Russian companies incur 2.4 billion loss

In Eastern Europe, concerns about the crisis with Russia are increasing. Countries including Poland and the Baltic states are afraid that they'll be the next country on the list where Putin will interfere. The rouble appears to stabilize, which is a ray of hope for the Russian economy. On the other hand, Russian companies had to incur a total loss of 2.4 billion Euro in January. Despite this, a mega infrastructure project was presented in Russia. With a high speed train and a large highway, Eastern Russia's isolation is to be resolved. Prices, meanwhile, increased further, with cabbage getting 66% more expensive this year alone. A shipment of confiscated apples from Poland was destroyed. Previously, shipments were sent back.

In Eastern Europe, concerns about Russian expansionism are increasing. Immediately after the annexation of Crimea, Polish media were already showing headlines asking: Will it be war? Poland recently called up a first group of reservists for extra training, and the minister of Defence wants to train 38,000 reservists annually, starting in 2017. In Poland, they're referring to a statement by former president Lech Kaczynsky: "Today, Georgia, tomorrow, Ukraine, then the Baltic states, and then it's Poland's turn." The Baltic states are also worried about the situation. The NATO efforts, including the establishment of a rapid reaction force, has only been able to take away these concerns to a limited extent.

Last month, Russia presented an ambitious plan to connect Asia with Europe through a rail network for high speed trains. The project traverses the whole of Russia. In addition to the railway, the infrastructure project also comprises a new highway, and pipelines for oil and gas. Facilities for electricity and water also have to be developed. The project goes by the name Trans-Eurasian Belt Development (TEPR). If the plan is successful, new cities are expected to develop along the route, with the development of Siberia and the Far East taken to a higher level. The new jobs realized by this project, are to keep young people in the region. Now, better educated young people from Siberia are leaving for other regions.

Rouble stabilizes
The rouble appears to have stabilized and even gained some value compared to the Euro. Although the currency is still no where near the old value of before December last year, and inflation is still running high, this would seem to be a ray of hope for the Russian economy. On the one hand, analysts think that the quick fall of the rouble in December turned into an exaggerated reaction, on the other hand the term in which Russian companies have to pay their taxes has just ended. For this reason, demand for roubles was higher in the past weeks.

Official figures show that Russian companies lost 152.5 billion roubles (2.43 billion Euro) in January. This is the first time that the companies are incurring a total loss since the crisis in 2009. Rosstat, the Russian Statistics Service, calculated that 33,800 profitable companies together achieved a profit of 1.6 trillion roubles, while 19,100 companies incurring a total loss of 1.9 trillion roubles, which means the final balance ends up in the negative. In the calculation, smaller companies, banks, insurance companies and state-owned companies weren't included. A year ago, the Russian companies still booked a total profit of 352 billion roubles (6.1 billion dollars). The sanctions and the tough economic situation affect these figures, although not every sector is hit equally hard. Profitable companies include oil and gas companies, agricultural companies, construction and retail. Fishery, railways and service providers operate at a loss.

Where Russia voiced its concerns about the increased export from Serbia, the Serbian Chamber of Commerce says that the increase came to be because of changing circumstances. Illegal re-export of Polish apples is reportedly not the cause, but the cooperation between the two countries. "We think that production and export potential haven't been fully utilized yet," the Serbian CoC says. "This year, the export could increase by 20% compared to 2014." The number of Serbian companies interested in export to Russia has reportedly increased a lot as well.

Russia destroys Polish apples
While rejected shipments were previously sent back, the Russian inspection service has recently destroyed a shipment of apples. The apples were intercepted at the border with Kazakhstan. According to the accompanying documents, the apples originated from Moldova, where a limited number of apple exporters have permission to export. The Russian inspection, however, was able to prove that the apples had come from Poland. Instead of returning the apples, the shipment was destroyed.

The governor of the Moscow region last week announced that two new distribution centres will be built in the region. The buildings are to be constructed in Solnechnogorsky and Podolsk. The 150 square metre centre in Solnechnogorsky is to be opened up this year. In Podolsk, operations will commence in 2017. In Domodedovo, a similar centre is already in use, where fruit and vegetables are stored and processed. The project cost 9 billion roubles (143 million Euro).

In order to get rid of the apple surplus, the Poles are making efforts to gain access to new markets. But the apples are also handed out to the American soldiers in the country. The soldiers are in the Eastern European country for training.

The product range in Russian supermarkets has once again decreased. FruitNews looked into the situation in six large supermarkets, comparing the results with studies just after the boycott. In February, the product range decreased by 21.5%, a smaller decline than in the months directly after the boycott. With the end of the seasons in surrounding countries, supermarkets appear to be having a harder time keeping shelves stocked. Particularly products that are difficult to replace, create problems. For instance, the number of available kiwis went down by 37.5%, while around 25% fewer pears, apples and grapes were available to buy. Virtually unavailable are kiwi gold, cherries and stonefruit. This is partially caused by the boycott, and partially because importers find the risk for these products too big. Compared to February of last year, prices increased by 65.6% on average for stonefruit. Pineapple became no less than 99.7% more expensive, grapes +79.3%, pears +64.9%, citrus +53.2%, and kiwis +30.2%.

Since the beginning of this year, the cabbage price has gone up by 66%. The cabbage prices increased faster than any other product, with the price being around 24 roubles (38 cents) per kilo. Other products also became significantly more expensive. Between January 1 and March 27, onions became 40% more expensive, potato prices increased by 36%, and carrot by 32%. Prices for meat also went up. The inflation amounted to 17%, while a year before this was still 7%.

A study by Intesco Research Group shows that the melon import in Russia has gone down. The Russian regions of Astrakhan, Volgograd, Krasnodar and Dagestan are the main domestic production regions. Import comes from countries including Iran, China and Uzbekistan. Last year, the import decreased by 30% compared to the previous year.

Chinese export Russia decreases
In the first months of this year, the export of Chinese products to Russia decreased by 70%. Most important causes are the devaluation of the rouble and Russians' decreased purchasing power. As a result of the decreasing export, prices in Novosibirsk, Russia have increased, and the market is dependent on domestic production. China is expected to increase its export again when stocks in Russia run out.

Poland wants to improve ties Mongolia
The Polish government wants to cooperate with Mongolia when it comes to mining, technology and food production. Representatives of the two countries recently met. Poland wants to improve economic ties with eleven countries, including Mongolia. The Eastern European country sees opportunities for things like fruit and vegetable export. There are also plans regarding infrastructure.

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