Import substitution

Russia Expects a Record Vegetable Production in 2020

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389,300 mt of vegetables have been harvested in greenhouses in Russia up until April 28, 2020, which is 29.4% more than in the same period of 2019. Specifically, the greenhouse cucumber harvest amounted to 274,600 tons (+30%), and that of tomatoes stood at 107,600 tons (+30%).

This year, the Russian Ministry of Agriculture expects a record production of greenhouse vegetables that could reach at least 1.25 million tons; 9.6% more than in 2019. This growth is due to investments made in the modernization of greenhouses and in the construction of new ones, according to the director of the National Union of Fruit and Vegetable Producers, Mikhail Glushkov. In the last five years, more than 1,100 hectares of greenhouses have been built in the country.

Russia’s objective is to become self-sufficient in the supply of vegetables. At the moment, it is already able to meet 90% of the cucumber demand and 60% of the tomato one. Meanwhile, the veto on European fruit and vegetable productions, introduced in August 2014, is still in force.

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Russia Approves New Food Security Doctrine

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Russian president Vladimir Putin has approved a new doctrine on the country’s food security, updating the previous decree from 2010.

The decree came into force from the day it was signed on January 20. Putin instructed the government within three months to develop and approve an action plan to implement the provisions of the new doctrine.

According to the new doctrine, “Russia’s food security is the state of the country’s socio-economic development, whereby the food independence of the Russian Federation is ensured, the physical and economic availability of food products that meet mandatory requirements is guaranteed for every citizen of the country, in volumes not less than rational food consumption standards needed for an active and healthy lifestyle.”.

In the previous version of the Doctrine, to assess the state of food security, the specific weight of domestic products in the total volume of commodity resources of the domestic market, taking into account carry-over stocks, was used as a criterion. In the new document, the approach has been changed: now food independence is defined as the level of self-sufficiency, which is calculated as the ratio of the volume of domestic production to the volume of domestic consumption of the products.

The document also highlights the interests of the state for the long term. Among them are the sustainable development and modernisation of agriculture and fisheries, agricultural production, feed, livestock breeding, seed selection. Also in the long term, the state is interested in banning the import of GMO, raising and breeding animals whose genetics were changed.

The document also sets thresholds for certain product groups, with self-sufficiency rates of at least:

  • 95% for grain;
  • 90% for sugar;
  • 90% for vegetable oil;
  • 85% for meat and meat products;
  • 90% for milk and dairy products;
  • 85% for fish and for fish products;
  • 95% for potatoes;
  • 90% for vegetables and melons;
  • 60% for fruits and berries;
  • 75% for seeds of the main crops of domestic selection;
  • 85% for table salt.

The previous version of the food security doctrine did not mention the category of fruits and vegetables.

www.iegvu.agribusinessintelligence.informa.com

Russia 2019–2023: Apple Imports will Increase

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In the period from 2014 to 2018, apple imports to the Russian market decreased by 23% from 1.13 to 0.87 million MT.

Among the reasons for the decline in imports, analysts have cited the introduction of Russian counter-sanctions since August 2014 and the devaluation of the ruble, after which foreign products went up in price. The state support of Russian gardening also affected the state of the market. This writes RBC with reference to the data “Analysis of the apple market in Russia,” prepared by BusinesStat.

The change in the reporting period and the structure of imports by supplier countries. So, in 2014, Poland was the main supplier of apples to the Russian market with a share of 37.1%. After the introduction of the pro-bargo, which affected Polish supplies, Belarus became the key importer with a share of 51.4%.

“Supplies of apples to Russia from this country doubled in 2015 compared to 2014 and amounted to 518,000 MT. Russian experts expressed a reasonable opinion that deliveries were made across the Belarusian border from countries in which anti-sanctions were imposed. This was supported by the fact that after the embargo was introduced by Russia, the import of apples to Belarus increased markedly,” the study notes.

In particular, in 2014, Belarusian exports increased by 2.3 times – from 180,500 MT to 414,700 MT, and in 2015 another 76.3% compared to 2014, reaching 731,100 MT. During 2016 and 2017, the volume of Belarusian supplies to Russia decreased. Last year, imports of apples from Belarus to Russia amounted to 81,600 MT.

Last year, Moldova became the main supplier of apples to the Russian market with a volume of 245,800 MT(28.3% of total Russian imports). China ranked second in shipments, sending 128,900 MT of apples to Russia, or 14.8% of total imports. Third place in the ranking of supplier countries was taken by Serbia with a share of 14.5% (125,600 MT). The fourth place was fixed for Azerbaijan (9.5%, or 82,300 MT). Analysts stressed that despite all the efforts of the Government of the Russian Federation, apples from countries that fell under counter sanctions (Poland, Ukraine) continue to enter the Russian market under the guise of Belarusian, Moldovan, Serbian.

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Despite Record Apple Harvest, Russia Continues to Increase its Imports

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Import substitution, which is so much talked about in Russia, has so far not yielded tangible results in the field of horticulture. Despite the very rapid expansion of the area of ​​orchards and an increase in the volume of domestic production of apples, imports of these fruits continue to grow steadily.

In the first two months of 2019, Russia imported 11% more apples than in the same period last year. Moreover, the January volume of apple imports exceeded 161,000 MT and was the highest since 2015, when, by the way, they were comparable to these volumes.

In order to understand how much more apples Russia actually imports, it is necessary to take into account that since 2015 apple consumption in the country has decreased due to four consecutive years of falling real incomes of Russian citizens and the rise in prices of products due to the devaluation of the ruble and the increase in VAT on fruits.

Experts explain this phenomenon easily; the Russian apple is of an inferior quality to its imported counterparts, so the consumer is simply not interested in it. Therefore, Russian growers are forced to sell a significant amount of crop for processing needs at bargain prices. Fortunately, the domestic market for apple concentrate is still quite capacious, and even low, according to Russian growers, prices for industrial apple are relatively high for other countries, such as Ukraine, Poland and Moldova.

However, this situation calls into question the prospects for further investment in new gardens in Russia. Protective measures, as practice shows, can do a disservice to Russian growers. After all, consumers demand quality products, which they mostly cannot yet provide.

And according to east-fruit.com¸ even a ban on the supply of apples from the EU, the USA and Ukraine, which can give a really high-quality product, does not guarantee any protection. As soon as the apple re-export channel closes through Belarus, the import of apples to Russia from non-sub-Azerbaijan, Kazakhstan, Macedonia and Georgia immediately grows. These countries also became the leaders in the growth rate of apple supplies to the Russian market in the first two months of 2019.

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Russia’s Annual Greenhouse Tomato Production Reached 380,000 MT

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In the 2017-2018 campaign, Russia’s average production of greenhouse tomatoes amounted to 380,000 MT. The statistics have been provided by researchers of the marketing agency ROIF Expert in the report “Greenhouse Tomatoes in Russia: Maximizing Production”.

It is worth noting that the share of greenhouse tomatoes in the market has reached 45%. The main market trend has been the sharp growth in the share of tomatoes against the background of a reduction in the share of cucumbers. The gross tomato harvest in 2017-2018 grew by almost 25%, while the production of greenhouse cucumbers by only 0.2%.

According to a ROIF Expert, the most negative aspects affecting the development of greenhouse tomato production in Russia until 2023 will be the depreciation of fixed assets, the high capital costs for the construction of new greenhouse complexes, the increased competition between Russian and foreign suppliers in the vegetable market, or the pressure from federal retailers. Many will also be affected by infrastructure or logistics problems.

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More Than 1,100 Hectares of Apple Orchards to be Built in Stavropol Region

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Agrarians of the Stavropol Territory are planning to plant 1,136 hectares of apple orchards in 2019.

As the Minister of Agriculture of the Region, Vladimir Sitnikov is quoted:  “In 2019, we are planning to lay out 1,136 hectares. We never pledged ourselves to such a big project: usually it would be 400-500 hectares per year.”

In 2018, the production of apples in the Stavropol Territory amounted to 35,000 MT, exceeding the 2017 figures by 1,000 MT. The acreage of ​​intensive and super-intensive gardens in the region is about 3,120 hectares.

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Putin: Import Substitution in Russia is Temporary Phenomenon

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The import substitution in Russia is a temporary phenomenon, a temporary tool for adjusting the current situation, President Vladimir Putin said on Wednesday.

“The idea of import substitution itself is not universal and is not what we should strive for in the long run, because import substitution should not undermine competition. This is an extremely important thing,” Putin said at a meeting with women entrepreneurs.

“We should understand, that all this import substitution is a temporary phenomenon. I want you to understand this. This is a temporary tool to adjust to the current situation,” he stressed.

“We should aim at producing such products of such quality and at such a price that it is competitive not on our own, but on the world market,” Putin added.

According to him, import substitution is primarily related to ensuring the security of the country, for example, in the defense industry. As an example Putin mentioned the fact that Russia has begun to produce marine engines, engines for helicopters, and this is being done compulsorily.

“In some cases we did it and are doing it to support the domestic producer in difficult economic conditions, especially in the situation when our partners violate and distort competition by imposing different sanctions, which are politically motivated, as they claim, but in fact are based on the ambition to gain an advantage,” he added.

www.tass.com

Russian Apple Production is a Long Way From Self Sufficiency

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Despite efforts to become self-sufficient in apple production after the embargo, recent figures confirm that the country is far from being able to produce enough apples to meet domestic consumption.

According to the Ministry of Health, the average Russian consumes 50 kg of apples per year, yet, according to AB-Center, recent total production would only amounts to 5.8 kg per year per consumer. This amount includes all apples, including those for processing, so when it comes to the amount of apples for fresh consumption, the amount per person would fall even lower.

Although it seems like self-sufficiency is far from a reality, Rosstat has estimated that the total production of top fruits, a majority of these being apples, did grow by 15% in 2016. In addition, independent experts have reported that the share of imported products on shelves has, for the first time in many years, given way to Russian apples.

Although apple imports have decreased since the embargo, a recent report from UN Comtrade said that Russia is still number 3 on the list of largest apple importers in the world in 2016, with a share of 6%, totalling 678,600 mt of fresh apples. This amount had already reached 622,200 mt in the first 11 months of 2017.

In the first half of 2017, the majority of apple imports were coming in from Serbia and Moldova, with 32.1% and 26.2%, respectively. Other major suppliers include China, Belarus, Chile, Azerbaijan, South Africa and New Zealand. Bosnia and Herzegovina had also been a significant apple importer to Russia, but this is currently on hold after Rosselkhoznadzor placed a ban on the country following suspicions that they were exporting apples from Poland as their own.

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Russia Approves State Qid to Fruit and Veg Processors

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Russian Prime Minister Dmitry Medvedev has signed a decree which approves the list of agricultural products that will benefit from state aid granted to organizations involved in their processing. This was reported by the press service of the Russian government.

According to the document, the list includes, in particular, processed and preserved fruit and vegetables and other agricultural products.

“The approval of the list will allow the state to provide support in the development of agriculture, increasing the availability of credit resources for organizations and individual entrepreneurs devoted to the processing of agricultural products,” said the document.

Also, the report says that state support will be exclusively provided to organizations for which the sale of these products generates at least 70% of their annual income.

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Russia to buy $2.5B of Filipino agri produce

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Officials report that during bilateral discussions between President Duterte and Vladimir Putin, Russia committed to buy up to a staggering $2.5 billion worth of fruit, grains and vegetable from the Philippines.

Trade Secretary Ramon Lopez said the Russian side agreed “immediately” to a proposal for the importation of Philippine fruit and other agricultural products in the next 12 months.

“Their immediate estimate is $2.5 billion. That’s a number they [the Russian side] quoted,” the Cabinet official told Filipino journalists covering the Asia-Pacific Economic Cooperation (Apec) Leaders Meeting in Peru’s capital.

This dwarfs the $46 million worth of exports the Philippines currently ships to Russia every year, he said.

“We were talking of what they could buy from us, especially agricultural products, but nothing was specified. But I understand we supply them with a huge quantity of bananas… and mangoes. With these kinds of discussions, these present more trading opportunities between us,” Lopez said.

Lopez said Putin also offered to help the Philippines through investments in energy and infrastructure.

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