Turkey and Russia Lift Nearly All Sanctions

Following the lifting of the sanctions between Russia and Turkey, the Russian phytosanitary service is taking the first steps to get the trade started again. This month the service will travel to Turkey to inspect companies. It concerns cultivation companies that grow peppers, lettuce, pumpkins and courgettes. The goal is to judge the companies and to check whether they meet the conditions.

Turkish president Erdoğan called on his Russian colleague to also lift the final sanctions. President Putin says the sanctions won’t be in effect forever, but that time is needed to lift them. On Wednesday, the two presidents met and talked about the sanctions and other topics.

During the press conference after the meeting, the presidents said that they will make an effort to lift the sanctions, but for tomatoes it can take three to five years before Russia will open its borders again. “We agreed to lift all restrictions, but we’ve asked our Turkish partners and friends for understanding the fact that after well-known events, which led to the sanctions, life has moved on,” president Putin said during the press conference.

According to Turkish traders, the first onions from the province of Adana have been exported to Russia. The resumption of the export gives the Turkish growers hope again, says the head of the district. The Russian phytosanitary service will talk to the Turkish citrus sector. In October last year the boycott of fruit was lifted. Since then 12 parties have been intercepted which did not meet the phytosanitary demands. The conversations between Russian and Turkish delegates are planned for June.

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Russia Still Third Largest Import Country in the World

Despite the boycott of the import of fresh fruit and vegetables from EU countries and Turkey, Russia was still the third largest importer of fresh produce globally in the past year. During the final year before the boycott, Russia was also third. In 2013, this amounted to 8.5 million MT, while last year, that number was only 6 million MT, or 30% less. In value, Russia dropped from third place to eighth place on the list of import countries. The value of the import amounted to 4.2 billion euro in the past year, compared to 6.2 billion euro in 2013. Expressed in (sharply devalued) roubles, the import value increased from 260 billion in 2013 to 320 billion in 2016.

Officially, the Russian import figures aren’t complete. Many products from boycotted countries arrive in Russia through Belarus in particular. The export figure from Belarus is much higher than the import figure from Russia. Furthermore, it is also noticeable that Belarus’s import figure is much higher than the export figure. All in all, more fresh fruit and vegetables will have ended up in Russia than might appear to be the case at first glance.

According to figures from KCB/GroentenFruitHuis, no Dutch products are now sent (directly) to Russia anymore. Dutch fruit and vegetables are sent to Belarus, but in the past year, less was sent than in previous years. A fair amount of re-export is sent to Russia through the Netherlands. According to CBS and Eurostat, that amounted to about 54,000 MT in 2016, and more than 57,000 MT in 2015. In the past two years, about 30,000 MT of fresh fruit and vegetables from and through the Netherlands was shipped to Belarus.

Despite the boycott, many Polish apples ended up in Russia. According to Eurostat, 650,000 MT of apples from Poland were exported to Belarus and other former Soviet states last year. Besides, about 300,000 MT of other fresh fruit and vegetable products were exported from or through Poland to various former Soviet states. Important products in addition to apples are tomatoes, mushrooms, pears, headed cabbage and tangerines.

Furthermore, many fruit and vegetables are shipped to mostly Belarus through Lithuania. In 2016, this flow was considerably smaller with 560,000 MT, compared to 1.28 million tonnes in 2015. Products that go further south and then east through Lithuania are: pears, apples, peaches and nectarines.

According to the official figures from Russian Customs on the import of Russia, more than six million of fresh fruit and vegetables were imported into Russia in 2016. That is 11% less than in 2015, and compared to the final year before the boycott, it is 30% less. The most important import product, bananas, distorts the image somewhat, because the import of bananas has remained level in recent years with an amount of 1.35 million MT. The import of other products decreased by more than a third, from 7.2 million MT in 2013 to 4.7 million MT in 2016. Over the 2013/16 period, hardly any product can be found of which not (much) less was imported. In fact, only watermelons (for low kilogram prices) grew in import. Of important import products such as apples and tomatoes, import even halved.

Regarding suppliers, a number of remarkable things can be seen. The boycott of products from mostly EU countries since the summer of 2014 is naturally obvious. The boycott of a great number of Turkish products was added to that from 1 January 2016. Which countries profited from the lost trade from these countries? The number of countries is limited. The most important ones are: Egypt, Azerbaijan, Serbia, Uzbekistan, Armenia, Kazakhstan, Macedonia, Georgia, Bosnia, Uruguay, Abkhazia and Syria. So clearly countries with a certain relation to Russia in particular. The import of Moroccan products has increased, but not as much as was expected. Of the 350,000 MT of Moroccan product imported in 2016, 200,000 MT concerned tangerines, and 125,000 MT were tomatoes. The import of Moroccan tomatoes has grown considerably, for that matter. This is mostly due to disappearing tomatoes from various EU countries.

However, some countries which were expected to profit form the boycott, didn’t. The largest example of that is China. After banana country Ecuador, China is Russia’s largest supplier. The import of fresh fruit and vegetables from this country has remained practically at the same level, despite some fluctuations, since 2010. Russia primarily imports apples, tomatoes and tangerines from China. Other countries that didn’t profit are Israel, South Africa, Argentina and Chile.

In 2013, Russia imported 1.37 million apples, 800,000 MT of which from EU countries. Last year, they only imported 675,000 MT, with Serbia as the most important supplier, followed by China and Moldavia. The import of tomatoes decreased from 866,000 MT in 2013 to 460,000 MT last year. For tomatoes, it was mostly Turkish product of which less was imported. In previous years, 350 to 365,000 MT of tomatoes were imported from Turkey, while none were imported last year due to the implemented boycott. Previously, 260,000 MT of tomatoes were imported from EU countries. Besides Morocco, Russia has been getting its tomatoes more often from countries such as Azerbaijan and Armenia in recent years.

The decrease of 37% in the import of pears has remained limited in relation. The decrease was largely compensated for by imports from Belarus. In the two last years, about 100,000 M of pears were imported from and through Belarus according to official Russian figures. This figure does correspond to that of Belarussian exports.

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Chinese Exports to Russia via Dongning up 34% in First Quarter of 2017

In the first quarter of this year, fruit and vegetable exports from China to Russia via the Dongnin check-point (Heilongjiang province) have amounted to 34,800 tonnes; an increase of 34% compared to the same period last year.

Due to natural conditions, between 30 and 35% of the supply of fruits and vegetables of the Russian Far East depends on imports. In October 2016, the first Russian industrial park in China opened in Ning’an, which combined functions such as warehousing and logistics, and became the first “particularly representative area” for the import of fruits and vegetables to Russia in the North of China. At the same time, fruit and vegetable producers in Heihe, Mudanjiang and other regions of Heilongjiang Province are also oriented to the Russian market.

With the dynamic development of Chinese-Russian trade and the economic cooperation between both countries, Heilongjiang Province has gradually turned into a “vegetable store” for the Russian Far East.

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Russia Says it Will not Reopen its Tomatoes Market to Turkish Imports

Russia does not intend to open up its market for tomatoes to Turkish growers, despite losing up to $1.5 billion from a trade dispute with Ankara, Russian Agriculture Minister Alexander Tkachev said on Wednesday.

Turkey has effectively put purchases of wheat, maize (corn) and sunflower from Russia on hold by imposing high import tariffs last month.

Russian market players believe the move was in retaliation for Moscow’s decision not to restore a visa-free regime with Ankara and resume purchases of tomatoes after the two countries improved ties last year, having fallen out over the shooting down of a Russian fighter jet in 2015.

“We do not plan to open the tomato market, (we) will support, above all, the domestic producers,” Tkachev said in an interview with Rossiya 24 TV on Wednesday.

Russia has been actively supporting domestic production of vegetables and tomatoes since it banned most Western food imports in 2014 in retaliation for Western sanctions imposed on Moscow over its involvement in Ukraine’s internal conflict.

“This is essential to us. The development of vegetable production has been our prestige in the recent years,” Tkachev said, adding that Moscow would get rid of the sector deficit in up to five years.

Russia was one of the key markets for Turkish tomatoes and bought several hundred million dollars worth each year.

That compares with between $1.3 billion and $1.5 billion which Moscow, according to Tkachev’s estimate, is losing from the effective suspension of agricultural exports to Turkey.

www.af.reuters.com

Bolivia Wants to Supply Tropical Fruits to Russia

Bolivian agricultural producers are interested in supplying tropical fruits to Russia, as revealed by the website of the Rosselkhoznadzor, reporting on the results of talks with the Bolivian side held in Moscow on Monday.

The parties discussed a wide range of issues concerning the prospects for cooperation and for the promotion of trade and economic relations between Russia and Bolivia.

“In addition to the already exported nuts and citrus fruits, Bolivian agricultural producers are interested in supplying other products to Russia, including corn, soy, pineapples, bananas and fruit juices, as well as goods of animal origin,” the report said.

The Russian side stressed that it is interested in direct deliveries of tropical fruits and seasonal vegetables from Bolivia, subject to strict adherence to quarantine and phytosanitary regulations.

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French Auchan Invests $356mln in Russian Market This Year

In 2017, Auchan Retail, a French company, plans to invest more than 20 billion rubles ($356 million) in the Russian market, the General Director for a hypermarket format of the Russian branch of the retailer, Oleg Alkhamov, told reporters.

“This year we invest more than 20 billion rubles, which is aimed at opening new stores and upgrading IT systems, and, of course, these are investments in rebranding of our supermarkets” Oleg Alkhamov said.

According to him, this year, Auchan will open 4 hypermarkets and 20 supermarkets in Russia, however, this is not the final data.

“We will look at what the market could offer, we always consider proposals from developers who invite us into their trade centers,” the company’s representative added.

Last year the company opened 10 hypermarkets in Russia.

“It’s not slowing down, it is these actual contracts that exist,” he said.

Currently, there are 102 Auchan hypermarkets in Russia.

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Turkish Tomatoes Suspected to Be Reaching Russia via Georgia

Turkish tomatoes are suspected to be reaching Russia via Georgia, as reported by the Russian newspaper Izvestia, although the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) has said that they cannot prove it.

“We have no confirmed cases of re-exports of Georgian tomatoes from Turkey. It is difficult to find such supplies. If all documents are in order, it is impossible, in the case of Georgia, to determine where the products were grown,” said the press secretary of the Rosselkhoznadzor, Yuliya Melano.

Indirect evidence suggests that Georgia has increased its purchases of Turkish tomatoes fourfold; at the same time, the volume of Georgian tomatoes shipped to Russia has also grown considerably.

The ban on the import of Turkish fruits and vegetables to Russia, in force since 1 January 2016, was party lifted for citrus fruits, but tomatoes are still subject to it. Turkey itself is unable to find alternative markets for its tomatoes, while consumers in Russia are experiencing shortages.

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Over 200 MT of Agricultural Imports Stopped in Novosibirsk

In March, more than 200 tonnes of vegetables and fruits from Central Asia were detained by inspectors of the phytosanitary control post in Karasuk, of the Regional Office of the Rosselkhoznadzor.

According to the press service of the institution, 147.15 tonnes of these products came from Kyrgyzstan, 62.35 tonnes from Kazakhstan and 20 tonnes from Uzbekistan.

During the checks on the post it was found that the vegetables and fruits were transported either without the relevant documents confirming their phytosanitary safety or without labelling on the packages.

The list of products that did not pass the controls includes apples, pomegranates, tomatoes, dried fruits, onions and radishes.

Suppliers intended to sell them in Novosibirsk, Irkutsk, Krasnoyarsk, Surgut, Khabarovsk and Chita.

All the goods were returned to the exporters.

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X5 Retail Net Profits up 57.3%

Russian food retailer X5 Retail Group’s revenues rose by 27.8% to RUB1,033,667 mln in 2016 – the fastest growth rate since 2011. Adjusted EBITDA rose by 33.8% to RUB79,519 mln and net profits of RUB22,291 mln were up 57.3% on last time.

Like-for-like sales increased by 7.7% with an improvement across all three of the company’s major formats. The company added a record 2,167 new stores in 2016 compared with 1,537 new stores in 2015. Pyaterochka was the main driver of growth: net retail sales rose by 32.5% y-o-y (9.1% growth in LFL sales and 23.4% growth from a 37.4% y-o-y increase in selling space).

Chief executive Igor Shekhterman said: “We have achieved all of the targets set out by the supervisory board and company management in 2016. We are creating value for stakeholders as the fastest-growing public player in Russia’s food retail market, building a stable and sustainable business that aims to benefit consumers, employees, partners and investors over the long term. As of Q4 2016, X5 is Russia’s #1 food retailer, with a market share of 8.0% for 2016. Revenue grew by 27.8% year-on-year and exceeded RUB 1 trillion, driven by a 7.7% increase in like-for-like (LFL) sales and a 20.1% contribution from a 29.1% rise in selling space. In 2016, we also demonstrated our ability to deliver efficient and sustainable expansion, with the adjusted EBITDA margin improving to 7.7%, up from 7.3% in 2015”.

“Looking ahead to 2017, while we do not expect meaningful positive macroeconomic developments in Russia in the medium term, significant growth opportunities still exist in the food retail sector.  We remain confident about X5’s potential to deliver sustainable growth as Russia’s leading food retailer, driven by market expansion and market penetration. We are now focused on achieving our target market share of 15% by the end of 2020, which will require continued strong performance during the coming years. Our focus will remain on organic growth while maintaining margins as we develop all three of our major formats.”

www.stockmarketwire.com

Moscow Extends Turkish Food Ban in Response to Heavy Tax on Russian Agriculture

Russia will not lift the import ban on Turkish vegetables, fruit, and meat, according to agriculture watchdog Rosselkhoznadzor. Last week, Turkey imposed stiff tariffs on Russian wheat and corn, making exports unprofitable.

According to watchdog spokeswoman Yulia Melano, “the issue of full or partial removal of restrictions on Turkish fruit and vegetable products for the Russian market should be discussed in conjunction with the removal of counter restrictions on Russian products from the Turkish side.”

Last week, the Russian media reported that Turkey had imposed a 130 percent tariff on wheat, corn and sunflower meal that is making deliveries highly unprofitable for local businesses.

Turkey’s Trade Ministry denied the reports, but a representative of the Russian trade mission in Ankara said Turkey had excluded Russia from a list of countries with zero rates of customs duties. Turkey is the second largest buyer of Russian wheat after Egypt.

Russia will keep the ban on Turkish frozen meat and poultry as well as tomatoes, cucumbers, grapes, apples, pears, strawberries and other fruit and vegetables.

In March, Rosselkhoznadzor lifted the restrictions against Turkish onions, cauliflower, broccoli and some other vegetables, explaining there is a lack of these food items in Russia.

Food imports from Turkey were blocked in response to the downing of a Russian jet in Syria in November 2015. There were other restrictions, including the cancellation of charter flights to Turkey, the introduction of a visa regime, and a ban on hiring Turkish citizens. At the request of the Kremlin, Russian travel agencies suspended sales of package tours to the country.

Moscow-Ankara relations began to improve after Turkish President Recep Tayyip Erdogan apologized over the jet incident. Russia lifted the flight ban, but the food ban has remained.

www.rt.com