The Russian Ministry of Agriculture has proposed the introduction of tax incentives for Russian fruit producers. According to the head of the Ministry of Agriculture, Alexander Tkachev, the reduction of VAT by eight percentage points would reduce the flow of imported fruit into Russia. According to the Ministry, agricultural product prices have every chance of falling by more than 15% by the end of September, and “in five years we could be able to stop the import of basic fruits, like apples, pears and grapes.”
Currently Russia buys several varieties of seasonal grapes from the former USSR republic of Uzbekistan, as well as in Latin America (Chile and Argentina). The purchase of apples is made in Serbia, Moldova and Belarus. Pears on Russian shelves come mostly from Lebanon, Morocco and Turkey. In the first six months of 2017, the country was supplied with about 500,000 MT of apples, which is 30% less than in the same period last year.
Russians are now consuming fewer imported fruits and vegetables, according to the Ministry of Agriculture. In fact, after the ban on the import of agricultural products from the European Union, the share of foreign fruits delivered to Russia declined by more than 50%, while the acreage in the country has increased by more than 40% over the last two harvesting seasons.
According to statistics from the Ministry of Agriculture, in 2016, a total of 14,600 hectares of new plantations were set up. In the same year, the Russian authorities allocated about 2.2 billion roubles for investment projects aimed at expanding the acreage. The cost of setting up one hectare can vary from 400 thousand to 3.5 million roubles, depending on the terrain and varieties planted. In 2017, the area of new plantations will reach 15,600 hectares.
The potential to reduce prices for fruit and vegetable products in Russia in the coming months is about 15%, according to the authors of the report “Inflationary picture in July”. In the summer months, vegetables and fruits have already become 7.5% cheaper.