The share of imported vegetables in Russia may decrease to 10% in five years

Over the next five years, the share of imported vegetables on the Russian market may decrease from 16% to 10%. This forecast is given by the Center for Industry Expertise of the Russian Agricultural Bank. According to the forecast, in 2019, 558,000 mt of tomatoes and about 100,000 mt of cucumbers were imported to the Russian Federation, and by 2025 the import of these products may decrease to 347,000 mt and 36,000 mt, respectively.

According to forecasts of the Ministry of Agriculture, this year the production of greenhouse vegetables will increase by 6.1%, to 1.25 million mt year-on-year, which will be a record figure. The Center for Industry Expertise of the Russian Agricultural Bank expects that Russian operators of greenhouse facilities will continue to increase production by an average of 7% per year. And the consumption of fresh vegetables in the country will grow by about 1% annually and will reach 115 kg per capita by 2028. Today it is  109 kg per capita.

Producers of greenhouse vegetables applied to the Ministry of Agriculture with a request to allocate 5 billion rubles from the budget of incentive subsidies to compensate for the part of the costs. As noted in the association “Greenhouses of Russia”, options for supporting the greenhouse industry needs to be intensified, as companies are faced with a decrease in consumer demand and the negative impact of the COVID-19 pandemic. As a result, the profitability of greenhouse operators fell to 5-7%.

Putin Extends Counter-Sanctions Until End of 2021

Russian President Vladimir Putin signed a decree extending certain special economic measures against countries that have imposed sanctions on the Russian Federation until December 31, 2021. The document was published on Saturday on the official website of legal information.

The government has been instructed to ensure the implementation of the decree and, if necessary, make proposals to change the period of validity of these counter-sanctions.

In March 2014, due to the situation in Ukraine, the European Union and a number of countries, including the United States, Canada, Australia, Japan, Switzerland, New Zealand, Iceland, began to impose sanctions on Russia. In particular, it included sanctions lists of Russian individuals and legal entities. Restrictive measures included a ban on entry, freezing of accounts. In addition, the so-called sectoral sanctions were introduced: the assets of the companies falling under them were not frozen, but restrictions were imposed on medium and long-term lending.

In response, on August 6, 2014, Russian President Vladimir Putin signed a decree, based on which the Russian government imposed a ban on imports of a number of food products from the United States, the European Union, Norway, Australia, and Canada.

After the EU countries extended sanctions against Russia on June 22, 2015, on June 24, Putin extended the food embargo for another year. Subsequently, it was extended three times, most recently on June 24, 2019, until the end of 2020.

In June 2019, Putin extended counter-sanctions until December 31, 2020, and amended the norms of the original decree on counter-sanctions from August 6, 2014, and the decree from October 22, 2018, on counter-sanctions against Ukraine.

Kaufland creates Moldovan food brand

The international supermarket chain Kaufland has launched an ambitious project called “Vreau din Moldova” which translates to “I want Moldovan” in English and it is focused on supporting local producers in Moldova. This new product line will include Moldovan goods, which in the future may become especially popular with consumers.

The new brand will include both processed products and fresh goods such as dried fruits and nuts. For the latter, these products will come from southern Moldova, in particular the Gagauz region. It is there that the largest almond plantations are concentrated (approximately 1,000 ha), which is 70% of the total area of ​​almond plantations in the entire country. Additionally, the southern region produces walnuts and fruits such as plums as well as viticulture. Cooperation between farmers in the south tends to be more receptive compared to the central and northern regions of the country.

Moldovan almonds are currently exported to countries such as Romania, Iraq, and Azerbaijan. However, in the domestic market, Kaufland will be the first supermarket chain in which Moldovan almonds and products will be presented in a wide range and in large quantities.

Back in September, Kaufland-Moldova supermarkets started tasting and testing products in focus groups with consumers. The first contracts with Moldovan suppliers of nuts and dried fruits will be signed in February 2021, but only after the goods have passed quality certification (e.g., IFS, FSSC 22000) in Germany.

In 2020, the share of local products in Kaufland increased by 500 items totaling 3,700. Currently, the supermarket chain works with more than 100 Moldovan producers, one-third of which supply fresh vegetables and fruits. In the future, the bulk of these products will go through consolidators such as trading companies and agricultural cooperatives.

USDA Russia: Fresh Deciduous Fruit Annual Report

Apples are one of the most popular and affordable fruits in Russia and with domestic production forecast to decline, imports will rebound in the 2020/2021 MY. Many commercial pear growers are replanting their orchards to apples to take advantage of this growing demand. Russia is the second-largest importer of pears and a major importer of table grapes as local production for these two fresh fruits is insufficient to meet demand. However, imports of pears and table grapes are expected to decline as the economic crisis continues and consumer purchasing power declines.

Since 2014, Russia’s countersanctions have banned fresh apple imports from Europe and the United States. This coupled with extensive support from the Government of Russia for the care and planting of new orchards has propelled investment in horticulture in recent years. In 2019, the Government of Russia financed a 311 billion Ruble (US$ 4.2 billion) support program for Russian agriculture.

Despite all this, several factors continue to constrain the development of Russia’s horticultural sector. First and foremost, Russia’s horticultural industry still lacks productive plant material. The Ministry of Agriculture estimates that in 2018 Russia produced around 24 million plants (including 15 million seed fruit plants). At the same time, Russia imported 25 million plants in 2018 and 21 million plants during the first six months of 2019. Very few nursery farms cultivate planting material for commercial orchards, and as a result, the quality of the planting material in Russia remains inadequate in terms of yields, winter resistance, and drought and disease tolerance.

As the ruble continues to weaken, Russian horticultural producers continue to face very high costs for importing planting stock, and other related items for cultivation, such as crop protection agents, technology, and equipment. A lack of qualified agronomists is another factor holding back the industry.

The current Russian trend of eating healthy has led to greater fruit consumption. Because of the COVID-19 outbreak, more people are paying attention to their health and eating patterns are increasingly favoring natural, healthier foods. According to analysts, the demand for vegetables and fruits increased during the COVID-19 pandemic. At the same time, the consumption of fruit is closely connected with household income and market prices. Russian disposable income has been declining since 2014, although there was some growth in 2018 and 2019, it is expected to drop again. In 2020, the decline in disposable income is forecast at 3 percent, according to the Ministry of Economic Development.

Full USDA report, containing information on the Russian harvest, import and consumption of apples, pear and grapes.

Republic of Georgia: Fruit and Nut Exports Soaring

According to the National Statistics Service of Georgia (Geostat), the volume of exports of fruits and nuts from Georgia amounted to $69.68 million in value, from January through August 2020. The share of fruits and nuts in Georgia’s total exports for the reported period amounted to 3.4%.

The major part of exports accounted for hazelnuts – $28.30 million, peaches, including nectarines – $20.07 million, tangerines – $3.84 million, blueberries and other berries – $3.79 million, bananas – $2.28 million, oranges – $1.82 million, apples – $1.63 million, lemons – $1.15 million and figs – $950,000.

Compared to the same period last year, the export of fruits increased by 45.2%. In the first six months of 2019, the volume of exports of fruits and nuts amounted to $29.19 million. Their share in the total volume of Georgian exports was 1.6%.

Georgia exported 19,86 mt of apricots, cherries, peaches, plums, and sloes to Russia in a total amount of $19.3 million from January through September 2020.

From January through September 2020, the foreign trade turnover between Georgia and Russia exceeded $934.6 million, which comprises 11.5% of the total trade turnover of Georgia.

During the reporting period, Georgia exported products worth $308.6 million to the Russian market, which is 12.8% of total exports.

Russia’s Vegetable Production Has Grown by 6%

According to the operational data of the regional governing bodies of the agro-industrial complex, as of October 27, 2020, about 5.3 million mt of vegetables have been harvested in Russia, which is 6% more than in the same period of 2019.

In winter greenhouses, 1.1 million mt have been grown, which is 18.2% more than last year (930.5 thousand tons). The harvest of greenhouse cucumbers amounted to 647 thousand mt (+14.3%) and that of tomatoes to 410.1 thousand mt (+18.6%). In spring greenhouses, 1.13 million mt of vegetables have been harvested during the period at hand. Lipetsk, Moscow, Volgograd, Kaluga, Novosibirsk, the Krasnodar and Stavropol Territories and the Republics of Karachay-Cherkessia, Tatarstan, and Bashkortostan are among the top ten regions leading the production of vegetables in winter greenhouses.

As of the above date, 4.15 million mt of vegetables have been harvested in the open ground. The biggest share corresponds to onions (22.3%), tomatoes (18.5%), cabbage (17.8%), and carrots (13.6%).

These results are a direct consequence of the support measures implemented by the state, which have contributed to the sector’s development. Within the framework of the incentive subsidies, the constituent entities of the Russian Federation have the right to choose priority areas, which allows the regions to provide additional support to growers engaged in the production of vegetables. There are also mechanisms of grant support for producers and cooperatives and a set of other measures being implemented.

Ukraine will Harvest Less Potatoes and Vegetables

Gross production of potatoes in 2020 is expected to reach 20 million mt, vegetables – at the level of 9 million mt against 20,3 million mt and 9,7 million mt, respectively, in 2019 (data from the State Statistics Service).

This is reported by the portal “Economic Truth”, quoting the words of the Deputy Minister of Economy of Ukraine Taras Vysotsky.

Two concepts of the Ministry of Economy have been submitted to the Cabinet of Ministers for consideration: the concept of the industrial potato development program for 2021-2025 and the concept of vegetable growing until 2025, which will subsequently be submitted to a government meeting.

“In 2021, it is planned to introduce state financial support for the installation of drip irrigation systems and the purchase of materials necessary for such work. A separate program will also be introduced to support the potato growing industry in Ukraine, ”Vysotsky wrote.

Russia is the World’s Fourth Largest Banana Consumer

Russia ranks 4th in the world in terms of banana consumption per person per year, and banana imports to Russia are forecast to continue to grow in the coming years. This was reported by Clinton Machado, head of Maersk’s Banana and Pineapple Shipping Division, at the 17th International Banana Convention.

Latin America remains the main banana exporter. The combined share of all supplies from Latin American countries is 73% of all exports. Most of the bananas grown in Latin America are exported to the United States and Europe.

“In 2019, global banana exports reached 20 million tons, up 5% compared to 2018. The Philippines and Ecuador remain the largest banana exporters in the world,” said Clinton Machado.

The main importing countries of Philippine bananas are China and Japan, but exports to these countries decreased slightly in 2019 due to the opening of trade between China and Cambodia. According to the Ministry of Agriculture of Cambodia, the export of bananas to China during the first five months of 2020 amounted to 121 thousand tons, and by 2021 the country plans to double the volume shipped.

“According to the forecasts of the Food and Agriculture Organization of the United Nations (FAO), the world’s banana production will increase to 126 million tons by 2029,” Clinton Machado added.

India is the world’s largest banana producer, but most Indian bananas are intended for the domestic market. According to Clinton Machado, government investment in the industry has allowed Indian producers to export more of their products, and if this initiative is successful, India will be able to supply bananas to the Middle East and Mediterranean regions.

Russian GDP Growth of 2.7% in 2021 Suggested by Conservative Outlook, Says the Economic Development Ministry

The conservative scenario of Russia’s macroeconomic outlook suggests GDP growth of 2.7% in 2021, and 2.9% in 2022, with further stabilization at the level around 2.5% amid persisting lower business activity in a number of sectors, according to the country’s social and economic development outlook for 2021 and the planned period of 2022 and 2023 presented by the Economic Development Ministry.

According to the base case scenario of the outlook, Russia’s GDP will contract by 3.9% in 2020, and grow by 3.3% in 2021, 3.4% in 2022, and by 3% in 2023.

“From the viewpoint of domestic conditions, the conservative scenario suggests lower business activity persisting long in the sectors, whose activities were restricted in response to the novel coronavirus infection spread. Meanwhile structural changes in consumer demand, both global and inside Russia, will slow down the recovery of such sectors as entertainment and leisure, tourism, personalized consumer services,” according to the outlook.

The conservative scenario “is based on the assumption that the sanitary and epidemiological situation in the world will become less favorable, a protracted recovery of the global economy and structural slowdown of its growth rates in the mid-term due to the aftermath of the novel coronavirus infection spread.” The base case option depicts the most probable scenario of Russia’s economic development considering the expected external environment and the economic policy measures being taken.

“In the conservative option of the outlook the global economic recession triggered by restrictions imposed in the biggest countries will deepen the structural problems accumulated before the pandemic,” the ministry emphasized.

Among them are a high debt burden in developed states and a number of emerging economies, a slowdown of global trade growth due to mounting trade frictions between the largest countries, slow growth of labor efficiency, an increase of global inequality. “Amid this environment global economy will be recovering slower than suggested by the base case scenario,” the outlook said.

The conservative option of the macroeconomic outlook also suggests oil prices in the range of $43-45 per barrel in the mid-term amid weak energy demand.

“Weak demand for energy resources will put additional pressure on global crude oil prices. That said, the OPEC+ agreement will continue influencing the oil market, the same as output reduction in the US and the countries with high production costs. In those conditions, oil prices are projected in the range of $43-45 per barrel in the mid-term in the conservative scenario, which is lower than base-case parameters,” the ministry explained.

Moreover, the accumulated corporate losses in the conservative scenario will restrain the recovery of profits and, as a result, of investment activity. “Amid this environment growth rates of fixed investment are projected at the level of 3.7% in 2021 and around 4.5% in the mid-term,” according to the outlook.

“Considering more moderate, than in the base case scenario, economic growth rates, growth rates of real disposable income of households in the conservative option are expected in the range of 1.6-1.9% in the mid-term, which will have a restraining effect on consumer demand,” Russia’s Economic Development Ministry said.

It estimates the growth of retail trade and charged services to consumers in 2021 in the conservative scenario at 4.5% and 5.6%, respectively, whereas in 2022-2023 both will continue growth by 2-2.3%.

China Becomes Russia’s Biggest Fresh Produce Market

Data from the Agricultural Export Center of the Russian Ministry of Agriculture show that as of September 20, Russia exported 2.67 billion US dollars worth of produce to China, experiencing an increase of 27% over the same period last year. China is the largest buyer of Russian produce, accounting for 14% of total agricultural exports from Russia.

At the same time, China is also actively exporting produce to Russia. In early September, 906 tons of fresh vegetables were successfully shipped to the Zabaikal region. Fresh vegetables exported to Russia include eggplants, radishes, cucumbers, and zucchini. 275 tons of fresh garlic, 400 tons of peppers, 132 tons of onions, 44 tons of carrots, and 33 tons of ginger were exported.