Early today, Reuters reported that Ukraine and Russia have reached an agreement for a permanent cease-fire in eastern Ukraine. President Poroshenko and President Putin negotiated the deal via a telephone conversation. Mr Putin's spokesman, Dmitry Peskov, clarified for Russian news agency Ria-Novosti: "Putin and Poroshenko did not agree a ceasefire in Ukraine because Russia is not party to the conflict, they only discussed how to settle the conflict."
In terms of the ban, very little will change. Putin wants to increase cooperation with the BRICS. Peru is willing to export and in Moscow a greenhouse complex is being built. In Europe, Total Produce warns about the consequences of the boycott for the European market and Poland aims to stimulate exports by reducing the insurance premium by 20%.
In terms of the ban, very little will change. Putin wants to increase cooperation with the BRICS. Peru is willing to export and in Moscow a greenhouse complex is being built. In Europe, Total Produce warns about the consequences of the boycott for the European market and Poland aims to stimulate exports by reducing the insurance premium by 20%.
Yesterday, a first draft of the new EU sanctions against Russia leaked. Although the reports are not yet confirmed, it includes tougher financial sanctions, a tightening of the sanctions on the trade of weapons and techniques for oil and gas drilling and a boycott of Russia in economic, sporting and cultural events. This makes it virtually impossible for the Russian government and companies to obtain capital in the international financial markets. What specific sanctions will actually be applied is not yet clear.
Total Produce warns about effects of ban
The Irish multinational warns about the impact that the Russian boycott will have on fruit and vegetable prices in Europe. The turnover of the multinational in the first semester amounted to 1.59 billion Euro, a slight decrease compared to last year. Total Produce has little trade in Russia, less than 2% of total sales, but according to CEO Carl McCann the surpluses in Europe will have an impact on prices. "The group hopes that this can be limited with the EU's intervention," said the CEO.
Russia has alternatives
Although the European sanctions limit trade between Russia and the West, the Russians also have alternatives. Wealthy Russians, who are affected by the sanctions, are switching, for example, to Chinese credit cards, and the government wants to further cooperate with the other BRICS countries. These possibilities seem to be there. The import of meat, especially chicken, from Latin America has been greatly increased and also for fruit and vegetables are South Americans to be relied on. Argentina's exports in 2012 were already worth a billion dollars; for Chile, this figure reached $ 567 million. Apples, pears, grapes, citrus, peanuts; South America is able to deliver them all. And then there is China, which has offered to increase the export of fruit and vegetables, although perhaps more important for the Russian economy are the alternatives to European high-tech products that the Chinese can supply.
A permanent end of EU-Russia trade?
Putin said in an interview that it will be difficult for European countries to recapture their position in the Russian market, even if the sanctions are lifted. "We are working with producers in Latin America, including Brazil, Argentina and Chile, and partners in the East, such as China. It would not be admissible for the EU to approach them and ask them to stop trade with Russia. I cannot imagine that these traders would give up the opportunity to operate in our market."
Peru wants to export to Russia
Peruvian exporters also see opportunities in the Russian market. Miguel Ognio, chairman of the exporters association Adex, says many exporters are interested in trade with Russia. During Expoalimentaria 2014 in Lima, which was held recently, Russian traders were looking for new contacts. The organisation invited a Russian delegation to provide them with information about Peruvian products. Next year, a visit from Adex to Russia has been scheduled. "International trade is based on trust, so we need to find reliable customers who appreciate our products and pay on time. That's the challenge," said the president of Adex. "The door is open for clients from Russia and other countries without restrictions."
Greenhouses in Moscow
In 2015, the company Greenhouse Growing Technologies will start a project in the Moscow region, which will receive a 5 billion Rouble investment (102 million Euro). The expected turnover for the company stands at 1.5 billion Rouble (30.6 million Euro) with a production of 20,000 tonnes. The technical installation would enable the company to harvest 3-4 seasons.
Russian vegetable market grew 1%
The Russian vegetable market grew in 2013 by less than one percent. The slight increase is due to increased own production and a good harvest. Half of the Russian vegetable supply consists of potatoes. The proportion of onions (15%) and carrots (12%) in the Russian market is considerably smaller.
The demand for fresh vegetables in Russia is high and continues to grow. Quality fresh produce is especially popular. Storage and fresh produce cover most of the Russian demand. Global Reach Consulting is working on a project to store more vegetables. The project will generate 2.5 million Euro per year and become profitable after five years.
Russian consumers affected
The longer the boycott lasts, the more reports from Russia appear confirming that consumers are facing price increases and shortages. The supply of apples, pears, plums, grapes and cherries has dropped significantly. The domestic apple production can cover 20% of demand and apple sales peak in October. Before the ban, Poland and Moldova were the largest apple suppliers. Russia's apple importers rely almost entirely on Europe, as during the peak in demand Latin America provides just a fifth of what Europe exports.
For stonefruit, supply has dropped by 70-75%; for kiwifruit, by 50-55%. The majority of these products were imported from Europe, although there are alternatives. For apples and stone fruit, Russia can look for suppliers in Serbia, China, Azerbaijan and Turkey in particular. For kiwifruit, Russia can also go to Iran; New Zealand is a more expensive option for kiwi imports.
For retailers, the biggest challenge is therefore to keep a varied fruit range. Fruit prices are soaring. Kiwis are 42.3% more expensive, and for other products, the percentages are: stone fruit +33.3%; grapes, +28.5%; bananas +23.3%; citrus, +21.6% and pears +16.7%.
A shift in Russian consumption patterns is expected. Thus, consumption of bananas and citrus could rise because the share of boycotted companies in these markets is practically zero.
British NFU asks retailers to pay fair prices
The National Farmers Union, NFU, has called on British retailers not to take advantage of the current situation, now that prices are under pressure. The organisation is monitoring the situation, but says it trusts big retailers to "act responsibly and not to abuse the current conditions." The British government is currently working on providing compensations to British growers.
Poland goes its own way
The Polish government has gone its own way to support growers. The country is busy seeking new export opportunities, for example, in Canada. Additionally, the government has reduced the export insurance premiums of boycotted products by 20%. The discount applies also for the export to a select group of countries in the Middle East, Eastern Europe and Asia.
Furthermore, the government is negotiating with Belarus to increase exports and use it as intermediary for the products to be introduced into Russia. That is legal, provided that a large part of the added value is supplied by Belarus.
To increase domestic production, the government wants to develop a new label, for whose design a contest has been organised.