Group of deputies and senators are developing draft of the bill, that may prevent Russian food retailers from direct imports from abroad. According to the creators, chains wrongfully prefer foreign suppliers to domestic ones, which creates damage to the Russian farmers. Direct import by retailers are executed by larger groups, which allows them to reduce prices on shelves. Analytics predict price increase, if the law comes to power. Spokesman for the initiative is Sergey Lisovsky, deputy chairman of the agri-food policy and environmental management committee at the Federation Council of the Russian Federation.
Russian Food Ban
South Africa main supplier citrus to Russia
South Africa has become the main supplier of fruit, particularly citrus, to Russia. About a quarter of all oranges on the Russian market come from South Africa. Since the trade between the nations was initiated twenty years ago, not a single shipment has been rejected on phytosanitary grounds, according to Mikhail Fateev, head of the food and agriculture department of the Russia-RSA Business Council.
South African growers may have a problem, Technical Regulations for “Food production labeling” introduced by Eurasian Economic Commission and due for full enforcement in Russia from February 15, 2015, are difficult, expensive and in some cases impossible for implementation by SA Fruit industry. It is technologically not possible to carry out EAC labels sticking in ports of shipment without destruction of pallets prepared for long oceanic travel. Neither it’s possible to stick labels on cartons at packing houses: Fruits are packed for exports without correlation to a specific market.
Russia postpones lifting sanctions
Russia postponed the plan to partially lift the ban on pork. The Russian inspection planned on lifting the restrictions on the export of meat, meat products and potatoes for France, Hungary, Italy, Germany, Denmark and the Netherlands, but those plans have now been put on hold. The head of the inspection says Russia wanted to take a step towards resolving the conflict, but the EU does not appreciate this step. The European Commission says there’s been no progress in the talks with Russia, and that there hasn’t been contact with Russia. Last week, the EU extended the sanctions against Russia by half a year.
EU extends sanctions for Russia
The European ministers of Foreign Affairs have reached an agreement on extending the sanctions against Russia. There was some uncertainty on the Greek point of view beforehand, but in the end the Greek minister acceded. The government leaders still need to have their say on the agreement. Moldova, meanwhile, is negotiating with Russia about resuming the apple export. And Serbia and Russia want to work together to combat illegal export.
Various countries are interested in establishing a free trade zone with the EEU, the economic union of a number of former Soviet republics, including Russia, Kazakhstan and Belarus. Israel is also interested in such an agreement. The negotiations are still running.
At the same time, Belarusian president Lukashenko is threatening to leave the EEU if the agreements within the union aren’t honoured. According to the president, it’s unacceptable for a trade war to arise between members, referring to disagreements between Russia and Belarus on food import and export. According to Lukashenko, the union is purely economic, and that this is also Kazakhstan’s point of view. By saying this, he suggests that Putin wants to use the union for political purposes.
Russia opens border to Dutch and German seedlings
After the Russian phytosanitary service announced that the borders would open up for Finnish seedlings earlier this months, export of seed potatoes from the Netherlands and Germany is now also allowed. The inspection service examined samples of the seedlings in December of last year, but found no objections. The borders will now open for 12,847 tonnes from the Netherlands and 18,092 tonnes from Germany.
EU pork exports to Russia may soon resume
Some pork product exports may soon resume from the European Union (EU) to Russia. That announcement came after a recent meeting between the EU Commission in charge of the veterinary and Sanitary and Phytosanitary (SPS) issues and Russian counterparts in Berlin. The Russian embargo was implemented in August.
The European Livestock and Meat Trades Union (UECBV), welcomes these outcomes, a result of months of dialogue, as the first concrete agreement between the EU and Russia on improving their trade relationship in the livestock sector. They have the potential to restore confidence between the two regions and to provide support to the EU pork market.
Thanks to this constructive dialogue the EU pig farmers and pork industry may restore up to around 40% of the exports to Russia. EU Member States will now start working on the technical specifications for a resumption of the export of some specific products.
Russia will import pork from Italy, Germany, Denmark, France, Hungary and Netherlands, clarified Rosselkhoznadzor Spokeswoman Yulia Trofimova.
Since January 2014, EU Member States have not been allowed to certify live pigs and the products thereof for export to Russia due to a technical issue regarding the veterinary certificate caused by the occurrence of African swine fever in certain Member States (Baltic States, Poland). The EU pig farmers and pork industry lost revenue and turnover because of SPS barriers for export to Russia that, in 2013, absorbed around 25% of the EU pork sector exports or 3% of the EU pork production.
Russia’s PM announces import substitution efforts in food industry to continue
The prime minister of the Russian Federation, Dmitry Medvedev, said, during the Gaidar Forum 2015, that plans for import substitution in various production industries will be adopted by mid-2015.
“By the end of the first half of the year, plans for import substitution in the production industry should take effect,” Medvedev said. He drew special attention to the large number of exports, including non-commodities.
The agriculture production, including Vegetable production, will be the one of the most important directions for developing Russia’s agro-industrial complex, the prime minister said. He also confirmed new changes to state programs, including speeding up the development of the agricultural complex. Fruits and Vegetables producers are to receive additional support.
“I’m adding that Russian agrarians have already made significant progress,” he said.
The Gaidar Forum 2015 was an event that gathered leading scientists, politicians and representatives of global financial and business elites to discuss the global issues, according to the forum’s website. The forum also provides international participants with information regarding the key trends in Russia’s social and political development, state of business environment and investment climate.
Russian importers hopeful low volume will boost prices
For exporters outside of the European Union, Russia had the potential as a lucrative market because of the ban on European products there limited competition. But the falling value of the Russian ruble has made it difficult for shippers sending fresh produce to Russia to get much of a return this year. Russian importers, who are looking to boost shipments from non-European countries, are also feeling the effects of a falling currency value. But Russia’s importers believe that good times are still ahead once they get out of the current situation.
According to Mohammed Mohammedli of Akhmed Fruit Company in Russia, the Russian ban on European goods cut 20 percent of what Akhmed Fruit usually imports. He noted that although a significant amount of what his company imports every year is now gone, the absence of that much product can be compensated by looking to other countries, like China, Turkey, Egypt, Pakistan and Morocco to send more fresh produce.
“We’ve explained to the exporters we work with that they can see better results if they decrease the volume of what they’re currently shipping,” said Mohammedli. “With decreased volume we can get prices back to normal, but we could see bigger losses if that doesn’t happen.” Depending on the commodity, Mohammedli thinks a cut in volume between 50 and 80 percent is warranted, though for staples, like onions and potatoes, that kind of cut is not necessary to boost prices.
“Products like cherry tomatoes, some salads, strawberries and grapes – could be limited because consumers don’t find them essential,” said Mohammedli. Up until this months, Russian importers would have normally taken more essential products, like vegetables from Europe. With the ban, they’ve been relying on Egypt, Turkey, China and India to supply mainly vegetables, and Argentine and Chilean exporters have provided mainly fruits like apples and pears, grapes.
While solutions to the economic problems Russia faces and the political problems it has with Europe and the United States will take some time, Mohammedli believes that the Russian fresh produce sector will come out stronger after things have settled. He hopes the value of the local currency will improve over the first three months of 2015, and the contacts he and other importers are making outside of Europe will give them more options once the market is again open to Europe. In fact, the longer Russian importers have to make do without European products, the harder, Mohammedli believes, it will be for European exporters to sell their products in Russia once the ban is lifted.
“The countries Russians are working with are making contracts in rubles, and once the currency situation is resolved, Russian importers will become comfortable working contracts this way,” said Mohammedli. “Both Europeans and Russians are losing money, and there will be some companies that go bankrupt, but some will survive and continue their business like always. New agreements are being made with countries outside of Europe, so it will be very difficult to go back to European goods after the ban is lifted”.
Russia could remove temporary Restrictions on Albanian food supplies
Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) by the end of January could remove temporary restrictions on supplies from Albania, the service’s assistant to the Head of the service Aleksey Alekseyenko said according to a report by Ekonomika Sevodniya.
“We are familiarizing ourselves with all the materials being presented to us, after which there will be the signing of a bilateral contract. I think, in reality, by the end of January we will sign it and supplies will be established,” Alekseyenko said.
He also underlined that Albania had an interest in supplying its own goods to the Russian market.
On December 8, Rosselkhoznadzor found fake Albanian phytosanitary certificates when receiving food shipments on their way to Russia. After that, the country had suspected Albania of covering supplies and granting fabricated certificates for products originating from countries of the EU.
Soon after the Ministry of Agriculture created a high degree of protection, supplies to the Russian market resumed. Rosselkhoznadzor was also given a list of facilities qualified to certify plant products.
Export of vegetables and fruits from China to Russia increased by almost 20%
The volume of exports of Chinese fruits and vegetables to Russia via Manzhouli border crossing point (Northern China) in the first 11 months of 2014 in terms of value amounted to $135 million, that is 19.4% more than during the same period the last year. The volumes of exports of fruits and vegetables form China to Russia increased in annual terms by 27.2% to 318 thousand tons for 11 months. Manzhouli is the largest customs checkpoint on the Russian-Chinese border. It accounts for more than 60% of the total land land shipments between two countries. There are simplified customs procedure for export of vegetables and fruits to Russia.
China is developing its export of agricultural products to the Russian Federation. This year several special economic zones, specializing in fruit and vegetable exports, were created on the border with Russia.