Market News

Russia Abolishes Import Duties on Fruit and Vegetable Imports from Moldova

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The Russian government has passed a decree on the abolition of duties on imports of Moldovan fruit and wine products in 2019, said the President of the Republic, Igor Dodon.

We are talking about vegetables, fruits (apples, cherries, plums, nectarines), canned food, grapes, wines and brandies.

The removal of duties has been possible thanks to the agreements reached earlier with the President of the Russian Federation, Vladimir Putin.

This resolution, according to Dodon, will undoubtedly contribute to a significant increase in the export of Moldovan goods to the Russian market, the creation of jobs, and an increase in revenues.

“I express my gratitude to Vladimir Vladimirovich for the support given to the Moldovan people,” said the Moldovan President on his Facebook page.

The removal of duties is especially important for Moldovan producers of apples and grapes. In 2018, due to an excessive harvest, they had to deal with a shortage of markets.

Earlier it had been reported that the Russian Federation was going to abolish customs duties on Moldovan apples, grapes, vegetables, canned goods and wines until July 1, 2019.

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24% Increase in Value of Turkish Fruit and Veg Exports to Russia

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According to the Association of Exporters of the Eastern Black Sea Region of Turkey (DKİB), the Republic has exported 673,222 mt of fruits and vegetables to Russia in the first 10 months of the year, which is 18 percent more than in 2017.

In monetary terms, exports have grown by 24 percent, reaching $ 465.677 million.

Most of Turkey’s fruit and vegetable exports to Russia (141,366 mt) came from the Eastern Black Sea region. In monetary terms, those exports were worth $ 100.208 million.

According to Turkish exporters, shipments in 2019 are expected to increase by at least 30%.

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Sharp Drop of Moldovan Apple, Plum and Table Grape Exports to Russia

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According to analysts from EastFruit, despite the record harvest of apples and plums, Moldova has sharply reduced its exports to Russia in September 2018 compared to the same month last year. Apple exports from Moldova to Russia fell by 42%, from 27.2 to 15.8 thousand MT. However, this volume still exceeded that of September 2016, when exports amounted to just 13.4 thousand MT.

As of the third week of November, Moldova still has record stocks of plums in cold storage. In September, its exports to Russia amounted to 9.3 thousand MT and were 6% lower than in the same month a year earlier.

Meanwhile, the export of table grapes dropped even more significantly, by 23.4%, down to 3 thousand MT. In the same month a year earlier, 3.9 thousand MT of table grapes were delivered from Moldova to Russia. Also, the supply of Moldovan peaches and nectarines to Russia dropped almost five times, from 527 MT to 113 MT.

It is also worth noting that the export of Moldovan pears to Russia recorded a slight increase, although the total volume remained insignificant. In September 2018, 177 MT of pears were exported.

All in all, in September, Moldova became the Russian Federation’s eighth largest fruit supplier, receiving $ 14.5 million in revenue; 23.5% less than in September 2017. Moldova’s share in Russian fruit imports fell from 6.3% in September 2017 to 5% in September 2018. A year earlier, Moldova stood fourth in this ranking, but in 2018, the country has been overcome by China, Azerbaijan, Uzbekistan and Argentina.

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Russian Cucumber and Gherkin Production up by 14%

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The total production of cucumbers and gherkins in Russia has grown by 14%, from 1.70 million MT to 1.94 million MT , as reported by RBC, citing data from the “Analysis of the cucumber and gherkin market in Russia,” prepared by BusinesStat.

In general, for the years 2014-2016, the production of cucumbers and gherkins in both the open ground and indoors has increased annually.

Cucumbers and gherkins grown in the open ground still keep a dominant share of the total production; however, that share has been falling annually. Thus, in 2013, they accounted for 62.8% of the total volume, and in 2017 this figure had already dropped to 53.7%. The share of greenhouse vegetable products, on the contrary, has increased during the period at hand, from 37.2% of the total gross yield to 46.3%.

According to analysts at BusinesStat, in the next 4 years, production of cucumbers and gherkins in Russia will increase annually by 3.0-3.7%. By 2022, the figure will reach 2.28 million MT and exceed the level of 2017 by 17.8%. According to the forecast, the production of cucumbers and gherkins in greenhouses will grow at a higher rate than those cultivated in the open ground. In 2022, the gross harvest of cucumbers and gherkins in greenhouses will reach 53.9% of the total, while the gross harvest in the open ground will be 46.1%, respectively.

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Volume of Russian Market for Organic Products is €160 Million

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According to the National Organic Union of Russia, the volume of the Russian market for organic products is €160 million. And 80% of this volume comes from imports.

“The volume of the Russian market is also small and amounts to about €160 million. At the same time, Russia itself produces only slightly more than 20% of the organic products it consumes, and 80% is import. Very few organic products are imported from the EEU countries to Russia, less than 1% of the import volume,” said NOS Executive Director Oleg Mironenko at the round table discussion themed ‘Prospects for the Formation of a Unified Organic Market of the EEU: Developing Coordinated Regulatory Approaches’.

The Russian market of organic products is growing annually by about 10-15%. At the moment, Russia is actively involved in the creation of an interstate standard for all EAEU countries.

“This standard was approved and put into effect on January 1, 2018 and we had a hope that other countries will join this intergovernmental standard. Unfortunately, today we state that only Kyrgyzstan and Russia have introduced this standard in their capacity as national standards, while other countries are still in the waiting period, ” added Mironenko.

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Russia Expects Record Vegetable Harvest in 2018

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The Russian Ministry of Agriculture has estimated that this year will be a 10-year record with regard to the vegetable harvest. The Ministry Press Service stated that by the end of 2018, Russia will produce one million MT of greenhouse vegetables. This will be an increase of 12.3 percent compared to last year, Izvestia reported.

The increase in yields, as stated by the Ministry of Agriculture, is linked to the introduction of new and modernized winter greenhouses. This was made possible by investments, credits and the reimbursement of their construction costs by the state.

Experts believe that a bumper harvest will not affect the prices of the domestic products. The Ministry of Agriculture plans to increase the production of greenhouse vegetables to 1.5 million MT by 2024.

As of October 30, 2018, the gross yield of greenhouse vegetable crops in Russia amounted to 820.1 thousand tons, which is 25.7% more than in the same period of 2017. This has been reported by the press service of the Ministry of Agriculture of the Russian Federation, according to “APK-Inform: vegetables and fruits.”

The Ministry’s report reveals that the cucumber production reached 496.8 thousand tons by October 30, which is 15% more than on the same date of the previous year. At the same time, the tomato production exceeded last year’s figures by 47% and amounted to 310 thousand tons. Lastly, the production volume of the remaining vegetable crops reached 13 thousand tons, and this is 30% more than on the same date a year ago.

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Grape Imports on the Rise this Season

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The volume of fresh grapes imported by Russia has slightly increased in the first seven months of 2018, as reported by EastFruit analysts, citing data from the International Trade Center (ITC).

Thus, the volume imported in January-July 2018 reached 105 thousand tons, which is the highest figure for this period since 2014 and is 2.4% higher than the volume recorded in the same months of 2017.

The key suppliers of fresh grapes to Russia during this period were India, Chile and Turkey. India supplied about a quarter of the total volume of fresh grapes imported by Russia in the first seven months of 2018, and the shares of Chile and Turkey were 16% and 17%, respectively.

In any case, it is worth noting that the majority of fresh grape imports into Russia take place towards the end of the year. In the first seven months, only about a third of the annual supply volume is imported. Therefore, it is still too early to judge what the general prospects for this year’s entire grape import season will be. However, given the results so far, the final volume is likely to be at least as good as last year’s. The return of Turkish grapes in the Russian market in June 2017 is mostly to thank for this.

It is worth recalling that before the introduction of the ban on imports (in January 2016), Turkey was a key supplier of fresh grapes to Russia and exported about half of the total volume purchased annually by Russian importers. To be precise, Turkey’s share of Russian grape imports in 2014 and 2015 stood at 48% and 51%, respectively.

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Price of Apples for Processing Continues to Fall

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According to EastFruit analysts, the prices paid for apples intended for processing into apple juice and concentrate have fallen significantly last week. As the harvest has continued in domestic farms and the industrial apple supply from Belarus has increased, prices have been declining almost daily.

While early in the previous week prices stood at $ 0.12 per kg, by Friday they had dropped to $ 0.10-0.09 per kg. Local producers are reacting to the price dynamics faster than the suppliers of Belarusian apples, so their sales are going much faster. At the moment, processors have already ceased to buy apples for more than $ 0.09 per kg. Also, some processors have started to demand a more substantial delay in the payments for the apples supplied to them.

Nevertheless, even such a price is still almost twice as high as that currently paid to producers in Moldova, Poland and Ukraine. Moreover, in these countries, the delay in the payments already exceeds 60 days. Some growers even doubt that processors will fully pay what they were promised, given the threat of a huge supply of concentrate.

Under these conditions, Russian industrial apple processors will also have a hard time selling finished products, because almost all the countries mentioned above and even Belarus are preparing to produce record quantities of apple concentrate.

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How to Change the Life of Russians Due to the Increase in VAT

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Due to the weakening of the ruble and is scheduled for 2019, raising the value added tax (VAT) may increase the prices of many goods.

Prices of clothing and footwear in Russia in 2019 may increase by 5-20% due to the weakening of the ruble and the rise in the rate of value added tax (VAT) to 20%.

Now in Russia there are three VAT rates: 0%, 10% and primary by 18%. A zero rate is levied on many kinds of transport services. Preferential 10% are the producers of the food basket (meat, milk, flour, bread, fish), children’s clothes and food, books and printed materials, medical products and medicines. All other categories of goods are at the basic rate, it is something next year and will increase by 2%. Thus, more expensive clothes and shoes, household appliances and electronics, automobiles, furniture, alcohol and tobacco products, gasoline, entertainment, trips, apartments, and housing services.

According to experts, clothing and footwear in the budget segment will rise by 5-10%, and premium — and more by 10-20%.

Pricing in the fashion sector is highly dependent on the exchange rate. With the weakening of the ruble and the rise in VAT, the cost of collections will inevitably increase, and hence the prices will also increase by 5-10%. As for pricing Western brands — it is entirely dependent on currency fluctuations, the Russian manufacturers can reduce the dependence from the course, placing orders to domestic factories, but the fabric still has to import.

The tax increase will hit the market in digital technology. Specialists of the information-analytical Agency TelecomDaily has estimated that prices for equipment will increase by about 5%, while the cost increase will manifest itself in one or two months after the introduction of the new tax. So, if before a decent fridge can be bought for 30 thousand rubles, now the price would be added for at least 1.5 thousand.

Real estate market analysts have warned that after the VAT increase the cost of construction projects will increase by 2-3%. Some experts call the more depressing figures: +10%.

The furniture is too expensive, according to the forecasts of market participants — 1-2%, although some time in the shops will be sold at the old prices previously paid for the furniture.

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Russia and China to Reduce Use of US Dollar

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Moscow and Beijing plan to use their own national currencies more often in trade deals, said Russian President Putin on Tuesday. “The Russian and Chinese sides confirmed their interest in using national currencies more actively in reciprocal payments,” he said at a joint news briefing with Chinese Leader Xi Jinping after talks at the Eastern Economic Forum (EEF) in the Russian city of Vladivostok.

Putin said this would “increase the stability of banks’ servicing export and import operations while there are ongoing risks on global markets.”

Russia is increasingly looking to China for investment after a sharp decline in relations with the West after the 2014 annexation of Crimea from Ukraine and support for pro-Russian rebels in eastern Ukraine.

China is seeking allies amid growing criticism of its militarization of the South China Sea and continued accusations of human rights breaches and unfair trade practices.

President Xi Jinping said on Tuesday that Russia and China should work together to oppose trade protectionism and what he called unilateral approaches to international problems.

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