Fruit and Veg Prices Rising Much Faster in Russia Than in the EU

Between January and May 2018, food products became 2.1% more expensive in Russia, while in the European Union, the same products saw prices grow by just 1.1%, according to the Federal Statistics Service (Rosstat).

The most notable difference was recorded in the price of vegetables, which grew by 14.4% in Russia, while in the EU they only increased by 2.7%. Meanwhile, fruit prices rose by 9.3%, while in the EU, they only increased by 6.7%.

It is worth noting that in 2017, the picture was the reverse, with prices in Russia rising more slowly than in the EU. Last year, food prices in Russia grew by 0.7%, while in the EU they increased by 2.6%.

EU Extends Sanctions on Russia

The EU on Thursday extended sanctions against Russia for another six months over Moscow’s actions in Ukraine.

The Council of the EU unanimously adopted the extension on the restrictions, which were originally imposed in July 2014 following Russia’s annexation of Crimea, citing Moscow’s “actions destabilising the situation in Ukraine.”

The sanctions target the financial, energy and defense sectors, as well as the area of dual-use goods — products that can be for either military or civilian use. The measures include limiting access to EU markets for five major Russian majority state-owned financial institutions and their majority-owned subsidiaries, as well as for three energy and three defense companies.

The sanctions also entail a ban on arms trade and curtailing Russian access to certain “sensitive” technologies that can be used for oil production and exploration.

EU leaders have said that the sanctions will be lifted once all sides in Ukraine commit to the ceasefire agreed in the Minsk accords.

Russian Apple Imports 2017 up for the First Time Since 2013

In the period from 2013 to 2017, the import of apples fell from 1.40 to 0.71 million MT, according to the data of the report “Analysis of the apples market in Russia” prepared by BusinesStat.

“The main reason for the reduction in imports in these years was Russia 2014 reaction on the sanctions, boycotting the import of agricultural products (including apples) from the EU, USA, Canada, Australia and Norway”, the publication reads.

It is specified that the growth was registered for the first time in five years in 2017 by 2.7%. In addition, over this period, the structure of imports has changed in the supplier countries. So, in 2013 and 2014 years. The main supplier of apples to the Russian market was Poland, whose share in total supplies was 37.2 – 50.3%. Import from this country stopped due to the decision to ban the import of fruit by the Rosselkhoznadzor on August 1, 2014.

The main importer in 2015 was Belarus with 518,000 MT(51.5%). According to statistics of BusinesStat, the volume of supplies of Belarus has increased 4.5 times since 2013. Market participants expressed the opinion that the most likely reason for the increase in Belorussian supplies was the re-export of apples from other countries.

In the following years (2016-2017), the supply of apples from Belarus to Russia declined and in 2017 amounted to 58,400 MT.

Russia’s Focus on Organic Agriculture

On 29 May 2018, a press conference took place in the Russian Federation, dedicated to the 5-year anniversary of the National Organic Union. Participants discussed the latest developments of organic products in Russia and expressed their expectations of the draft Federal Law on “Organic Products, Production and Marketing”. However, some problematic issues were raised as well. The Organic Union on 23 and 24 June will hold another conference on organic agriculture in Suzdal.

In just ten years (2005-2015), the area of organic agricultural land in Russia has increased from 6,900 to 385,140 hectares, which amounts to 0.2% of the total agricultural land in the country. But not all certified organic land is under cultivation, which is partly due to the fact that certification takes about three years and farmers do not start using the land until they can produce and sell certified organic products.

Most organic farms in Russia are small and medium of size (50-1,500 hectares), while the biggest share of the organic production is done by large holding companies such as Agrivolga, Arivera and  Savinskaya Niva. More than 60 Russian organic producers have international organic certificates from the European Union and of the National Organic Program of the US.

Sharp Increase of Turkish Fruit and Veg Exports to Russia

According to the Association of Exporters of Fresh Fruits and Vegetables (UYMSIB), the export of fresh fruits and vegetables from Turkey grew by 25% between January and April this year, compared to the same period in 2017, and reached a value of $794 million (compared to $635 million a year earlier). According to an article published by Anadolu Agency, solving the problems with Russia played an important role in this rise of Turkish fruit and vegetable exports.

Other factors contributing to growth were the greater trust in Turkish products in European markets, as well as access to new markets.

During this period, a total of 1,557 million MT of fruits and vegetables were exported, which is 17% more than the previous figures, the association said.

During the same period, exports to Russia grew by 125%, from $90 million to $202 million, and the volume increased by 91%, reaching about 315,000 MT.

According to UYMSIB, Russian exports accounted for 70% of Turkey’s export volume, with a value of $112 million out of $159 million.

Egyptian Potatoes Readmitted to Russian Market

From 6 June 2018, Egypt is again allowed to supply potatoes to Russia from eight regions. A ban had been introduced due to cases of brown rot, as reported by the official Egyptian news agency MENA, citing the words of the Minister of Industry and Trade of Egypt, Tarek Kabila.

“The Russian authorities have agreed to lift the ban on the import of Egyptian potatoes from eight regions; imports from these areas are allowed again from 6 June,” T. Kabil said.

He explained that such a decision became possible following the negotiations of the Russian-Egyptian intergovernmental commission, which met in Moscow in late May. There were also a series of visits, and moreover, Egypt sent Russia the results of checks on Egyptian agricultural products, which confirmed their compliance with international standards.

Russian Economic Recovery under Way in April Despite Sanctions

Retail sales in Russia picked up in April, while real wages growth exceeded expectations as the unemployment rate fell, suggesting an economic recovery was under way.

The monthly set of data released by the Federal Statistics Service, or Rosstat, indicated that sanctions that the United States imposed on Moscow in early April had little immediate impact on Russia’s fundamentals.

After two years of recession caused by a slump in oil prices and Western sanctions, the Russian economy is now recovering along with oil, the rouble has generally stabilized and global commodity prices remain favorable for an economy dependent on exports of energy and raw materials.

Retail sales, the key gauge for consumer demand, the primary driver of economic growth, were up 2.4 percent year-on-year in April after a 2.0 percent rise in the year to March. (more…)

Russia’s National Horticultural Union Asked to Ban Imported French Fries

Russia imported 94 percent of its French fries in 2017 but has bought the necessary equipment to produce it locally, Russia’s National Horticultural Union head Sergey Korolev said. The new equipment allows production of 110,000 MT a year, while the market is 106,000 MT. That is why Russia’s National Horticultural Union sent a request to the Russian government to ban imported French fries.

“The introduction of restrictions on the supply of imported frozen French fries, according to the Union, will not only support domestic agricultural producers engaged in the production of raw potatoes, but will also contribute to the preservation of jobs at newly established processing enterprises, and will increase the safety and quality of the product,” Korolev said.

The first plant to produce French fries opened in April. Domestic production is expected to replace imported French fries and fully satisfy the country’s needs. Russia has been deciding how to respond to the new US sanctions imposed in April.

Russian McDonald’s to Start Using Home-Grown Potatoes

French fries at McDonald’s restaurants across Russia will be made with Russian-grown potatoes from now on, because of U.S. sanctions that have hit the Russian ruble and led to trade restrictions.

McDonald’s restaurants in Russia have already been using Russian ingredients for most other menu items, but until now they had relied on frozen French fries from the Netherlands and Poland because Russian potatoes weren’t quite right.

Now McDonald’s is making the switch to home-grown potatoes to deal with ruble’s volatility caused by fluctuating oil prices and western sanctions. A plant south of Moscow using potatoes grown on local farms will supply frozen fries to 651 McDonald’s restaurant across Russia.

The factory has capacity to process more than 200,000 tons of potatoes per year, washing, cutting and freezing the vegetables.

The ruble has recovered some ground as the price of oil, a major source of revenue for Russia, has risen from a low in 2016. But western trade restrictions remain in place.

Russia’s response to western sanctions included a 2014 ban on a range of western food imports.

Gross Harvest of Greenhouse Vegetables in Russia Grew Almost by 40% as of End of April

According to reports of the Ministry of Agriculture of the Russian Federation, the gross harvest of greenhouse vegetables as of April 28 was 235,200 MT, that is 39.5% more than in 2017 (168,500 MT) .

179,300 MT of cucumbers (27,7% more than in 2017), 51,800 MT of tomatoes (2 times more), and 4,100 MT of other vegetables (17,1% more) were produced.

The leaders in the production of greenhouse vegetables were Krasnodar region (22,800 MT), the Moscow region (17,700 MT), the Republic of Tatarstan (16,600 MT), Stavropol region (16,500 MT), and Lipetsk region (16,000 MT).