primorsky UPK is also planning a grain terminal in the port of Primorsky with a capacity of up to 5 million tons.

EXPORT RESTRICTIONS

Putin has set a goal of increasing agricultural exports by 50 percent by 2030 as part of a strategy to strengthen the country’s position as an agricultural superpower alongside Brazil, the United States and China.

Russia has become the world’s largest exporter of wheat, corn, barley and peas over the past decade, but further growth could be limited by bottlenecks in transportation capacity.

Many Russian ports have announced plans to increase capacity after record harvests over the past two years. Terminals in the Baltic Sea are expected to expand at a faster pace.

“Expanding terminal capacity in the Baltic Sea is a matter of security and economic and transport sovereignty,” Novotrans said in an emailed comment.

Russian trade flows and shipping have so far seen no major disruptions in the Baltic Sea, where 96 percent of the coastline belongs to NATO member states, including Finland and Sweden.

Instead, disruptions are growing in the Black Sea and could reduce global grain supplies, according to a World Bank report. Two weeks ago, a Ukrainian ship carrying grain to Egypt was hit by a missile.

In August, local Russian authorities said Ukraine had sunk a ferry carrying fuel tanks in Port Kavkaz, which is also used to transship grain.

ECONOMIC CALL

Russia exported 62 million tonnes of grain by sea in the 2023/24 season, with 90% of deliveries going via the Black Sea, mostly to markets in the Middle East and North Africa. This share will decrease as the infrastructure of the Baltic Sea grows.

Baltic Sea ports loaded 1.5 million tons of grain last season, a threefold increase from the previous season, but still only 2.4 percent of total Russian exports, according to Reuters calculations based on publicly available data.

“Logistically, the Baltic Sea has many advantages for grain exports,” said Darya Snitko, vice president of Gazprombank, one of Russia’s largest banks and one of the biggest lenders to farmers.

She said the ability of the Baltic terminals to handle larger vessels should help reduce overall costs.

“Deliveries from the Baltic Sea exceed (the economics of) shipping from the Azov-Black Sea area when trading with non-Mediterranean African countries as well as Asia,” she added.

Vysotsky sent grain to Algeria, Brazil, Cuba, Mali, Mexico, Morocco, Nigeria and Tunisia, according to data from logistics company Rusagrotrans.