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 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.

Russian tycoon invests in apples and potatoes

Russian electricity and farming tycoon Dmitry Arzhanov has told the Reuters Russia Investment Summit that he plans to invest in apple and potato production, a direct response to Moscow’s embargo on food imports from Europe, the US, Canada and Australia.

The ban, which was introduced in August 2014 in retaliation against EU sanctions that were imposed following the conflict in Ukraine, has apparently led to new opportunities for domestic producers, but few have been able to capitalise as prices rise for items including fresh produce sold in the Russian market.

Arzhanov’s company AFG National, which has traditionally concentrated on producing rice and grain, is now planning to establish 300ha of apple orchards by 2016.

In seven years time, Arzhanov reportedly told the summit, around 2,500 ha will be under cultivation, producing an estimated 125,000 tonnes.

That figure represents around 10 per cent of the volume of apples that were imported from Poland prior to the ban.

Elsewhere, AFG National is said to be lining up a US $600m investment package to create what Reuters referred to as “a vegetable complex” that can produce 500,000 tonnes of washed potatoes per annum – equating to a quarter of Russian market demand – within the next five years.

“Russia’s government, faced with economic sanctions and the worst crisis in its relations with the West since the Cold War, has pushed the concept of ‘import substitution’ – domestic firms stepping in to fill the gap left by imports,” the Reuters report continued.

“That has worked in some sectors, but food producers, for years sidelined by powerful foreign competitors, have struggled to increase production quickly, people in the industry say.”

Arzhanov, who also co-owns the retail electricity supplier TNS Energo Group, said his investments in both apples and potatoes would be safe regardless of whether or not the embargo was lifted in the near future.

He also predicted that an extended ban lasting for the next two years would result in a downturn in investment within the Polish apple industry.

Remarkable development of Egyptian exports to Russia

Mounir Fakhry Abdel Nour, Egyptian Minister of Trade and Industry, reported that the country’s agricultural exports have seen a remarkable development, especially potatoes, which registered a 144.8% increase, frozen vegetables, up 900%, machinery and appliances, up 681.3% and processed vegetables and fruit, with an 823.1% growth.

He pointed out in a press statement that this is mostly the result of the efforts made by the Ministry in helping Egyptian companies to access the Russian market, as well as to the promotional campaigns carried out by the Egyptian Commercial Office in Moscow for many Egyptian products, which facilitated the opening of communication channels with major Russian importers.

These campaigns resulted in the provision of more than 70 export opportunities, contributing to the shipment of new and non-traditional products (not only food products) to the Russian market.

Temporary ban on Egyptian potato imports

Russia’s Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) has imposed a temporary ban on the import of potatoes from Egypt.

The reason is the frequent violation of regulations in the field of plant quarantine. Russian phytosanitary services detected brown rot bacteria and golden cyst nematode in Egyptian potatoes. Since the introduction of the EU embargo on fruits and vegetables, the import of Egyptian potatoes by Russia exceeded 300 thousand tonnes.


Potato prices are 1.5 times higher

Retail prices for potato are higher by almost 1.5 times in contrast with last year.

The retail price of fresh potatoes in Moscow stores and vegetable markets broke all records of last year. In mid-November, residents of the capital and its suburbs are buying potatoes for approximately 27-35 rubles per kilogram. Minimum prices are suggested by retail chains “Auchan”, “Dixie” and “Pyatyorochka”, where you can find native potatoes 18-22 rubles per kilogram. The quality and vendibility of vegetables in grocery discounters cannot be called even satisfactory.

High prices of potatoes this season arise from several factors: the rainy weather in the harvest season, a poor harvest national average, and imposed ban on imports for phytosanitary reasons.

Every year in Russia, according to the Agriculture Ministry of Russian Federation, it is grown about 30 million tons of potatoes, 25 million tons of which belong to private households and are not intended for sale. The remaining 5-5.5 million tons are not enough for the commodity turnover and industrial processing. According to the Federal Customs Service of Russian Federation, the country still imports about 400,000 tons of potatoes a year. The main importers for Russia are the producers of the Netherlands and Germany.

Domestic seeds will help lessen EU dependance

Russia lives in vegetable dependence on Europe where all seeds are purchased. The Federal Service for Veterinarian and Vegetation Sanitary Supervision (Rosselkhoznadzor) repeatedly threatened the European Union with the ban on import of seed grains. In fact, it means digging its own grave. “Without seed potato coming from foreign countries we can pull through only for one year, then everything that involves vegetables will come to a halt,” Vitaly Dunin, the chairman of the Sverdlovsk Union of Producers and Processors of Potatoes and Vegetables, told RusBusinessNews.

According to Dunin, the domestic seed industry was destroyed in the 1990s-2000s and now is in the embryonic state. The Belorechensky Agro-Industrial Complex, CJSC, headed by Dunin, purchases high yielding potato hybrids from the Netherlands. The Dutch grow their seed potatoes in the most agriculturally favorable areas in Italy, Africa and Spain, sorting them by color, quality grade and size.

The Sverdlovsk Region is ready and willing to get out of the European bondage. The Belorechensky Agro-Industrial Complex, together with Kartofel, LLC, and the Agriculture Research Institute of the Russian Academy of Agriculture, prepared a business plan for the breeding center that will allow farmers to reduce their potato seed import by 50% or more. The cost of this center is 300 million rubles. The initiators of the project expect that the federal and regional government authorities will chip in together and allocate 100 million from each side. The Sredneuralsk government gave the go-ahead to the idea, which is now being scrutinized at the Russian Ministry of Agriculture. If everything works out, the breeding center will start operating in 2014.


European Potato Growers Raise Prices

In September 2010 the Russian Government decided to abolish potato import duties. The Government expected to saturate the domestic market with inexpensive in imported product. At the same time, European growers, having faced harvest drop and the growing demand from Russia increased the prices dramatically.
According to the Institute for Agricultural Market Studies (IKAR), Russia can import up to 500,000 tonnes of European potatoes during the season 2010/2011. In the recent years Russia has imported about 200-250 thousand tones of European potatoes. The largest shippers in 2009 were the Netherlands (119,000 tonnes), Azerbaijan (84,300 tonnes), Egypt (59,000 tonnes) and China (40,400 tonnes).
According to the estimations of the Ministry of Agriculture, the harvest shortage in 2010 will amount to 4 million tones. The experts say that the 2010 potato crop in Russia will be 22 million tones with annual demand of 29-32 million tones. Last year Russia harvested 28.8 million tones.


Russia: Potato shortage to stem from drought

Following a pessimistic forecast of the drought impact on potato crops, Russia will have to import over 4 million tones of potato in order to meet the consumer demand. The shortage amounts to 7 million tones assuming the general domestic demand of 29 million tones.

Kazakhstan, a major potato exporter to Russia has also been severely hit by the drought and heat waves. Belarus plans to gather a good harvest and increase its exports to Russia (up to 250,000 tones of potatoes). However, Belarus cannot cover Russia’s total demand of potatoes. Therefore, Russia will have to import from other CIS countries, as well from Poland, France, Germany, the Netherlands, India, China, Canada and the U.S.