In Minsk, presidents Poroshenko (Ukraine) and Putin (Russia) have reached an agreement. Both parties aim for a cease-fire; the bloodshed in eastern Ukraine should stop and border control should become more efficient. Regarding the sanctions, for the time being nothing will change, and even a de-escalation of the Ukrainian conflict is no guarantee that anything will change. The Russian sanctions have provisionally closed the border for most products, including a Polish initiative to send trucks with apples to Russian schools. But British seed potatoes are welcome. Meanwhile, Minsk has become the smuggling capital of Europe and Belgium considers that compensations for growers is a cartel forming measure disturbing the market.
British seed potatoes allowed in Russia
Russia has eased the sanctions against Great Britain, with seed potatoes allowed to cross the border. The British Potato Council is pleased with the decision, as they see a lot of potential in the Russian market. "We hoped to be able to grow in this market and we have seen a lot of interest from Russia in the new varieties that we wanted to export," said Robert Burns of the Potato Council. Russia needs the seed potatoes to sustain its own food production, which is why it has allowed them.
Russians leave Germany
No Russian firm has operated in Germany this year, while last year there were 11 Russian companies. The sudden drop, according to analysts, is the direct result of the Ukraine crisis. German exports to Russia during the past six months have dropped by 15.5%.
Minsk smuggling capital
Minsk Airport, Belarus, has become a smugglers nest for EU exports to Russia. The fruit and vegetable volumes handled at the airport have suddenly rocketed. Remarkably, Belarus is now suddenly producing lemons, grapefruit and pineapple for Russia. Belarusian customs authorities are turning a blind eye to this. In the streets of Moscow it is possible to find "Belarusian oysters." Belarus is landlocked, and thus unable to produce oysters, but it does so anyway.
Belgium withdraws 2000 ha of pears from market
The Flemish Ministry of Agriculture wants to withdraw 2,000 of its 9,000 hectares of pears from the market. The government offers growers a compensation of 6,440 Euro per hectare to growers not harvesting the fruit. This applies only to growers who are members of a marketing organization; non-members get half.
The Federal Department of Health announced that growers may use chemicals to force apples and pears to drop from the trees.
There have also been protests against the withdrawal of products. According to European law, the formation of cartels, including agreements between competitors to drive up prices, is prohibited. Strictly speaking, a compensation regulation to withdraw products from the market is a form of cartel forming. According to proponents of this view, the withdrawals disturb the free market and consumers have a right to lower prices when there is a large supply. "This is how a free market works" is the reasoning.
Moldova exports 20% to EU
Of all the fruit that is grown in Moldova, only 20% meets the EU's requirements. Now that Russia, where such requirements do not apply, has been lost as an export market, the country is looking for new destinations. Growers must now therefore strive to implement the European legislation. Apples, for example, must have an intact stem, weight at least 90 grams and a have a diameter of at least 60mm.
New suppliers for Russia
The Russian Ministry of Agriculture published a list of countries that will supply replacements for Western products. The list includes countries already mentioned in previous posts which have shown an interest in increasing their exports.
Vegetables: Turkey, Argentina, Chile, China, Uzbekistan and Azerbaijan. Apples and pears: Argentina, Armenia, Tajikistan, Israel and Turkey. Citrus: Egypt, Morocco, Turkey and South Africa.
The ministry stressed the potential of Azerbaijan, which in the first half of 2013 exported vegetables worth 60.5 million Euro. In the same period this year, that amount has increased to 76.6 million. Fruit exports grew by 53.63%. However, the country is suffering a serious drought, which will affect production in the near future. It is therefore questionable whether Azerbaijan will be able to meet the expectations.
Companies and authorities in Tajikistan are preparing for a significant increase in fruit and vegetable exports to Russia. It is expected that these will increase by about 700%. "We are now waiting for a decision from the Government and the approval of the competent authorities," said the Ministry of Agriculture. In the first six months of this year, Tajikistan exported more than 60,000 tonnes of vegetables, 3,000 tonnes of fruit and 50,000 tons of dried fruit to Russia. In terms of revenue, exports increased by 13.6% to $ 50 million.
Kaliningrad keeps border closed
The Russian republic of Kaliningrad keeps its borders closed. A Polish retail chain had announced it would send trucks loaded with apples to be donated to 37 schools in the region, but the Russians were not happy with the initiative. The Ministry of Foreign Affairs has announced that the borders will remain closed for the boycotted products, and that nothing has changed with the rules. The shipments had been scheduled for early September.
Prices stable or rising?
Serbia and Latin America would like to supply apples to Russia, but increased demand has pushed prices up and traders request a prepayment; something Russian traders currently do not accept. The domestic apple harvest has started and the market is expected to be filled with products from Krasnodar, Voronezh and Belarus. Russians also claim that the prices for bananas, oranges and mandarins will not rise because the routes are not changing. Peaches and nectarines have become much more expensive due to the loss of EU suppliers. New suppliers of this stone fruit are Turkey, Israel and Crimea.
You will find more statistics at Statista
Moreover, the reports on prices differ depending on the source. The Russian government says that overall prices are not rising, but several websites show a different picture. Either way, it is not always clear how the calculation was made.
The website Statista estimates that potato prices have increased by 72.7% since 1 January. Other food prices have also increased, resulting in an average increase of 10%.
Also retail chain X5 reported to be facing difficulties to keep the shelves filled. After the import ban, the Russian retailer has had to look for $ 9.5 billion in products from different suppliers. That equates to about 8% of the range. X5 is looking for new suppliers for fruit and vegetables in Morocco, Israel, Serbia and Azerbaijan. Nevertheless, the chain continues to invest in expanding the number of stores.
Russian horticulture
A study conducted by the Intesco Research Group concluded that Russia's cabbage harvest volumes have increased in 2013, especially on farms and private plantations, while agricultural organizations are reducing the acreage. Nevertheless Intesco calculated that 25% of the harvest in Russia consists of cabbage, whose production has been growing since 2005. Most of the production takes place in Dagestan, where over half a million tonnes were harvested in 2013.
Greenhouse production is also still in the spotlight. In the Russian republic of Saratov, the Ministry of Agriculture estimated that its current 89.7 hectares yield more than 27,000 tonnes of vegetables per year. To secure a consumption of an average of 15 kilos per capita, a yield of 37,500 tonnes is needed. That is why the government wants to invest more in the sector.