Rung product on Russian market

Argentina sees a lot of opportunities for exporting soft fruit to Russia. The country sees interest from Russian traders increase. On the Russian market, lemon prices go up to unprecedented levels. Partly because the season in Argentina and South Africa is drawing to a close, and the volumes there were disappointing, prices are 300% higher than last year. And the greatest challenge for Russia in becoming self-sufficient, is gathering enough know-how and organizing good management. In Europe, consumption is back to old levels, the effect of initiatives to buy local produce has worn off. And in the Netherlands, products are reportedly being rung for export to Russia.

Where the world seems mostly concerned about Russian involvement in Ukraine, Russia’s power base is expanding farther eastwards. With political and financial means, Russia is embracing Kyrgyzstan. Partly because of Russian influence, the American military base in the country was shut down, and by relieving large sums of national debt, ties with Russia are getting closer. Russian oil companies are also investing large sums of money in the country, and Russia is helping Kyrgyzstan in order to be able to join the Eurasian Union faster.

Dutch produce in Russia as well
Dutch produce in a blank box, label them with a different country of origin, and the products can be shipped to Russia. Illegal, but it does occur. After reports about Poland and the Czech Republic looking to enter the Russian market through Belarus and Kazakhstan, now there are also reports of Dutch products being rung. During the EHEC crisis, products were also being rung. The insights gained by inspectors during that time, are now being used to track down illegal export.

Lemons 300% more expensive
With the lemon season in Argentina and South Africa drawing to a close, prices on the Russian market are vastly increasing. Compared to last year, prices are three times higher. The lower volumes in these countries are partially responsible for the price increases. Prices are between 130-165 roubles (3.23-4.10 dollars) per kilo. The situation will probably change toward the end of the month, when Turkey enters the market. Turkey is the largest exporter to Russia, with a market share of 62% last year. South Africa and Argentina represent 12% and 8% of the market respectively.

Argentinian soft fruit in high demand in Russia
Russian traders have shown interest in Argentinian soft fruit. Among others, Holding First Fruits, the largest importer in Moscow, has reportedly shown interest. The company trades for 150 million dollars annually. The Argentinian minister is enthusiastic, and sees opportunities to ship berries from the south, and strawberries from the north to Russia. The minister stresses the successful trade relations between the countries. Of the Argentinian mandarin export, 45% goes to Russia.

European consumption saw small increase
After the boycott, various countries drew attention to local growers. In Poland, an ‘Eat apples to annoy Putin’ promotion was started, but six weeks after the promotion, despite a brief revival, consumption is back to old levels. Prices for Polish apples have gone down to around 22 cents, hardly enough to cover production costs. Although in theory, European growers could move to new markets to fill the gaps there, a lot of time is needed to gain entry to new markets. Time that isn’t there for products that are currently being harvested. Millions of kilos of Greek peaches and strawberries were left to rot after shipments were held at the Russian border. In the Netherlands, 900 hectares are expected not to be harvested. Other markets are mainly seeing indirect consequences. The British market is getting through the sanctions relatively unscathed, but if the market is flooded with Dutch apples and pears, for instance, that will have consequences for the British.

Re-export to Russia allowed
There’s still quite a bit of confusion on the boycott, and the details of the ban. For export, the origin of the product is binding, rather than the route travelled by the products. That gives opportunities, because Russia still depends on import. The Russian aim of becoming self-sufficient isn’t within reach for the time being.
Although Russia is working hard to become more self-sufficient, that’s not possible for all foods. Earlier this month, Pierre Bernstein of ABN Amro travelled to Russia. He found that trade in Russia is mainly based on personal relations, which are now being upset by the boycott. By the way, many trades do support choosing for own production. For fruit and vegetable cultivation, that will be quite difficult. Know-how, capital and proper management is needed to be able to produce efficiently, and that’s just what’s often lacking at the moment. When it comes to cooling, storing and logistics, big steps also have to be taken yet. Alignment between the industry and the supermarket is often not good either.

Russia eliminates import tariff Iran
Earlier, Russia and Iran already announced their willingness to improve trade relations. Now Russia has eliminated the tariff on import of Iranian fruit and vegetables. Because of this, Iranian exporters can sell their produce in Russia more easily. Turkish traders responded stoically, they think Russia will look away from Turkey, switching to Iran as its main supplier. Iran is able to supply watermelons, kiwis, pomegranates, apples and pears, among others, to the Russian market. Russia is hoping this will ease the domestic consequences of the boycott.