EU to Extend Economic Sanctions on Russia until 2020

European Union leaders will decide on Thursday to prolong until the end of January 2020 economic sanctions against Russia over the turmoil in Ukraine and call on Moscow to help bring to justice those guilty of shooting down a passenger plane there in 2014.

The EU introduced sanctions on Russia after Moscow annexed Crimea from Ukraine in March 2014 and went on to support the regions in the east of the country, pursuing to separate from Kyiv. That conflict is still simmering.

The EU’s economic sanctions against Moscow over Ukraine include curbs on Russian energy, defence and financial sectors and are currently in place until the end of July.

The EU’s Russia hawks Poland and Lithuania are among those pushing to extend the bloc’s punitive measures against Moscow over the passport issue. But any new EU sanctions would require unanimity among all the 28 national leaders of the bloc and no new sanctions are expected swiftly as most others – including Italy, Germany and France – are opposed.

The leaders will, however, say on Thursday that the bloc “stands ready to consider further options, including non-recognition of Russian passports” issued in east Ukraine which undermine the peace process.

Turkish Vegetable and Fruit Exports Denied Entry into Russia

Producers of fruits and vegetables in Turkey are concerned about the increasing cases of exports being sent back from Russia.

Some claim that Russian phytosanitary watchdog Rosselkhoznadzor regularly returns fruit to Turkey. On May 25, specialists returned 20 tons of Turkish strawberries and apricots, finding Californian flower thrips in them. In April, the agency for a similar reason returned 39.5 tons of tomatoes and 20.3 tons of strawberries, and in March it returned 25 tons of tangerines because of a Mediterranean fruit fly infestation.

The reasons for the return of the suppliers are called unreasonable, and the claims to the quality of products are haunting the control services.

“The fact that vegetables and fruits are returned to Turkey on the basis of their phytosanitary conditions, does not point at malicious intent. All this is routine procedure, in relation to all products supplied from abroad. Products that enter Russia must comply with all our phytosanitary requirements. When we register a violation of these requirements, we, naturally, do not allow products to enter the country,” a Russian official explained the situation to

Some Turkish suppliers report product inspections taking up to two weeks. In those cases, the exporters’ goods become unusable and remain unclaimed. In addition, manufacturers said that with respect to countries such as Egypt and Tunisia, there are no such stringent checks. At this time, the Turkish Ministry of Agriculture is discussing these issues with its Russian counterparts.

Azerbaijan: 99.7% of Tomato Exports Go to Russia

In January-March 2019, Azerbaijan exported 21,371 MT of tomatoes in the amount of $25.5 million. Compared to the same period in 2018, exports in quantitative terms increased by 7.7%, in value terms – by 6.1%.

The main importer of Azerbaijani tomatoes is Russia. In the first quarter of 2019, 21,303 MT of products were sent to the Russian market, which amounted to 99.7% of total exports, worth $ 25.4 million. Compared with January-March 2018, exports of tomatoes to Russia increased by 7.8% in quantitative terms and 6.3% in terms of value.

It is specified that for the whole 2018 Azerbaijan exported 172,000 MT of tomatoes for the sum of $177.4 million. The main importer of Azerbaijani tomatoes in 2018 was also Russia, which imported 170,000 MT of tomatoes for the sum of $176.3 million

From January to March 2019, exports of Azerbaijani apples to the Russian Federation amounted to 27,500 MT (+ 34.9%) in the amount of $11.3 million (+ 27.5%). The total exports of this type of fruit from Azerbaijan amounted to 29,300 MT worth $12.2 million. Compared to the same period in 2018, exports of apples from Azerbaijan increased by 41.5%, and in money terms – by 35.7% .

For the entire period of 2018, Azerbaijan exported 90,000 MT of apples for $38.4 million. Of these, 82,400 MT of apples worth $ 34.5 million were exported to Russia.

Bonduelle Acquires Frozen Food Factory in Russia

The Bonduelle Group announces that it has acquired the industrial assets of the LLC SHOCK frozen vegetable production company located in the Belgorod region (Russia).

Bonduelle is commercially present in the Russian market in canned and frozen food since the mid-1990s. Bonduelle established local production of canned vegetables in Russia in 2004 by building a plant in the Krasnodar region (south of Russia) and then by the acquisition of an existing plant in the same area in 2012. Bonduelle is operating 10,000 hectares of agricultural land to supply its production facilities. With undisputed leadership in canned vegetables through Bonduelle and Globus brands, and a spontaneous awareness of the Bonduelle brand above 80%, the Group is strengthening its positions in Russia and the Community of Independent States (CIS).

Located in a reputed agricultural region – temperate climate, particularly fertile soils (black central soil) – this industrial site will accelerate the development of the Bonduelle frozen activity in the above mentioned markets through a high quality production.

In recent years, the Russian frozen market has experienced significant growth supported by the Bonduelle Group through imports (mostly France and Poland). This market is benefiting from growing consumer interest in value-added ready-to-eat solutions. This investment will enable the Group to also be present on the mono-vegetable and simple mixes market segment, banned for import by embargo.

This production site, which initial cost of acquisition and additional investments remain limited, will ensure an annual production from 6,000 to 10,000 tonnes of frozen vegetables within 3 years. About 50 permanent employees will work at the site and Bonduelle will partner with the local agricultural community, developing its know-how in environmentally friendly agricultural practices.

Russia Lifts Stone Fruit Import Ban Regarding Serbia & North Macedonia

Phytosanitary agriculture watchdog Rosselkhoznadzor has released a statement that this Monday, Russia lifted its import ban on stone fruit from North Macedonia and Serbia.

Moscow had imposed the ban in August on some fruit from the two countries after it said it had found the Monilinia fructicola fungus in Serbian peaches and apricots and in batches of fruit from North Macedonia.

Russia Again Top Market for Turkey’s Fruit & Vegetable Exports

Turkey’s fresh fruit and vegetable exports to 118 countries amounted to $622.5 million in the first four months of the year, with Russia taking the lead among markets with $184.2 million in that  period.

According to the Eastern Black Sea Exporters’ Association (DKİB) data, in January-April 2019, $622.5 million was generated from Turkey’s fresh fruit and vegetable exports of 1.1 million tons to 118 countries. In this period, the Russian Federation ranked first with $184.2 million, followed by Iraq with $61.9 million and Romania with $60 million.

Russia Loses $30Bln a Year in Post-Crimea Investment Climate

Russia is losing at least $30 billion every year due to the investment climate that has followed its annexation of Crimea, economist Sergei Guriev said in an interview published Monday.

Russia’s 2014 annexation of the Black Sea peninsula from Ukraine has weakened Russia’s relations with the West, launching multiple rounds of sanctions from the U.S. and the EU as well as a drop in foreign investment.

Each percentage point that doesn’t go into GDP growth equals a loss of $15 billion, Guriev told Russia’s The Bell business outlet. The Russian economy grew by 2.3 percent in 2018, according to official data.

“If it’s 2 [percentage points lost], then [Russia’s losses total] $30 billion a year,” the chief economist of the London-based European Bank for Reconstruction and Development said.

Up to $300 billion has been lost since Russia annexed Crimea, the Bell cited Guriev as saying, adding that Central Bank data puts the losses at $320 billion.

“In total, something like $1 trillion has fled Russia in 20 years,” he told the outlet.

Fruits and Vegetables will Pass through the Tajikistan-Russia Simplified Corridor

Five groups of foods products can pass through the Tajikistan-Russia simplified corridor.

Tajikistan and Russia have agreed to simplify customs procedures.  An agreement between Tajikistan’s Customs Service and Russia’s Federal Customs Service on simplifying customs procedures for movement of goods and vehicles between Tajikistan and Russia (Simplified Customs Corridor) was signed in Moscow on April 17, 2019.

In accordance with the annex to the agreement, the following goods can pass through the Tajikistan-Russia simplified corridor:

– Vegetables and some edible roots and tubers;

– Edible fruits and nuts, citrus and melon peels;

– Unroasted Peanuts;

– Processed vegetables, fruits, nuts or other parts of plants;

– Various food products.

Persons participating in the simplified customs corridor project have some preferences.  For example, they have the priorities in customs clearance zones and customs procedures will be accelerated for them.

Russian media outlets consider that the agreement is groundwork for the possible expansion of the Eurasian Economic Union (EAEC).  In an interview with Ekonimka Segodnya (Economics Today), Dmitry Verkhoturov, an expert on Central Asia at the Center for Contemporary Afghanistan Studies, said Tajikistan is seeking expansion of economic cooperation with Russia.

Russia 2019–2023: Apple Imports will Increase

In the period from 2014 to 2018, apple imports to the Russian market decreased by 23% from 1.13 to 0.87 million MT.

Among the reasons for the decline in imports, analysts have cited the introduction of Russian counter-sanctions since August 2014 and the devaluation of the ruble, after which foreign products went up in price. The state support of Russian gardening also affected the state of the market. This writes RBC with reference to the data “Analysis of the apple market in Russia,” prepared by BusinesStat.

The change in the reporting period and the structure of imports by supplier countries. So, in 2014, Poland was the main supplier of apples to the Russian market with a share of 37.1%. After the introduction of the pro-bargo, which affected Polish supplies, Belarus became the key importer with a share of 51.4%.

“Supplies of apples to Russia from this country doubled in 2015 compared to 2014 and amounted to 518,000 MT. Russian experts expressed a reasonable opinion that deliveries were made across the Belarusian border from countries in which anti-sanctions were imposed. This was supported by the fact that after the embargo was introduced by Russia, the import of apples to Belarus increased markedly,” the study notes.

In particular, in 2014, Belarusian exports increased by 2.3 times – from 180,500 MT to 414,700 MT, and in 2015 another 76.3% compared to 2014, reaching 731,100 MT. During 2016 and 2017, the volume of Belarusian supplies to Russia decreased. Last year, imports of apples from Belarus to Russia amounted to 81,600 MT.

Last year, Moldova became the main supplier of apples to the Russian market with a volume of 245,800 MT(28.3% of total Russian imports). China ranked second in shipments, sending 128,900 MT of apples to Russia, or 14.8% of total imports. Third place in the ranking of supplier countries was taken by Serbia with a share of 14.5% (125,600 MT). The fourth place was fixed for Azerbaijan (9.5%, or 82,300 MT). Analysts stressed that despite all the efforts of the Government of the Russian Federation, apples from countries that fell under counter sanctions (Poland, Ukraine) continue to enter the Russian market under the guise of Belarusian, Moldovan, Serbian.

Despite Record Apple Harvest, Russia Continues to Increase its Imports

Import substitution, which is so much talked about in Russia, has so far not yielded tangible results in the field of horticulture. Despite the very rapid expansion of the area of ​​orchards and an increase in the volume of domestic production of apples, imports of these fruits continue to grow steadily.

In the first two months of 2019, Russia imported 11% more apples than in the same period last year. Moreover, the January volume of apple imports exceeded 161,000 MT and was the highest since 2015, when, by the way, they were comparable to these volumes.

In order to understand how much more apples Russia actually imports, it is necessary to take into account that since 2015 apple consumption in the country has decreased due to four consecutive years of falling real incomes of Russian citizens and the rise in prices of products due to the devaluation of the ruble and the increase in VAT on fruits.

Experts explain this phenomenon easily; the Russian apple is of an inferior quality to its imported counterparts, so the consumer is simply not interested in it. Therefore, Russian growers are forced to sell a significant amount of crop for processing needs at bargain prices. Fortunately, the domestic market for apple concentrate is still quite capacious, and even low, according to Russian growers, prices for industrial apple are relatively high for other countries, such as Ukraine, Poland and Moldova.

However, this situation calls into question the prospects for further investment in new gardens in Russia. Protective measures, as practice shows, can do a disservice to Russian growers. After all, consumers demand quality products, which they mostly cannot yet provide.

And according to¸ even a ban on the supply of apples from the EU, the USA and Ukraine, which can give a really high-quality product, does not guarantee any protection. As soon as the apple re-export channel closes through Belarus, the import of apples to Russia from non-sub-Azerbaijan, Kazakhstan, Macedonia and Georgia immediately grows. These countries also became the leaders in the growth rate of apple supplies to the Russian market in the first two months of 2019.