PhosAgro-Region, a subsidiary of PhosAgro and the largest mineral fertilizer distribution network in Russia, increased its supply of mineral fertilizers to Russian agricultural producers by 7.6% y/y in 2019 to 3.16 million tones. Most notably, sales of PhosAgro products to farmers increased by 10.5% y/y to 2.69 million tones. Sales of complex and phosphate-based fertilizers, which increased by 13.9% y/y, accounted for more than 80% of this volume. PhosAgro-Region’s regional companies also supplied more than 470 000 tones of product made by other producers. PhosAgro remains the largest supplier in terms of the overall volume of all types of mineral fertilizers to Russian farmers. The domestic Russian market remains PhosAgro’s priority market, where the Company sells around 30% of its production output.
In 4Q19, PhosAgro’s sales to the Russian market increased by 15% y/y. This dynamic increase in demand for phosphate-based fertilizers was largely due to the fact that farmers began stocking up on phosphate-based fertilizers in advance of field work not only for the spring but also for autumn 2020. The largest consumers of PhosAgro-Region products and services are located in areas of the Central Black Earth Region and the south of Russia, which account for about 70% of sales. In 2019, the highest growth rates in terms of purchases of mineral fertilizers were seen in parts of the Black Earth Region, where the network’s regional companies increased total sales of all types of mineral fertilizers by 9.2% to 1.24 million tones.
PhosAgro-Region invested more than RUB 650 million in 2019 into infrastructure development in priority regions. New logistics capacities were launched in the Tambov and Voronezh regions that made it possible to reduce end consumers’ costs for the delivery and storage of mineral fertilizers and to improve capacity to supply farmers during periods of field work and peak demand. In November of last year, PhosAgro-Region began construction of its fifth distribution center in the Krasnodar region, the launch of which is expected shortly before the start of spring field work. As of the end of 2019, the simultaneous storage capacity of PhosAgro-Region’s warehouses exceeded 650 000 tones. About half of these centres are located in southern regions of Russia, which are rapidly developing the practice of using liquid complex fertilizers.
“PhosAgro supplies more fertilizers to the Russian market than to any other country in the world,” PhosAgro CEO Andrey Guryev said. “In 2019, for the first time in the recent history of Russian agribusiness, PhosAgro-Region exceeded 3 million tones in sales of mineral fertilizers to farmers. More than a third of these sales were made up of a wide range of NPK fertilizers, which has proven effective in ensuring the consistently high quality and unique environmental performance of Russian agricultural products.” PhosAgro CEO also added that he is “confident that the creation of the national Green Standard for environmentally friendly products will contribute to the further development of the Russian agricultural sector, which will allow us to highlight the competitive advantages of Russian agricultural products in foreign markets and to use advanced agricultural technologies to create an affordable basket of wholesome food products for domestic consumers.”
