The International Monetary Fund (IMF) predicts a drop in Russia’s GDP by 5.5% in 2020, according to the April report on the global economy.
In general, the global economy will shrink sharply by 3% this year. This decline will be significantly higher than in 2009 when the world economy shrank by 0.1%. In 2009, Russia’s GDP fell by 7.9%.
The volume of supplies of greenhouse vegetables from Turkey to the Russian market amounted to 29,300 MT, worth $28 million, in the beginning of 2020.
According to ROIF Expert agency, that due to the sharp increase in supplies, Turkish companies have surpassed the largest exporters of this product category – Azerbaijan and China.
As of the agency report “Condition and analysis of the greenhouse industry in Russia: research and forecast until 2024”, the import of Turkish vegetables has grown by 20 times in 2016-2019. Last year, Turkey increased the sales of greenhouse vegetables to the Russian market by $66.2 million.
Turkish exporters increased their presence on the Russian market despite a 5.3% overall decline in imports in this category in volume terms in 2019. Meanwhile, the Russian producers of greenhouse vegetables increased the production volumes by 471,500 MT, with an increase of greenhouse areas by 36.9%, in 2016-2019.
According to the director of the Fruit and Vegetable Union, Mikhail Glushkov, in 2020, Russian fruit producers will lose about 20% of the production due to frost.
“Russia’s fruit production volume in Russia this year will be significantly lower than in the past. Firstly, due to an excessively warm winter, the number of orchards affected by pests and diseases will be greater than in the past. Secondly, in the main horticultural regions – Stavropol and Krasnodar Krai – late frosts were recorded, with crop losses that could reach 30-40%. These circumstances will negatively affect not only the size of the production, but also its quality. “Some of the fruits may be in poor condition,” said Tamara Reshetnikova, general manager of Rostov Technologies.
According to estimates of regional associations in the territories of the South and North Caucasus Federal Districts, about 80% of the apple and pear productions and 85% of the cherries, plums, apricots and peaches were destroyed. There, the air temperature dropped to -11 °C.
“The consumer demand for all types of fruits has already been reduced both in terms of volume and value, and this trend will continue by the end of the year. For this reason, we do not expect a strong jump in fruit prices, despite the fact that producer costs are increasing due to ruble devaluations,” said Tamara Reshetnikova.
She believes that despite the expected low yield of apples and other fruits grown in Russia (peaches, apricots and cherries), foreign suppliers will not increase the import of their products into the territory of the Russian Federation, as Russian consumers will not be able to buy them due to their lower incomes. Besides, countries in Western Europe are experiencing a shortage of seasonal workers for the harvest due to the closure of borders to prevent the spread of the coronavirus. Abroad, the demand for fruits and berries has also been reduced. Tamara Reshetnikova doubts that Russian fruit importers will look for new suppliers, for example, Australian or South American.
“The main question is not where to get imported products, but how to stimulate consumers to buy fruits and berries, and this can only be done without raising prices for them,” she added.
389,300 mt of vegetables have been harvested in greenhouses in Russia up until April 28, 2020, which is 29.4% more than in the same period of 2019. Specifically, the greenhouse cucumber harvest amounted to 274,600 tons (+30%), and that of tomatoes stood at 107,600 tons (+30%).
This year, the Russian Ministry of Agriculture expects a record production of greenhouse vegetables that could reach at least 1.25 million tons; 9.6% more than in 2019. This growth is due to investments made in the modernization of greenhouses and in the construction of new ones, according to the director of the National Union of Fruit and Vegetable Producers, Mikhail Glushkov. In the last five years, more than 1,100 hectares of greenhouses have been built in the country.
Russia’s objective is to become self-sufficient in the supply of vegetables. At the moment, it is already able to meet 90% of the cucumber demand and 60% of the tomato one. Meanwhile, the veto on European fruit and vegetable productions, introduced in August 2014, is still in force.
Argentine pear and apple exports experienced a significant increase during the first quarter of 2020, as they grew by 30% and 22% respectively, according to data published by the Nation’s Ministry of Agriculture, Livestock, and Fisheries.
In this period, Russia established itself as the main destination for pears after it imported between January and March more than half of the 81,031 MT it imported throughout all of 2019. As reported by the Ministry in a statement, “shipments of pears to that destination reached 44,867 MT and were worth more than 31 million dollars; which places Russia as the main market for Argentine pears, concentrating 30% of exports.”
Meanwhile, apple exports stood at 3,245 MT of apples worth more than $2 million, i.e. 22% higher than in the same period in 2019.
The Ministry also highlighted that Argentine fruits were benefiting from a 25% tariff reduction granted by the Eurasian Economic Union (UEE), which is formed by the Russian Federation, the Republics of Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
Rosstat reports that over the past month, lemon prices in Russia have become 2.5 times higher. According to experts, this was due to rumors that the fruit supposedly helped protect you against the coronavirus. Other fruits and vegetables also recorded significant increases in April.
Statistics show, in that month, the price of onions rose by 49.9%; garlic became 25.7% more expensive; the cost of cabbage and carrots increased by 17.1%; potatoes saw their price rise by 16%, and that of beets by 10.7%. Apples went up by 8.8% and oranges, by 8.4%. At the same time, the cost of cucumbers fell by 20.6%, and that of tomatoes, by 10.3%.
Experts believe that the increase in fruit and vegetable prices is clearly linked to an increase in the cost of products in general.
In the first quarter, Turkey’s mandarin exports to Russia increased by 49% in terms of value and 37% in terms of quantity.
According to the Eastern Black Sea Exporters Association (DKIB), in the same period, Turkey exported 81 776 MT of mandarins to Russia and earned 49.8 million USD. Last year, Turkey exported 59 725 MT of mandarins in exchange of 33.5 million USD.
Trabzon, a city in the Black Sea Region, was the only mandarin exporter from the region. In this period, the city exported 14 638 MT of mandarins and earned 9 million USD.
The association’s (DKIB) vice-chairman Ahmet Hamdi Gurdogan announced that the 2019-2020 citrus season is going well and that they work towards the next season.
Pointing out to the coronavirus pandemic and its impact on global trade, Gurdogan stated that export costs are constantly increasing. “It is important to lower export costs. State support is crucial to achieve a competitive position in the market. Our exporters’s expectations are in the same line”.
On April 3, 2020, the Eurasian Economic Commission (EEC), which is the regulatory body of the Armenia-Belarus-Kazakhstan-Kyrgyzstan-Russia Eurasian Economic Union (EAEU), issued EEC Council Decision No. 33, introducing a temporary exemption from import duties for critical food products, such as potatoes, onions, garlic, cabbages, rice, rye, buckwheat, etc., as part of the EAEU coronavirus pandemic response.
The measure, which comes into effect on April 18, 2020, will apply to products imported as of April 1, 2020, and last through June 30, 2020. This report contains an unofficial English translation of the measure.
Nine months after the construction began in June 2019, the chilled capabilities of Maersk’s own cold store in St. Petersburg are operational, addressing the needs of a high-demand Russian market. In the near future, the facility will also offer freezing capabilities in a separate storage chamber for frozen produce (-25°C).
The first container to arrive at the new warehouse brought pears from Argentina after a 26-day journey and was unloaded swiftly into the chilled chamber operating at a temperature of 0.5 Celsius. In total, more than 60 Maersk’s refrigerated containers were scheduled to arrive at the facility as part of the end-to-end service from Argentina, as well as grapes and apples originating from South Africa.
“The full end-to-end offering will allow our customers to enjoy the shorter overall lead time, predictable costs and best in class service,” said Zsolt Katona, Managing Director, Eastern Europe at Maersk during the inauguration of the first reefer container.
The new cold store operated by Maersk has a total capacity of more than 40 000 pallets in 3 chambers and uses CO2 cooling, which makes it the largest commercial cold store in Russia using this new technology. Over the next months, as part of its Cold Chain Management product, Maersk will also establish on-site customs clearance, bonded cold storage (frozen) and phytosanitary/veterinary services, as increased interest by both current and prospective customers underpins Maersk’s strategy of providing integrated solutions for reefer logistics.
Russian retailers have been rocked for the past six weeks as epidemic fears were mounting among the population. Even before the shutdown of many offline outlets—which was ordered in Moscow on March 31—online demand surged across a host of products.
Conservation-type food products became in strong demand in late February, with market leader Utkonos reporting a 60% sales spike in comparison with the same period of last year.
E-commerce companies also reported a rush, sometimes fleeting, on many other food items as well as on refrigerators and other home essentials.
In the first “non-working week” (as the authorities call the lockdown), from March 30 to April 5, Russians’ consumption habits changed drastically. The number of online orders at cafes and restaurants increased by 78% in comparison with the last week of February, according to Yandex.Checkout, the online payment arm of Yandex.
Delivery activities are being transformed by the epidemic. In March, restaurants and cafés massively switched to online orders, forcing Delivery Club, a market leader, to simplify its integration procedures.
X5 Retail, a leading Russian food retailer, has begun installing self-checkout machines across its Pyaterochka proximity stores. Tested successfully in August and September last year, these self-checkouts are now already installed at 369 stores. The plan for 2020 is to have a total of 12,000 units operating. “Through mass implementation of self-service technologies, [we] seek to minimize contact between customers and store personnel,” the company stated.