Market News

Russian producers against Iranian fruit and veg imports

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Russian fruit and vegetable producers have showed their opposition to the import of tomatoes, cucumbers, potatoes and carrots from Iran under a simplified customs procedure with reduced duties. In the first half of 2017, a free trade zone between Iran and the Eurasian Economic Union, which includes Russia, is expected to come into force.

Back in June, it was revealed that Russia may create a temporary free trade area (FTA) with Iran in the first half of 2017, lasting until 2020, leading to a reduction of customs duties for Iranian goods. A list has subsequently been prepared that features all products whose supply to Russia is a priority for Iran.

This list includes cucumbers and gherkins, tomatoes, potatoes, peppers and other vegetables; canned tomatoes, fresh garlic, onions, shallots, apples, trout, dry milk, meat, chicken and offal, oil palm substitutes for ocoa butter, white sugar, chewing gum and apple juice.

However, the Ministry of Agriculture, which has carried out a risk analysis on the impact of an increase in the import of certain categories of goods from Iran, has been asked by the National Union of fruit and vegetable producers to withdraw tomatoes, cucumbers, potatoes and carrots from the free trade regime.

The Association emphasizes that, in the framework of the state programme for the development of domestic agriculture, producers are facing many challenges, starting with the construction of about 1.3 thousand hectares of modern greenhouses up until 2020.

They recall that the programme was launched in 2013. According to the National Union of producers of fruits and vegetables, the construction of these greenhouses started in an area of 100 hectares at a cost of 20 billion roubles.

The viability of these modern greenhouse complexes will rely on the seasonal prices for the products in autumn and spring. In the summer, producers have been operating at a loss and selling their products below cost, and “shipments of imported products grown in milder climates have a direct impact on prices,” stated the producers.

According to the Association, the production of potatoes and carrots is currently actively developing in Russia. For example, potato production in 2015 amounted to 7.6 million tonnes and increased by 22% compared to 2014; meanwhile, the carrot production amounted to 713 thousand tonnes in 2015, 25% up compared to 2014. “This increase is due to the introduction of modern technologies of cultivation and storage, which requires a considerable investment by agricultural producers,” said the Association of Producers in a letter.

Import of fish and seafood to Russia decreased by 12% during 7 month of 2016

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According to preliminary data from the Russian Statistics Service, during seven months of 2016, the volumes of imports of fish products to the Russian Federation decreased by 12% (37,000 MT) compared to the same period of 2015 and amounted to 271,600 MT. Import of frozen capelin decreased by 67.9% – to 8,600 MT, import of frozen herring deceased by 50.2% – to 11,700 MT, import of frozen salmon deceased by 3.3% – to 25,300 MT, import of frozen mackerel dropped by 28.2% – to 31,800 tons. Meanwhile import of frozen trout almost doubled – up to 6,800 MT.

The structure of imports of fish and seafood to Russia consists of frozen fish (54.5%), prepared or preserved fish products (14.4%), fish fillets and other fish meat (11.2%), crustaceans, molluscs and other aquatic invertebrates (11%), fresh or chilled fish (4.5%).

www.fish.gov.ru

Russia imported 1.5 million tons produce less during first half of 2016

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Russian import of fresh fruits and vegetables decreased sharply during the first half of this year. During the first half of 2015, 20 per cent less was imported already, due to the import ban implemented in August 2014. This year it was another 16 per cent less. In total, due to the boycott of import from the EU and a number of other countries, one-third less fresh fruits and vegetables were imported during the first half of this year. This amounts to at least 1.5 million tons.

The boycott of Turkey was added this year. Poland and Turkey are most affected by the boycott. From January to June this year, 500,000 tons less fresh produce was imported in Russia from both countries compared with the first half of 2014. Compared with last year, losses for Turkey were even bigger. The import ban was not yet in effect for that country then, it was implemented 1 January of this year.

The Netherlands and Spain exported about 175,000 tons of fresh produce just before the boycott during the first half of 2014. Belgium was also an important supplier for Russia before the boycott.

It is striking that import from a number of countries not affected by the boycott also decreased sharply during the first half of 2016. Some examples are Israel (64,000 tons less than in Jan-Jun 2014), China (35,000 tons less), Morocco (34,000 tons less) and Argentina (27,000 tons less). It should be noted for Morocco that during the first half of this year a recovery was noticeable compared to the first half of last year.

After implementing the boycott a lot of fresh produce was imported by Russia via Belarus. This amounted to at least 1.1 million tons for all of 2015. The results of the boycott were less severe because of that. During the first half of 2016, the amount of import in Russia via Belarus sharply decreased. In total, 290,000 tons, compared to 600,000 tons in the first half of 2015, was imported by Russia from January to June this year. Mostly apples, pears and tomatoes were sent to Russia via Belarus during the first half of the year.

Egypt profited most from the boycott. During the first half of 2016, 360,000 tons of fresh produce were imported from Egypt. That is nearly 100,000 tons more than in 2014. The products imported most were oranges and onions. Serbia also profited from the boycott. Apples were imported either from or via Serbia, for the most part. The other countries profiting from the boycott are mostly former Soviet republics.

Interestingly, the import of the most important import product, bananas, reached record sizes during the first half of this year. From January to June, at least 745,000 tons of bananas were imported. These come almost exclusively from Ecuador. The second import product was apples during the first half of 2016. Import only amounted to 360,000 tons, compared with 860,000 tons during the first half of 2013, and 740,000 tons during the first half of 2014. During the first half of this year, 325,000 tons of tomatoes were imported, compared to 600,000 tons before the boycott was implemented. The import of pears decreased from 360,000 tons during the first half of 2014 to 150,000 tons during the same period this year. The decrease of oranges remained limited. Other products whose decrease remained limited, or which even increased, were grapefruit, sweet cherries, garlic, apricots and plums.

www.freshplaza.com

Apples from Moldova may do harm to apple growers from Krasnodar region

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Growers from Krasnodar region, South Russia, estimate the loss of 2 billion rubles due to competition with Moldovan apple suppliers until the end of the year. In the end of July, Moldovan suppliers began importing apples and plums to Russia and they are cheaper than Russian ones. Domestic producers turned for help to the Russian Ministry of Agriculture. However, experts believe that the request to ban the import is unlikely to be satisfied.

22 July, Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) allowed 43 Moldovan companies to export their produce to the Russian market, and the produce is cheaper than the Russian one. As a result, domestic production remains unclaimed. So, the price of a Russian plum fell from 12-14 rubles per 1 kg to 5-7 rubles per 1 kg.

According to the Union officials, over the past two weeks growers only from Krasnodar region lost more than 120 million rubles. And the total losses of fruit growers from Krasnodar region are estimated to be more than 2 billion rubles till the end of the year.

At the same time, growers from Krasnodar region believe that so far they have successfully contributed to import substitution program. For example, according to their data, they have increased domestic production of seedlings of fruit crops by 2.7 times, and fruit production has increased by 45.2% over the past five years.

Rosselkhoznadzor said that it would be impossible to ban the import of Moldovan plums and apples now without any risks of biological kind. In the summer of 2014, Rosselkhoznadzor banned imports of vegetables and fruits from Moldova because they did not match Russian phytosanitary requirements. In mid-2015, the import was renewed on a trial basis, and the number of companies authorized to ship products to the Russian market, is gradually increased. In March 2016, Rosselkhoznadzor temporarily suspended imports of vegetables and fruits with the Moldovan phytosanitary certificates via Belarus to the Russian market because of the suspicion of re-exports of apples and pears from the European Union.

In 2015, Moldova exported to Russia 42,000 MT of apples, according to the Federal Customs Service. The total import of apples to Russia was 890,000 MT. Domestic production was about 600 000 MT in 2015. As for plums, Moldova takes the second place – 13,000 MT, the total import of plums to Russia was 60,000 tons, while Russia produced only 6,000 -7,000 MT.

www.retailer.ru

62% of Ukrainian apples exports shipped to Belarus

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According to a marketing research “Apple market in Ukraine”, conducted by Alliance Capital Management, the biggest volumes of apples imported from Ukraine – 62% – were shipped to Belarus in the first half of 2016.

Georgia takes the second place – 11% of Ukrainian apple exports. It is followed by Moldova – 10% and Kazakhstan – 9%.

Belarus also imported the cheapest Ukrainian apples in the first half of 2016.

At the same time, Belarus successfully exports apples. In 2014, export of apples to Russia from Belarus increased by 104% up to 175 thousand tons, at the end of 2015 it increased already by 134% and reached 411 thousand tons.

According to Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), the export of apples from Belarus has increased by five times after Moscow has introduced counter-sanctions. At the same time, the Federal Customs Service of the Russian Federation believes that this is a re-export of Polish apples, which are prohibited for import into Russia.

www.charter97.org

Turkish ban reduced quality of fruit and vegetables in Russia

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The quality of fruits and vegetables in Russian stores has allegedly deteriorated after the introduction of the product embargo on Turkey, according to a study of the investment bank Morgan Stanley, which has studied the impact of a possible lifting of the sanctions against Turkey.

“We visited some federal and regional chains to look at the quality of the fruit and vegetables on offer. While the stores we visited may not be a representative sample, our experience revealed a decline in the quality of fresh fruits and vegetables,” says the report.

The Morgan Stanley study draws attention to the fact that, after the imposition of the embargo on some Turkish fruit and vegetables, Russian retail chains have switched to imports of fruit and vegetables from countries of North Africa and the Middle East. This, according to investment bank analysts, led to a loss of quality and a rise in the price of these products.

Analysts say that the blame is unlikely of retailers. “Russia had to switch to suppliers of North Africa and the Middle East, such as Egypt, Morocco, Israel or Algeria, to replace products which are usually imported from Turkey (tomatoes, peppers, peaches, citrus, etc.). This suggests long delivery distances, which often leads to lower quality, and sometimes to, higher prices,” said Morgan Stanley.

“If Russia does not lift the ban on the import of fruits and vegetables from Turkey and continues importing them from North Africa and the Middle East, the quality may deteriorate further and prices could become even higher,” concluded the study.

Morgan Stanley also predicted that the lifting of the embargo on Turkish products would not strongly affect the level of inflation in Russia. Earlier, a similar forecast was made by the Economic Development Ministry.

Lastly, Morgan Stanley analysts noted that given the significant devaluation of the rouble, which has led to higher prices for imported goods, Russian consumers have started buying less fresh vegetables and fruits, especially imported. In the annual survey which Morgan Stanley conducted in February 2016, 30% of respondents admitted that they were less likely to make purchases in supermarkets; a third of respondents admitted they were more likely to buy the agricultural products in the markets, while more than 20% have started to grow their own vegetables and fruit and about 10% share products with friends and family.

www.freshplaza.com

7,500 tonnes of products destroyed by Russia since August last year

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Over the past year, Russian authorities have destroyed a total of 7,282 tonnes of vegetable products and 228 tonnes of animal products banned for import into the country.

According to the Russian Federal Service for Veterinary and Phytosanitary Surveillance, the plant products most frequently subjected to destruction are pears, apples, peaches, peppers, tomatoes, aubergines, nectarines, grapes, strawberries and oranges.

The Russian embargo, forbidding the supply of food from Western countries, namely the US, EU, Canada, Australia and Norway, has already been in force since 7 August 2014, but in 2015, the Russian government decided to deal with the issue in a more severe way. The destruction of products from Western countries affected by the ban started on 6 August 2015 by decree of President Vladimir Putin. The disposal of such products is permitted to be carried out “in any way possible.”

The Kremlin renewed the period in which illegally imported products can be destroyed to 31 December 2017.

www.freshplaza.com

Russian ban alarms Bosnia fruit producers

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Bosnian fruit and vegetable producers stand to lose millions of euros after Russia slapped a temporary ban on imports of such items from Bosnia, citing concerns about safety. Bosnian fruit and vegetable producers fear major losses after Russia introduced a temporary ban on such imports from Bosnia from August 4.

“If the blockade remains in force in the following months, this will do incredible damage to our producers,” Dragoja Dojcinovic, president of the association of fruit producers of Republika Srpska, Bosnia’s Serb-dominated entity, told BIRN. “This is a crucial period, as the farmers are starting the harvest,” Dojcinovic pointed out, noting that spring was already hard for producers in the entity and that “many [farmers] had already signed contracts with Russia on exporting their produce.”

From August 4, Rosselkhoznadzor, Russian  introduced temporary restrictions on the import of “high phytosanitary risk products” to Russia from Bosnia and Herzegovina. Importing products from Bosnia and Herzegovina to Russia via third countries is also not allowed. Goods shipped before August 4 may be allowed to be imported after “supervisory measures and laboratory investigations”.

Rosselkhoznadzor explained that the volume of quarantined products imported into Russia from Bosnia and Herzegovina had increased. However, Russia was not provided with information about the country’s quarantine system and phytosanitary control measures. Moreover, the management of Plant Protection at Bosnia and Herzegovina’s Ministry of Foreign Trade and Economic Relations refused to accept a Russian delegation to familiarise them with the system.

In July, Russian experts from the Center for the Development of Entrepreneurship in St Petersburg had warned that export certificates for the EU market are not valid for Russia, Bosnian business website Capital reported. Bosnia’s Ministry of Foreign Trade declined to comment to BIRN on the decision of the Russian authorities.

A long-term ban would be a major blow for the agricultural sector in Bosnia, which in the past two years started exporting massively to the Russian market, taking advantage of the sanctions introduced by the EU against Moscow in 2014 in connection with Ukraine. According to the Bosnian Chamber of Foreign trade, the value of exports to Russia of fruits and vegetables, especially apples, pears, grapes, cabbages and tomatoes, grew from 3 million euros in 2014 to 11.8 million euros in 2015. In the first six months of this year alone, the value of this trade reached 10 million euros.

“If the ban is not lifted, agricultural producers in Bosnia could lose up to 25 million euros, which would be a great loss,” Amila Sehic, an expert at the Bosnian Chamber of Commerce, told. Vladimir Blagojevic, spokesperson of the Chamber of Commerce of Republika Srpska, agreed. “Exports from the RS to Russia have grown constantly in past years,” Blagojevic stated, noting that fruits are one of the most important products that the entity sells to Russia. “If this ban remains in force, it will be a major loss for many here in the RS,” he said.

www.balkaninsight.com, www.freshplaza.com

Russians increasingly prefer buying fresh produce at the market

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More than half of Russians trust the quality of fresh products sold in markets; at the same time, more and more Russians are losing trust in large chains and are switching to smaller stores, as revealed by the Nielsen report “The Russian consumer in the new economic conditions.”

Some 70% of Russian respondents believe that markets have a wider selection of fresh produce, while every second Russian believes that prices in the markets are lower than in chain stores.

Among fresh vegetables, the most popular in the baskets of consumers are cucumbers (92%) and tomatoes (91%), as well as potatoes and onions (79%). As for fruit, the most purchased are apples (81%), bananas (78%), lemons (56%) and peaches (49%). Seasonal berries were bought by 50% of respondents. Among them, the most popular are cherries, followed by strawberries and raspberries.

In terms of volume, Russians are reported to have reduced their purchases, with price increases as the main cause. During the survey period, every third Russian (33%) bought less fresh vegetables than last year. Approximately 57% bought them in the same quantities as last year, and 16% said they were buying less fresh vegetables, or even stopped buying them altogether, because they were growing them in their own garden. 15% of respondents complained about the quality of agricultural products.

“The opinion that fresh products at the market are better than those in supermarkets is largely due to the fact that their suppliers are national companies or companies from neighbouring countries, so goods are believed to gain in freshness and safety in the eyes of consumers,” states Marina Jerskowa, manager of the department evaluating the effectiveness of sales and marketing communications at Nielsen Russia.

www.freshplaza.com

Prices for fruit and vegetables to drop in August

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Fresh produce prices are expected to drop in Russia between August and September. This is said to be down to a number of factors; the arrival of the new harvest to market, import substitution and the slowing down of the rate of inflation.

Experts believe that primarily fruit and vegetable prices will fall, to a lesser degree livestock prices will be affected and the prices of goods of mass demand will not be affected at all. However, by the end of September, prices will most likely have returned to their previous figures.

However, Alla Dvoretskaya, Head of the Department of Economics and Finance at RANEPA (Russian Presidential Academy of National Economy and Public Administration), notes that the decline in prices for fruit and vegetables is not surprising in this period. This situation is an annual trend. Exceptions are only possible under such adverse events as crop failure or a ban on the import of certain products.

www.freshplaza.com