Russia Expands Baltic Ports with Focus on New Grain Markets – Reuters

Russian Wheat Exports: Expanding Baltic Ports for Future Growth

By Olga Popova and Gleb Stolyarov

Moscow – As the world’s foremost wheat exporter, Russia is enhancing its Baltic Sea ports with the goal of increasing agricultural exports by 50% by 2030. This initiative aims to lessen reliance on the traditional Black Sea routes, officials and industry executives have stated.

In the 2023/24 season, Russia exported at least 72 million metric tons of grain and is pursuing new markets in Latin America and Africa to diversify its traditional customer base in North Africa and the Middle East.

Historically, Russian ports on the Black Sea have been crucial for agricultural exports, but ongoing conflicts with Ukraine have created risks for shipping in the region, with both sides targeting each other’s facilities.

Ksenia Bolomatova, deputy head of state-controlled agricultural conglomerate OZK, noted at an industry event in Sochi that last year’s record harvest highlighted a lack of capacity to handle the swift pace of exports.

In the past 18 months, Russia has inaugurated two significant ports, Vysotsky and Lugaport, in the Gulf of Finland near St. Petersburg. Vysotsky commenced grain shipments in April 2023, while Lugaport started operations in June of this year, with expectations of reaching a capacity of 7 million tons by early 2025, according to its owner Novotrans.

Dmitry Rylko from the IKAR agricultural consultancy projected that the two ports could collectively manage up to 15 million tons of agricultural exports annually, which would represent a quarter of Russia’s forecasted grain exports of 60 million tons for the 2024/25 season.

Additionally, the private firm Primorsky UPK is developing a grain terminal at Primorsky port, which will have a capacity of up to 5 million tons.

Export Constraints

President Vladimir Putin has set a target to bolster agricultural exports by 50% by 2030 as part of a broader strategy to establish Russia as a major agricultural powerhouse alongside Brazil, the United States, and China.

In the past decade, Russia has emerged as the leading global exporter of wheat, corn, barley, and peas. However, further expansion may be hindered by limitations in shipping capacity.

Following record harvests in recent years, many Russian ports have announced plans to enhance their capacities, with Baltic Sea terminals expected to see more rapid growth.

As stated by Novotrans, the expansion of Baltic Sea terminal capacities addresses concerns related to economic and transport security and national sovereignty.

While Russian trade flows and shipments have generally remained stable in the Baltic Sea—where 96% of the coastline is held by NATO member states—disruptions have surged in the Black Sea, which could impact global grain supplies. A recent incident involved a Ukrainian vessel carrying grain to Egypt being struck by a missile. Moreover, Russian authorities reported that Ukraine sank a ferry carrying fuel tanks in Port Kavkaz, a site also used for grain transshipment.

Economic Appeal

In the 2023/24 season, Russia exported 62 million tons of grain via sea routes, with 90% of these supplies transported through the Black Sea, primarily to markets in the Middle East and North Africa. This percentage is anticipated to decline as infrastructure in the Baltic Sea develops.

During the last season, Baltic Sea ports handled 1.5 million tons of grain, a threefold increase from the prior season, but still only about 2.4% of total Russian exports, according to publicly available data.

Darya Snitko, vice president of Gazprombank, noted that the logistical advantages of the Baltic for grain exports are significant. The capacity of Baltic terminals to accommodate larger vessels is expected to reduce overall shipping costs.

She highlighted that supplies from the Baltic Sea are economically favorable compared to shipments from the Azov-Black Sea region when trading with countries in Africa beyond the Mediterranean and with parts of Asia.

Vysotsky has already been facilitating grain exports to countries such as Algeria, Brazil, Cuba, Mali, Mexico, Morocco, Nigeria, and Tunisia, reflecting Russia’s efforts to widen its export horizons.