Turkey sanctions

The West Mediterranean Exporters Association (BAIB) reported that they had received their first order of fresh fruit and vegetables from Russia after attending the WorldFood Moscow Exhibition, organised between the 12th and 15th September.

In August, Russian President Vladimir Putin and Turkish President Recep Tayip Erdogan re-established normal relations between the two countries, putting an end to a year of hostility, although the ban on import of some fruits and vegetables to Russian from Turkey has not been lifted yet.

BAIB president, Mustafa Satıcı, stated that they had attended the WorldFood Exhibition to raise awareness of Turkish produce as the fresh fruit and vegetable sector recovers and sanctions on Turkish exports are lifted.

Satıcı added that Russian companies had shown an interest in a wide range of fruit and vegetables including tomatoes, peppers, courgettes, pomegranates, oranges and lettuce.

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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.

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Russia’s Economic Development Ministry said in its report for January – June 2016 that Turkey lost $209 mln in the Q1 of 2016 due to the food embargo introduced by Russia on certain imports to the country.

“Import of goods prohibited from January 1, 2016, to enter the Russian Federation from Turkey, in the Q1 of 2016 compared to the same period in 2015 decreased by $209.1 mln,” the document said.

The Russian government banned supplies of a number of food products from Turkey to Russia from January 1, 2016. Fruits (oranges, tangerines, grapes, apples, pears, apricots, peaches and nectarines, plums, wild strawberries and strawberries) and vegetables (tomatoes, cucumbers, cauliflower, broccoli, yellow onions) were banned. The restrictive measures were adopted after the Turkish air forces shut down the Russian Su-24 bomber over the territory of Syria.

As TASS reported earlier, Veterinary and Phytosanitary Services of Russia and Turkey are going to hold consultations on removing restrictions in trade of Turkish agricultural products.

However, earlier Agriculture Minister Alexander Tkachev told journalists that Russia is in no hurry to open its market for Turkey, because it is necessary to support domestic producers.

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