For exporters outside of the European Union, Russia had the potential as a lucrative market because of the ban on European products there limited competition. But the falling value of the Russian ruble has made it difficult for shippers sending fresh produce to Russia to get much of a return this year. Russian importers, who are looking to boost shipments from non-European countries, are also feeling the effects of a falling currency value. But Russia's importers believe that good times are still ahead once they get out of the current situation.
“If there are strong enough importers, we can get through the difficult times until we get to the good times,” said Mohammed Mohammedli of Akhmed Fruit Company in Russia. The Russian ban on European goods cut 20 percent of what Akhmed Fruit usually imports, and Mohammedli has worked this season to make up for that missing fresh produce. He noted that although a significant amount of what his company imports every year is now gone, the absence of that much product can be compensated by looking to other countries, like China, Turkey, Egypt, Pakistan and Morocco to send more fresh produce. But even while looking to other countries to pick up the slack left by European exporters, he's careful to note that the volumes sent to Russia have to be balanced.
“We've explained to the exporters we work with that they can see better results if they decrease the volume of what they're currently shipping,” said Mohammedli. “With decreased volume we can get prices back to normal, but we could see bigger losses if that doesn't happen.” Depending on the commodity, Mohammedli thinks a cut in volume between 50 and 80 percent is warranted, though for staples, like onions and potatoes, that kind of cut is not necessary to boost prices.
“Products like cherry tomatoes, some salads, strawberries and grapes – could be limited because consumers don't find them essential,” said Mohammedli. Up until this months, Russian importers would have normally taken more essential products, like vegetables from Europe. With the ban, they've been relying on Egypt, Turkey, China and India to supply mainly vegetables, and Argentine and Chilean exporters have provided mainly fruits like apples and pears, grapes.
While solutions to the economic problems Russia faces and the political problems it has with Europe and the United States will take some time, Mohammedli believes that the Russian fresh produce sector will come out stronger after things have settled. He hopes the value of the local currency will improve over the first three months of 2015, and the contacts he and other importers are making outside of Europe will give them more options once the market is again open to Europe. In fact, the longer Russian importers have to make do without European products, the harder, Mohammedli believes, it will be for European exporters to sell their products in Russia once the ban is lifted.
“The countries Russians are working with are making contracts in rubles, and once the currency situation is resolved, Russian importers will become comfortable working contracts this way,” said Mohammedli. “Both Europeans and Russians are losing money, and there will be some companies that go bankrupt, but some will survive and continue their business like always. New agreements are being made with countries outside of Europe, so it will be very difficult to go back to European goods after the ban is lifted.”
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