Russian Apple Production is a Long Way From Self Sufficiency

Despite efforts to become self-sufficient in apple production after the embargo, recent figures confirm that the country is far from being able to produce enough apples to meet domestic consumption.

According to the Ministry of Health, the average Russian consumes 50 kg of apples per year, yet, according to AB-Center, recent total production would only amounts to 5.8 kg per year per consumer. This amount includes all apples, including those for processing, so when it comes to the amount of apples for fresh consumption, the amount per person would fall even lower.

Although it seems like self-sufficiency is far from a reality, Rosstat has estimated that the total production of top fruits, a majority of these being apples, did grow by 15% in 2016. In addition, independent experts have reported that the share of imported products on shelves has, for the first time in many years, given way to Russian apples.

Although apple imports have decreased since the embargo, a recent report from UN Comtrade said that Russia is still number 3 on the list of largest apple importers in the world in 2016, with a share of 6%, totalling 678,600 mt of fresh apples. This amount had already reached 622,200 mt in the first 11 months of 2017.

In the first half of 2017, the majority of apple imports were coming in from Serbia and Moldova, with 32.1% and 26.2%, respectively. Other major suppliers include China, Belarus, Chile, Azerbaijan, South Africa and New Zealand. Bosnia and Herzegovina had also been a significant apple importer to Russia, but this is currently on hold after Rosselkhoznadzor placed a ban on the country following suspicions that they were exporting apples from Poland as their own.

www.freshplaza.com

Russia Renews Ban on Import of Apples from Bosnia and Herzegovina

About a year and a half after the regular export of BiH (Bosnia and Herzegovina) apples in Russia was resumed, the ban is set to take effect again. The reason behind this is that inspections have once more determined that some enterprises in Republika Srpska violate the agreement.

The ban had originally been imposed when there was a problem with the origin of the apples: although they appeared as RS products, they turned out not to be. They  originated, in fact, from other countries. The agreement between Russia and BiH says that apples and other fruit and vegetables must be an original BiH product, not the product from third countries.

Balkaneu.com reported that Minister of Foreign Trade and Economic Relations of BiH, Mirko Šarović, confirmed that the Russian Federation has again imposed a ban on imports of apples from BiH that comes into force Monday, January 22. He explained that the certificate for controversial apples was issued by the phytosanitary inspection in Brcko District, BiH, and transported to the Russian market as a local product.

www.freshplaza.com

Russia Has Destroyed 19,000 MT of Food Since Import Ban

Over 19,000 tons of banned western food products have been destroyed as of Tuesday, Jan. 9, Russia’s state agriculture watchdog said in a statement published on its website. The ban was introduced in August 2014 in retaliation to Western sanctions imposed on Russia following its annexation of the Crimean peninsula. Since then, the country has destroyed hundreds of tons of fruits and vegetables, cheeses and livestock products.

Only 278 tons of the confiscated products remained untouched, Rosselkhoznadzor added.

The practice of destroying foods dates back to August 2015, a month after President Vladimir Putin ordered the physical destruction of fruits and vegetables, dairy, meat and other agricultural products imported to Russia from the blacklisted countries.

The ban has been extended until late 2018.

Meanwhile, the EU has demanded 1.4 billion euros in compensation from Russia for banned pork.

www.themoscowtimes.com

Moscow expanded sanctions

Expanding the list of products under food embargo against the West in the Russian government explained the desire to close the grey import schemes of the sanctions. This was stated by Deputy Prime Minister Arkady Dvorkovich on October 27.

“We have thus closed the gray supply channels, which were used for deliveries of some goods under the guise of others and caused damage to Russian manufacturers”, — has explained Dvorkovich. According to him, such schemes are typically used in the supply of offal meat and live pigs.

At the same time to impose sanctions against purebred breeding pigs, the government did not, to preserve the possibility to create high-performing pig farms in Russia.

Earlier on 27 October, Russia expanded sanctions against Western countries. The ban includes live pigs and pork from EU countries, USA, Canada and some other countries. Also the ban includes pork and poultry fat of cattle, sheep, goats, and animal oil.

The Russian government stated that the food ban was extended till December 31, 2018.

www.rusreality.com

Turkish Tomatoes Going to Russia from 1 November

Four Turkish tomato exporters have been granted permission to export to Russia. Russia has, however, set a quota limit of 50,000 MT for the export of Turkish tomatoes.

According to the Russian Minister of Energy and Vice Chairman of the Russian-Turkish intergovernmental Commission, “The decision was taken to amend the regulations, thus granting four companies permission to ship 50,000 MT of tomatoes to Russia.” The first Turkish tomatoes should arrive in Russia since 1 November.

Russia banned the import of vegetables and fruits from Turkey on January 1, 2016, after the Russian-Turkish conflict over a Russian Su-24 plane. Restrictions were lifted gradually, only the import of Turkish tomatoes remains under the ban. Until January 1, 2016, they had the biggest share of Turkish vegetable exports to Russia – 360,000 MT a year.

www.freshplaza.com, www.interfax.ru

Russia to Strengthen Controls over Fruit and Veg Imports from Three CIS Countries

The Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) reported that due to the increased attempts to supply banned products via Armenia, Azerbaijan and Belarus, the control over the import of fruits and vegetables from these countries will be strengthened.

According to the service, products from third countries are allegedly supplied to Belarus, Armenia and Azerbaijan and then attempts are made at re-exporting them under the guise of products produced in these countries. The monitoring will be particularly strict in the case of tomato shipments, as each single lot will have to contain information about the producer.

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EU Fruit Still Slipping into Russia Despite Sanctions

Despite ongoing sanctions imposed by Moscow on fruit and vegetables from European Union countries in response to EU measures banning the sale of produce from Russia, large quantities of fruit such as nectarines and peaches from the bloc’s warmer member-states, including Greece, Italy and Spain, are reaching Moscow shelves in a steady supply, with Belarus-based middlemen seen as the prime suspects in the illicit trade.

Belarusian traders are suspected of slipping through the sanctions net and passing off Mediterranean fruit exports as their own – likely with the assistance of Russian officials.

Initial reports of a doubling of Belarus exports of nectarines and peaches to Russia failed to raise eyebrows, even though the landlocked Eastern European country is not a major producer of either fruit.

It later became apparent that produce hailing from Italy and Spain was reaching the Russian market.

Recent reports have indicated that traders with links to the Russian market are sweeping through northern Greece, a key crop-growing region, and buying large quantities of fruit including nectarines and peaches.

A recent survey conducted by Kathimerini confirmed that Greek produce is widely available at retail outlets in the Russian capital.

Russia largely depends on imports for its fruit and vegetable supply.

Last year, the authenticity of trade documents certifying the origin of products exported by Belarus had been questioned by Russian officials.

Despite the EU-Russia sanctions, Greek traders are well aware of the fact that it is still possible to export to the Eurasian Economic Commission (EEC), a five-member common market with a combined GDP of more than 3 trillion dollars comprising Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

Getting cargo into any of Russia’s fellow EEC members enables unobstructed entry into the Russian market.

Meanwhile, Greek olive oil exports to Russia – the product category is not included in the sanctions – have almost doubled, rising by 91 percent to 3.1 million dollars’ worth of trade in the first half of 2016, compared to 1.6 million dollars during the same period a year earlier.

www.ekathimerini.com

Tomatoes in Game of Yes-No Between Russia and Turkey

Last week’s meeting between Russia and Turkey has yet to provide clarity about the tomato boycott, but the yes-no game isn’t over yet. In the run-up to the meeting, contradictory reports were heard. After last week’s meeting, only one thing became clear: nothing is clear yet, so borders will remain closed for now.

The choice of words of both parties after the negotiations illustrate the confusion. The Turkish Minister of Economic Affairs Nihat Zeybecki said in Turkish media that various agreements had been reached. For the remaining small problems he expects a solution before 20 October (when there’s a meeting in Kazan). “There are just one or two very small things regarding agrarian products. We agree on all major lines. I am certain all problems will be completely solved before 20 October.” Specifically about the tomato boycott the minister said: “In the near future we hope for a positive solution from the conversations with the Russians about lifting the sanctions.”

“Proposals for liberalisation of the tomato trade will be prepared separately within parameters between the Ministries of Agriculture,” according to the Russian Minister of Energy Alexander Novak in Russian media. When asked if the sanctions could be lifted by 20 October, he answered: “Yes, definitely. We have confidence that all will become clear before the meeting of the intergovernmental commission.”

A Russian analyst illustrates the different points of departure of the two countries for Turkish website Vestnik Kavkaza. “Our growers are unable to deliver tomatoes that can compete with the Turkish ones. It is obvious that Ankara is very interested in an end to the boycott, but our growers aren’t interested at all.” Earlier the Russian Ministry of Agriculture said he wants to protect the investments that have been made in the Russian cultivation of tomatoes.

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Russian Consumers Paying a Pretty Penny for Apples

The World Apple and Pear Association (WAPA) has reported that domestic apple production in Russia for 2017 is expected to be down by 37%, after late frosts and heavy rains hit production. However, this will not be the only reason why apple sales could be down this year.

According to industry sources, ‘The combination of rising apple prices and falling Russian consumer incomes has been the biggest factor in the decline of both imports and apple sales in the Russian market, industry sources acknowledge.’

Since 2013 the price of apples per kilogramme is up by 30%, more than any other fruit or vegetable in the country.

Despite recent increases in production, Marek Marzec from Ewa-Bis, said that Russian apple production only fills around 20% of the demand.

“Russia has been trying to develop the domestic apple industry for the last 20 years, sure, they have made some progress, but no where what is needed to become self sufficient. The positive thing about Russia is that it is such a large country with many different regions, they should be able always have success despite what the weather might throw at them.” said Marek.

Igor Muhanin, President of the Association of Fruit and Berry Producers (ASPRUS), had initially said that apple imports in 2016 had reached 1.38 million tonnes, but later revised that amounts to 1.25 million tonnes, saying that smuggling continued to be an issue in Russia, which authorities there have found it difficult to keep up with.

“The Agriculture Ministry is providing a subsidy payment to apple growers for planting new orchards and equipping them for higher yields of Rb236,000  ($4,140) per hectare. The experts say this represents between 10% and 25% of the costs of planting and equipping new high-yield apple orchards.” said Muhanin.

Estimates have claimed that Russian apple consumption came to 2.5 million tonnes in 2016, about 100,000 tonnes (4%) more than 2015. By 2020 the forecast is for consumption of 3 million tonnes; this represents an annual rate of growth of 4%.

According to BusinesStat, “The rate of growth of both domestic production and imports will depend not on the recovery of Russian consumer incomes and demand, and not on the sanctions or the increase in investments for commercial domestic orchards.”

“This year, apple sales will grow by just 1.7%, roughly the same as government and expert forecasts for Russia’s GDP growth. As the resumption of growth in real incomes begins, apple sales will grow in the retail sector. In 2021 the sale of apples in Russia will amount to 2.08 million tonnes, which will exceed the 2016 level by 35.7%.”

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How Sanctions Changed Russian Food Market for 3 Years

During the past three years, something Russians were used to doing in the 1990s has made a triumphant comeback: the habit of bringing food home from trips abroad. Shopping for food on vacation outside Russia has become a routine pastime for them since August 2014, when the Kremlin banned import of dairy, produce, fruit, meat, poultry, fish and seafood from the U.S., European Union and several other countries.

Authorities at the time maintained that the move would punish the West and boost the country’s agricultural sector, spurring it to thrive in the absence of competitors offering less-expensive products.

Three years later, officials insist it did. A closer look, however, presents a more uneven picture. Food production in Russia has increased, but so have prices. Higher prices have led to changed and lowered consumption, and in turn, reduced sales. Inflation has eaten into the promised government support to help food production. And, say consumers and people in the food industry, the overall quality of available food isn’t as high as it was prior to the food import ban.

The food embargo came at a bad time for Russia. Oil prices were at a record low, the ruble had plummeted and the country’s relationships with Western nations was worsening. The term “isolation” dominated the news here.

In an attempt at positive spin, the Kremlin announced that the food import embargo would boost “import substitution” and help Russians overcome what many politicians labeled their “addiction” to imported goods and become self-sustainable. Companies in the agricultural sector were promised financial and infrastructure support from the state. Many companies immediately jumped at the chance to conquer the market.

The agricultural sector has indeed increased production of some food items in the past three years, according to data provided by Rosstat, Russia’s state statistics service. Russian companies produced 17.5 percent more beef in 2016 than in 2014. Pork production increased 30.6 over the same period, poultry production 11.9 percent, frozen vegetables 31.6 percent, milk 5.8 percent and cheese 20.2 percent.

“The embargo was quite an incentive for us because it meant we’d be able to produce more,” says Andrei Danilenko, chairman of the Soyuzmoloko, Russia’a association of dairy producers. “Over these years, we filled the niche completely – together with Belarus that supplies the rest.”

Spokespeople at the Agriculture Ministry are even more positive. “For the first time in many years, Russian food items started to dominate on the shelves,” officials said in a written statement.

Food imports during the past three years dropped almost in half, the ministry said, from $43 billion to $25 billion, whereas overall Russian agricultural production has increased by 11 percent.

“Achievements of the agricultural sector in recent years allowed us to edge even closer to full self-sufficiency when it comes to food,” ministry spokespeople said.

However, there was a downside. Rising prices, spiked by the embargo and fueled by inflation, changed consumer behavior. People started buying less and sales started to drop.

“People in general are saving money on food, and we end up selling less,” says Pavel Grudinin, head of the Sovkhoz Imeni Lenina agricultural holding that produces vegetables, berries and fruit in the Moscow region.

With some products, consumers started choosing cheaper options, and that kind of behavior significantly affected the country’s fish market, says Timur Mitupov, head of the Fishery Information Agency.

“Russia used to import 600,000 tons of fish from countries under the embargo every year,” he says. “Then people saw that fish is disappearing from the shelves and becomes more expensive. So they started replacing fish with something more affordable – like chicken.”

Yearly consumption of fish dropped from 22 kilograms (48 pounds) per capita to 16-17 kilograms, Mitupov says.

Adding insult to injury, the promised state support turned out to be not much of a help, Grudinin says.

“Financial support from the government on paper increased this year, but if you convert it into hard currency, you’ll see that in reality it actually decreased, because hard currency is more expensive now.”

At the same time, he adds, various taxes and levies have increased during the past three years, and so have crediting rates: “So there is simply no money to invest into growing.”

For the restaurant industry, the food import ban is a double-edged sword. Many restaurants had based their cuisine on imported food items and shut down after the embargo, unable to adjust to the new reality quickly enough. Those that survived are experiencing a gastronomic renaissance, says Alexandra Sutormina, restaurant consultant and food critic for GQ Russia.

“Restaurateurs discovered Russian meat, Russian seafood, Russian vegetables. Russian food has become a thing,” she says. “They started experimenting with it, setting up their own small farms, selecting products more carefully.”

The quality of Russian food products, however, is far from the best, argues Victoria Lavrushkevich, manager of Saxon&Parole, an upscale restaurant in Moscow.

“We offer quality seafood and quality meat,” she says. “But Russian (food) products or products we now have to buy in other countries are worse in quality and the same in price compared to what we used to get from Western suppliers.”

Some food has turned out to be flat-out irreplaceable – like cheeses from Italy and France. It takes decades to produce a good mature cheese, notes Lavrushkevich.

Sutormina agrees: “Even though many small cheese farms appeared across Russia over these three years, wonderful cheeses from Europe is the one thing we all miss.”

The embargo has hurt the ordinary consumer in more basic ways, says Vasily Uzun, economy professor at the Russian Presidential Academy of National Economy and Public Administration.

“The embargo took the cheapest products off the shelves: Polish apples, American poultry and European cheeses. Products that replaced them turned out to be more expensive and of lower quality,” he says.