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Russia: Retail food sales bounce back, present opportunities

After a dip in retail food spending in 2009, consumer spending on food products in Russia increased last year. With more money spent on food and the development of more favorable trade conditions, there are many opportunities for the introduction of United States imports.

A recent report by the U.S. Department of Agriculture Foreign Agricultural Service highlighted increased spending on food products by Russian consumers. According to the report, food sales reached 311 billion dollars last year, which is 87 billion dollars more than what consumers spent on food in 2009. Though consumer food spending has steadily increased over the last decade, 2009 spending was lower than the previous year, and the rebound in spending presents opportunities for American suppliers of agricultural products.



Russian cooperation in matters of trade is also promising. According to the report, accession by Russia to the World Trade Organization obligates it to bind its agricultural tariffs, adding more predictability to the trading relationship and opening export opportunities for the U.S. agricultural industry. But even with those opportunities, the report warned that American exporters need to be careful about two key things.

First, U.S. businesses need to find local importers and distributors that understand the market and can help navigate the domestic landscape. Those kinds of relationships can help with the second factor, which is that any product shipped to Russia should be carefully studied to make sure it won't be displaced by local production. According to the report, for many staple products, domestic production meets demand, so successful imports tend to be those that add to the variety of foods on the market and products that are not grown in Russia or for which domestic production is not enough to meet local demand.

One of the sectors in which American agricultural exporters are experiencing success is tree nuts. Currently, the U.S. is the leading supplier of tree nuts for Russia with over 317,000 metric tons of net imports last year. The value of those imports is over 1 billion dollars, and it's mostly on the strength of California almonds. That kind of market position is due to the fact that almond suppliers found a niche within the growing Russian market and took advantage of it, and although the United States is currently only the sixth largest supplier of agricultural products to Russia, the good news is that the value of those shipments grew 18.2 percent from 2010 to 2011. With that kind of growth, coupled with overall consumer spending, the opportunities for the U.S. agricultural industry are promising.

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