Russia Expands Baltic Ports to Target New Grain Markets – Reuters

By Olga Popova and Gleb Stolyarov

MOSCOW – As the leading wheat exporter globally, Russia is actively developing its Baltic Sea ports to increase agricultural exports by 50% by 2030 and reduce reliance on traditional shipping routes in the Black Sea, according to officials and industry executives.

During the 2023/24 season, Russia exported over 72 million metric tons of grain and is now aiming to diversify its market presence by targeting new regions in Latin America and Africa, moving away from its established markets in North Africa and the Middle East.

Historically, Russia has depended on its Black Sea ports for agricultural export, but the ongoing conflict with Ukraine has rendered these routes precarious due to frequent attacks on shipping facilities. Ksenia Bolomatova, deputy head of the state-controlled agricultural conglomerate OZK, highlighted that last year’s record harvest exceeded existing export capacity, emphasizing the need for upgrades.

In the past 18 months, Russia has inaugurated two significant ports—Vysotsky and Lugaport—in the Gulf of Finland, near St. Petersburg. Vysotsky began exporting grain in April 2023, while Lugaport started operations in June and is expected to reach a capacity of 7 million tons by early 2025. Agricultural consultant Dmitry Rylko estimated that together, these two ports could facilitate up to 15 million tons of agricultural exports annually, accounting for approximately a quarter of Russia’s projected 60 million tons of grain exports for the 2024/25 season. Additionally, a private company, Primorsky UPK, is planning a grain terminal at the Primorsky port with a capacity of 5 million tons.

President Putin has set a target to increase agricultural exports by 50% by 2030 as part of a broader strategy to position Russia as a major agricultural power alongside Brazil, the United States, and China. Although Russia has emerged as the largest exporter of various grains in the last decade, its growth may be hindered by shipping capacity challenges.

Several Russian ports have announced expansion plans following record harvests over the past two years, with Baltic Sea terminals expected to progress more rapidly. According to Novotrans, the expansion of these ports is critical for economic security and sovereignty.

Currently, Russian maritime trade continues without significant disruptions in the Baltic Sea, where 96% of the shoreline is owned by NATO member countries. In stark contrast, the Black Sea has seen increasing disruptions that could affect global grain supplies. Recently, a Ukrainian vessel carrying grain to Egypt was hit by a missile, and earlier, Ukrainian forces reportedly sank a ferry transporting fuel tanks in Port Kavkaz, used for grain transshipment.

In the 2023/24 season, Russia exported 62 million tons of grain by sea, with 90% delivered via the Black Sea, primarily targeting markets in the Middle East and North Africa. This percentage is expected to decrease as Baltic Sea infrastructure expands. Last season, Baltic Sea ports managed to load 1.5 million tons of grain, a threefold increase compared to the previous season, yet still accounting for only 2.4% of total Russian exports.

Gazprombank vice president Darya Snitko noted the logistical advantages of the Baltic Sea for grain exports, emphasizing that the capacity of these terminals to accommodate larger vessels could lower overall shipping costs. She explained that Baltic Sea routes are economically superior to those from the Azov-Black Sea region when trading with African and Asian countries.

Vysotsky port has already begun exporting grain to countries including Algeria, Brazil, Cuba, Mali, Mexico, Morocco, Nigeria, and Tunisia, according to a logistics company.