Author Archives: CrispConsulting

Decision on Extending EU Sanctions against Russia Comes into Force

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The decision to extend the economic sectoral anti-Russian sanctions imposed by the European Union (EU) by six months, until January 31, 2017, has come into force, the Council of the European Union said in its resolution published in the EU’s Official Journal on Thursday.

According to the EU, this decision followed a report by French President Emmanuel Macron and German Chancellor Angela Merkel at the EU summit on the implementation of the Minsk agreements on June 22-23. That paved the way for extending the sanctions for six months, the Council of the European Union said.

This is a purely technical move, since a political decision to extend sanctions was made at the EU summit on June 22. The package of anti-Russian economic restrictive measures was last extended in January 2017 until July 31.

Russian Deputy Foreign Minister Alexey Meshkov earlier told reporters that the EU’s anti-Russian sanctions cannot help Brussels achieve its goals in relations with Moscow, and the decision on their extension is regrettable. “It has long been clear to everyone that sanctions are counterproductive, that they are not able to tackle any tasks assigned by the European Union in terms of its relations with Russia,” he said. “Independent EU experts have repeatedly provided figures showing that the sanctions and our countermeasures affect, above all, the economies of the EU member-countries.”

The European Union began to impose sanctions against Russia over developments in Ukraine in March 2014. The decision about anti-Russian restrictive measures was made at the EU’s emergency summit on March 6, 2014. It was also announced that the Russia-EU summit scheduled for June 2014 had been cancelled and negotiations on a visa-free travel and a new framework cooperation agreement had been suspended. Later, the EU imposed three packages of sanctions on Russia, specifically, visa restrictions against some Russian state-owned oil, defense and financial companies (extended until January 31, 2018) along with restrictive measures against Crimea (extended until June 23, 2018).

www.tass.com

 

Turkish Export to Russia Starting

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The first Turkish strawberries and grapes have been exported to Russia, according to Turkish media based on data from the Turkish customs. Russia supposedly imported 322 tonnes of strawberries and three tonnes of grapes. This means the sanctions have been officially lifted. Tomatoes are still being boycotted, although it’s assumed the boycott will be lifted between November and April. Last week, the Russian State Secretary of Economic Development announced they were starting the negotiations regarding this dossier. Russia wants to protect the investments that have been made in the cultivation of tomatoes, which is why the boycott is still in effect officially.

Sudan is also picking up exports to Russia. The African country wants to export fruit and vegetables to Russia for the first time ever, according to the ambassador in Moscow. In recent years, trade between the two countries improved considerably. Last year, trade was 150 per cent higher than in 2015.

The EU extended the sanctions against the Crimea by one year. The sanctions against the annexed peninsula will now be in effect until 23 June 2018. The EU will soon also have to decide about extending the sanctions against Russia. It is expected these sanctions will once again be extended by six months.

www.freshplaza.com

 

Fruit & Veg Exports From Turkey to Russia up by 73%

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Turkey’s exports increased by 15.8 percent in May compared to the same month of the previous year, according to data released by the Turkish Exporters Assembly (TİM) Thursday.

The monthly export volume stood at around $12.5 billion, increasing for the seventh consecutive month. In the first five months of 2017, Turkey’s exports have recovered, marking a 10 percent increase in total. The TİM announced the numbers during a press conference attended by Economy Minister Nihat Zeybekci.

“Of our 20 top exporting partners, the highest increase in exports was to Russia with 73.4 percent. The five-fold increase in exports of fresh fruit and vegetables to this country had an effective impact on the said hike. Thus, our exports to Russia showed the highest monthly increase in May 2017,” he noted.

Büyükekşi said exports to 160 countries and regions increased in May, while exports to 75 others declined, stressing that exports to the top five exporting countries increased.

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Growth of Prices for Fruits and Vegetables Slowing Down

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According to the Ministry of Economic Development of the Russian Federation, the slowdown in the growth of prices for fruit and vegetable in Russia can be seen. Expects say that this trend will continue in the next months. According to the weekly data, the average daily price growth slowed to 0.18% in the first week of June from 0.25% in early May.

At the same time, overall inflation in May remained at the level of 4.1% in annual terms, which is slightly higher than the estimates made by the Ministry of Economic Development of Russia a month earlier. The main reason for this deviation was the dynamics of prices for fruit and vegetable products as the price increase accelerated from minus 3.1% in April to 2% in May, due to the atypically cold weather in April-May and a delay of the early harvest.

The prices for potatoes and other staple vegetables excluding cucumbers and tomatoes grew by 30.7% and 21.6%, respectively, due to the low stocks of production and low volumes of early harvest because of the cold spring.

The prices for greenhouse vegetable (cucumbers and tomatoes), on the contrary, decreased significantly – by 18%, (the previous month they grew by 1.6%). However, this could not fully compensate for rising prices for other vegetables.

www.fruit-inform.com

Africa Increasing Supplies of Fruit & Veg to Russia

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The last couple of years have seen a rise in Russia–Africa trade, with aggregate turnover reaching USD 14.5 billion in 2016, up by USD 3.4 billion year-on-year. The bulk of it (USD 10.1 billion) was done by four countries, including Egypt (USD 4.16 billion), Algeria (USD 3.98 billion), Morocco (USD 1.29 billion) and South Africa (USD 718 million), with Algeria as the major growth driver adding USD 2 billion.

Agriculture is one of the significant contributors to the bilateral trade. Africa is becoming a promising market for Russian grain and agricultural machinery. Egypt, Côte d’Ivoire, Benin, Nigeria, Guinea-Bissau, CAR, Guinea, Burkina Faso and Mali are in turn increasing supplies of fruit and vegetables to Russia, benefiting from Russia’s counter-sanctions against European food products.

According to the Eurasian Economic Commission, Africa was the only region to have expanded its trade turnover with Russia in 2016 (unlike the EU, MERCOSUR, APEC, and others).

www.freshplaza.com

Russian Crops Growing

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According to the Ministry of Agriculture of the Russian Federation, as of May 23, 2017, the establishing of permanent fruit crops throughout the country was carried out on an area of 6,270 ha, that is almost 2 times more than for the same period in 2016 (3,150 ha). In 2017, the total area of new orchards is expected to be 10,600 ha. In 2016, it was planned to start 10,400 ha of new orchards, however, the actual area exceeded the plan by 40% and amounted to 14,600 ha.

Besides, as of May 4, 2017, gross harvest of greenhouse vegetables in Russia amounted to 200,700 MT, which is almost 2 times more than for the same period in 2016, when it was 111.600 MT. In total, 164,600 MT of cucumbers (in 2016 – 89,500 MT), 32,500 MT of tomatoes (in 2016 – 18,300 MT), and 3,600 MT of other vegetable crops were produced for the period January-May 2017.

In total, this year in Russia it is planned to build and modernize at least 200 ha of winter greenhouses, which will increase the volume of vegetable production by 120,000 MT, so the total yield will reach 930,000 MT per year. In 2016, it was 813,600 MT, which was 14.6% more in 2015.

www.fruit-inform.com, www.fruit-inform.com

Russian Economy Moves to Recovery from Recession

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The Russian Federation is showing encouraging signs of overcoming the recession it entered in 2014. The economy is projected to grow 1.3% in 2017, and then 1.4% in both 2018 and 2019, according to the World Bank’s latest Russia Economic Report (no. 37 in the series) launched on May 23 in Moscow.

Growing macro-stability, driven by the government’s policy response package of a flexible exchange rate policy, expenditure cuts, and bank recapitalization – along with tapping into the Reserve Fund – has helped facilitate the adjustment of an economy hit by the double shocks of low oil prices and restricted access to international financial markets. The positive terms-of-trade effect from rising oil prices, coupled with more stable macroeconomic conditions, are expected to drive Russia’s economic recovery going forward.

“Macro stability and oil prices are the main factors driving this recovery,” said Apurva Sanghi, World Bank Lead Economist for the Russian Federation and the main author of the report. “Successful adherence to the 2017 – 2019 Budget Law will be key for laying the proper groundwork for the planned fiscal rule, which will subsequently reduce the sensitivity of the budget to oil prices and improve economic predictability”.

Consumption is expected to drive growth in 2017-2019, with investment playing a supporting role, says the report. Headline inflation is expected to continue moderating, falling slightly below 4% at the end of 2017 and stabilizing at around 4% in 2018-2019. Lower inflation will support real wages, which will be the main source of real income growth. Along with these developments, improving consumer sentiments and better credit conditions are all expected to lead to a growth in private consumption of 1.8% in 2017 and 2.5% in both 2018 and 2019.

Investment demand is expected to increase in 2017-2019, due to a pick-up in fixed capital investment growth and a restocking of inventories, predominantly in 2017. Additionally, the 2018 FIFA World Cup – which will take place in Russia – could further support public investment.

The report emphasizes that the poverty rate is expected to decrease because of decelerated inflation and recoveries in household incomes and consumption: the poverty headcount is projected to decline from 13.5% in 2016 to 13% in 2017, and to continue declining to 12.3% and 11.6% in 2018 and 2019, respectively.

The special topic of the report examines how Russia’s regions fared during the crisis years of 2014-16. While they fared well as a whole, significant disparities and variations remain in the fiscal health of the regions. Moreover, the adverse effects of the crisis were averted by a strategy of significant expenditure cuts in the regions, which may have deleterious medium-term effects on regional productivity.

In that context, Russia’s regions have room to improve their fiscal buffers, by tapping more into the revenue side, raising select taxes and increasing yields of other taxes, for example. In the long run, a rebalancing of the division of revenues and functional responsibilities between the federal government and the regions may need to be considered.

Russia’s longer-term growth prospects, however, remain constrained by its low productivity.

“Boosting productivity growth remains key to achieving inclusive, sustainable and fast-paced growth in Russia,” said Andras Horvai, World Bank Country Director and Resident Representative in the Russian Federation. “While we already see the benefits of increasing macro-stability – not only through a return to growth, but also in declining poverty – addressing deeper structural issues related to demography and competitiveness would enable Russia to take full advantage of the positive momentum.”

www.finchannel.com

Luxury Goods Sales Growing in Russia

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Domestic demand for luxury in Russia is recovering. 62% of wealthy citizens said they increased the cost of luxury goods in the last year. The same trend can be seen in China and the UAE.

According to a Deloitte survey, covering 11 countries, 62% of buyers in Russia, China and the United Arab Emirates, countries that Deloitte refers to the developing markets of expensive goods, said about the growth of their spending on luxury goods in the last 12 months. In developed markets (in the European Union, the United States and Japan), the share of increased spending on luxury is much less – 49%.

The study involved 1,300 respondents who consider themselves wealthier than their country’s citizens on average and who have made at least one purchase of luxury goods in categories such as clothes and shoes, bags and accessories, cosmetics and perfumes, jewelry and watches for the past six months.

“Consumers in emerging markets continue to stimulate the growth of the luxury market,” Deloitte analysts conclude.

The Russian luxury goods market, which resumed its growth in 2016, continues to grow, also because of increase in the tourist flow, including from China. In addition, the Russian market of premium products was positively affected by the fact that retail companies held back or even cut prices. In 2016 the ruble strengthened, and the companies reduced the prices for luxury goods by more than 11% in Russia.

If in 2015 the Russian luxury goods market showed a decline for the first time in five years (by 9%, to 227.2 billion rubles), then in 2016 it resumed growth – it amounted to 1%, to 229.6 billion rubles.

www.retailer.ru

Russia Will Be a True Competitor in the Apple Sector

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The fact that Russia aims at being self-sufficient as regards the production of fruit and vegetable is common knowledge. According to economist Gianluca Bagnara, the Russian ban against European produce is just a test to organise its own production chain.

During a recent convention, Jochen Kager from AgroFresh illustrated his report on “New apple orchards in Eastern Europe or east of Europe?”. According to official data, Russia grows apples on 209,240 hectares producing on average 15 MT per hectare. New plans are strictly connected to state funding.

“The first so-called ‘high-density’ orchards were planted in 2002 in Krasnodar and Crimea. Investors relied on Europe for technical skills, plants and systems and developed projects covering as much as 1,000 hectares each. Today, 10,000 new hectares have been planted planted in Krasnodar as well as 3,000 in Kabardino-Balkaria and an additional 1,000 in surrounding areas. Another 6,000 might be planted over the next three years.”

Granny Smith apples are losing popularity, while 30% of the new orchards are of the Fuji variety. “There is a lot of interest for scab-resistant varieties, while organic production methods are not an objective yet. New orchards are covered with anti-hail nets, while often there is not enough water for anti-frost systems. State funding can cover up to 75% of costs.”

Other nations
Poland can count on 180 thousand hectares, 60,000 of which equipped with modern systems. Professional orchards might grow by 10% over the next three years. Kager reported that Polish operators are adapting quickly to the Indian and North African markets. Currently, producers plant mainly Gala (40%), Red Delicious (20%), Red Prince (20%), Golden (15%) and new Champion clones.

Over the next few years, new competitors might emerge, Serbia, Croatia and Macedonia all expanded their cultivated areas (from 2,000 hectares on 2008 to 5,000). Montenegro cultivates 700 modern hectares and is not included in the ban.

In addition, Kazakhstan is becoming an exporter. According to state data, 55% of apple orchards are of the modern type. The closest markets are Russia and China and the most popular varieties are Gala (40%), Red (20%), Golden (20%), Granny (10%) and Fuji.

Uzbekistan is growing too, with 1,000 hectares of traditional orchards and 800 hectares of modern orchards.

China is a totally different matter, as it has 2.32 million hectares, 40% are still to modernise. It could be an excellent outlet for nursery gardeners and service suppliers from Italy as well, but businesses must get organised and work as a team.

www.freshplaza.com

 

Nearly 600 MT of Produce Detained in Novosibirsk in April

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Inspectors of the Rosselkhoznadzor of the Novosibirsk region have reported their figures for April. This month, 584 MT of fruits and vegetables from the republics of Kazakhstan, Kyrgyzstan and Uzbekistan were detained at the border of the region. These were intended for sale in Novosibirsk and its neighbouring regions. Products like apples, lemons, tomatoes, peanuts and cereals were transported without appropriate documents confirming phytosanitary safety or without proper labelling on the packages.

“In accordance with the requirements of international quarantine legislation, all of these shipments were denied entry into the territory of the Russian Federation. The cargo was returned to the exporters in the republics of Kazakhstan and Kyrgyzstan,” stated the ministry’s press service.

It is worth noting that the volume of banned quarantine products in April is comparable to that of the first quarter this year (562.24 MT). This is due to an increase in the flow of plant products imported to the Novosibirsk region from the territory of the Republic of Kazakhstan.

www.freshplaza.com