Russian Food Ban

Supplies to retail chains frozen because of the collapse of the ruble

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Prices in shops cannot follow ruble devaluation: before retailers dictated terms to suppliers, now wholesalers lay down terms to retailers. If retailer do not want to increase purchase prices, deliveries of products may be suspended.

Maria Kurnosova, representative of the hypermarket chain Auchan, reported that part of the suppliers, both food and non-food categories, sent a letter that they would stop the shipment of goods, if the retailer did not increase purchase prices.

Some producers reported that a similar situation occured with Metro Cash & Carry: part of their suppliers stopped shipments or warned about this.

Anastasia Orlova, representative of the retail group “Dixy”, said that there were no breakdowns in the supplies, although some suppliers sent requests to increase purchase prices, they also refused to participate in the discount promotions.

Despite the penalties (up to 50% of the contract value), many suppliers suspended work. Small companies, unlike large multinational companies, cannot supply at a loss for so long. About 70% of the suppliers are in the process of negotiations, and if after a day or two retail chains refuse to accept reasonable prices, deliveries may stop at all, according to the head of the association “Roschaykofe” Ramaz Chanturia. “Empty shelves will cause panic among the population”, so retailers are likely to make concessions, he said.

Producer of fish and seafood “Agama” informed retailer about price increase in proportion to the increase of the dollar on Tuesday, said Yuri Alasheev, chair of the board of directors, they gave retailers a week for approval. He said, that most networks responded “quite calm”. “I think the situation will be clarified by Monday, when retailers will respond to our letter”, said Alashaev.

Wine importer Simple stopped selling wine for a while, it is not possible to order drinks on their website at the moment. Online assistance of the website confirmed that the sales were frozen because of the economic situation, and the problem would be resolved in a day or two. Anatoly Korneev, vice president and co-founder of the company, said that this was a “temporary measure”.

Andrew Agarkov, commercial director of the supplier Uvelka (buckwheat and rice) said that they continued supplies to retailers with the old purchase price and would raise prices in February according to the plan after the negotiations with retailers.

With the constantly growing currency rate there is no time for neg long negotiations on the revision of the price, although there is a rule that it should take 45 days, according to Dmitri Leonov, deputy chairman of the association “Rusprodsojuz”.

www.top.rbc.ru

Rosselkhoznadzor officially withdraws re-export allegations against Switzerland

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Following negotiations with a Swiss Ambassador, Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) announced that the service had officially withdrawn allegations against Switzerland over re-exporting food products from banned Western countries to the Russian.

Embassy representatives provided agency officials with documents confirming the legality of their deliveries.

Rosselkhoznadzor’s concerns stemmed from an increase in the amount of supplies shipped by Switzerland. Some shipments had doubled, whereas shipments of apples had increased by as much as 400 times compared to the volumes shipped from Switzerland prior to Russia’s ban.

www.fruitnews.info

Product assortment and supply of imported fruits and vegetables are reducing in Russia

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Because of the instability of exchange markets and ruble devaluation, suppliers are forced to review the assortment every day and reduce supplies of vegetables and fruits from other countries.

Last week the assortment of fruits and vegetables decreased by 20% on average. Suppliers are ready to stop importing a number of niche vegetables such as cherry tomatoes, zucchini, radishes and some kinds of cabbage.

Situation with fruits is a little better. Citrus, bananas, apples and exotic fruits remain the main fruit imports, as on the eve of New Year holidays, this product is in high demand. However, the geography of deliveries changed. Now Russian importers mainly supply relatively cheap citrus from Turkey, while a month ago the main supplier of citrus was Morocco.

www.freshmarket.ru

Price increases of up to 10% expected

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The Russian Ministry of Economic Development expects prices for food to go up by 9.5-10%. According to the ministry, the boycott is responsible for 2.5% of price increases. The decreasing value of the rouble would account for price increases of 4%. Rosstat, the Russian statistics service, calculated that prices went up by 8.5% this year. In November, prices increased by 1.3% on average. Fruit and vegetables got 8.7% more expensive.

www.freshplaza.com

 

Russia rejects shipment of fruit

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The international market for pears and apples is changing. The decrease in the consumption of fruit in Europe and the veto decreed by Putin on the West are changing the economies of large blocks and market flows.

Russia is a prime example of this. On Tuesday, the Russian government devalued the ruble by 5.4%, which has accumulated a depreciation of 52% since early August, when the trade war with the EU and its allies began. This scenario is generating widespread losses in the Russian economy and its effects are starting to be felt in the fruit sector.

Importers of Argentine fruits are unable to meet their commitments because of the deterioration suffered by the local currency in recent times. “They close their agreements with the exporters in dollars and receive rubles for their sales. It is not difficult to understand the crisis they are experiencing,” confided one of the market participants when asked about the issue.

This week a ship with 43 containers of more than 700 tons of apples and pears from the Rio Negro Valley and Neuquén was rejected in Vladivostok, a port city located in the Russian Far East Pacific. Argentina’s Chamber of Integrated Fruit Growers (CAFI) confirmed that the importer failed to pay the freight and port services and therefore the fruit had been rejected.

“The problems that lie ahead with Russia are very complex for the Valley,” said Marcelo Loyarte, manager of CAFI. The official said that the ruble’s devaluation “is hitting the regional fruit producing sector as the dollar is anchored at 8.5 pesos here and internal costs are growing.”

The high expectations about the Russian market are evaporating as the harvest in the southern hemisphere approaches and Putin’s economic problems deepen. Part of these problems are due to the drop in international oil prices. Russia, one of the largest exporters of oil in the world, depends on oil sales. Hence, the 35% fall in the price of a barrel of oil will significantly affect the country. The acceleration of the devaluation of the ruble looks to mitigate the negative effects of this economic scenario.

The Rio Negro Valley exports an average of 90,000 tons of pears and apples to this market per year. Exporters are very concerned as Argentina’s exportable supply loses competitiveness in a market that has already devalued its currency by more than 50% in just a couple of months. They wonder if Russian imports this season will ratify the historical purchase volumes and if prices will be good enough to cover the costs in the Argentine market.

www.freshplaza.com

Russia boycotts Albania

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Export from Albania is added to the Russian ban. Russia saw Albania as a possible transit hub for illegal produce from Europe. The documents handed to Russia by Albania reportedly contained traces of fraud, after which Russia closed the border. Albania was the first country, whose produce is banned because of re-export. Switzerland and Macedonia may be the next.

www.echo.msk.ru, www.freshplaza.com

7 distribution centers to open in Russia

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A new conception of production and processing of agricultural products has been developed by specialists of the Ministry of Agriculture and Processing Industry of the Krasnodar Krai. According to the press service of the ministry, there are plans to create at least seven of such centers in the Krasnodar Krai.

“Today, already the Krasnodar Krai is first among the subjects of the Russian Federation in terms of production volume of Fruits and berries and is in third place by production of Vegetables. An additional increase in the production of Fruit and Vegetable products in Kuban is hampered by the lack of an established system of preparation and implementation,” according to the press release.

In 2010, there were already more than 30 storage facilities in the Krasnodar Krai for Fruit and Vegetable products and five wholesale distribution centers with a total capacity of 145 thousand tones.

This measure, according to representatives of the executive and legislative branches of Kuban, will be the basis for a decent infrastructure program of import substitution.

www.freshplaza.com

Russians may spend up to 40% of the expenses on food

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Russians are currently spending about 36 percent of all the expenses on food, but many specialists forecast that this number will grow up to 40 percent. The Russians have started saving and changing their shopping preferences to discount and convenience stores.

According to the study “Russian Food Retail: Current Situation and Prospects”, conducted by VTB Capital, the number 40 percent is significantly higher than the highest figure in European countries. For example, in Germany, the UK and Italy it is about 12-13 percent, in Poland and Turkey it is about 23 percent.

According to the same study, imported food products amount to about 20 percent. As for the fruits the number is about 40 percent, for vegetables it is less – 25 percent.

“One in four consumers now shops at discount and convenience stores,” Ilona Lepp, director of work with retail chains of Nielsen Eastern Europe.

At the same time, the increase in revenue of Dixy retail network (mostly convenience stores) is 29.5 percent in October. During the first 10 months of the year, the increase in revenue was 25.8 percent. The similar situation is with the Russian retail network Magnit – the increase in revenues is a 36.14 percent increase in October, and 30.66 percent increase for the first 10 months of the year. Retail representatives said that they did not noticed consumption decrease.

In July, food inflation in Russia was recorded at 11.4 percent, according to Russia’s Federal State Statistics Service and confirmed by Infoline-Analytics.

www.fruitnews.info

Euro exchange rate to ruble surpasses record high

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The official dollar rate for Friday has increased by 1.24 rubles up to 47.66 rubles, the rate of euro has increased by 1.72 rubles up to 59.62 rubles – that is a historic record. The dollar-euro basket (0.55 dollars and 0.45 euros) amounted to 53.04 rubles.

On Thursday, the ruble fell to its minimum for the last three weeks as a reaction to OPEC meeting. The reason for the weakening of the ruble is decreasing oil prices. Brent cost fell below $76 per barrel.

Representatives of several OPEC countries – Saudi Arabia, UAE, Kuwait and Qatar – said on Wednesday that they would not propose decreasing the volumes of oil production at the meeting. As Reuters reports, according to some analysts, if the OPEC countries did not agree on the significant reduction of oil production, oil price could fall to $60 per barrel.

According to expert consulting firm IHS Brushan Bahri, it is unlikely that OPEC will agree to reduce oil production significantly, although there is some possibility of surprise too.

www.vedomosti.ru

Rosselkhoznadzor asked Belarus to halt transit shipments destined for Kazakhstan and other countries

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On Monday, Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) asked Belarus to halt transit shipments of food products through the territory of Belarus, destined for Kazakhstan and other countries, starting from November 30. The purpose of such measures is to stop supplies of banned products to Russia from the EU, USA, Canada, Australia and Norway. Rosselkhoznadzor suspects that transit shipments through Russia from Belarus to Kazakhstan may partially stay in Russia. Since Russia, Belarus and Kazakhstan are in the Customs Union, shipments between these countries do not undergo customs clearance, so there are no accurate estimates of products destined for Kazakhstan that stay in Russia. But the results of random inspection at the border of Belarus and Russia have shown that it is about 20% of all food products.

www.vedomosti.ru