Despite the increasing inflation, which continued last week as well, industrial production in Russia is growing. According to figures from Russian authorities, industrial production went up by 2.8%. Meanwhile, prices are further increasing. In week 41, cucumbers became 10.9% more expensive, and prices for tomatoes and potatoes increased by 5.7% and 2.1% respectively. General inflation for this year is 6.7%.
Whether the Western sanctions against Russia are successful, depends on one’s expectation of it. Politically, nothing is changing. Putin does not seem impressed by the Western sanctions. From the perspective that the sanctions are to cause political change, the sanctions are failing. But from an economical point of view, the sanctions are effective. The restrictions imposed on the financial world and the energy sector, for instance, have consequences for the Russian economy. According to expectations, the growth will stagnate, and a recession is looming in Russia. The direct connection between economic growth and the sanctions is hard to prove. What is certain is that the sanctions do not have a positive effect.
Fruit and vegetables more expensive in Moscow
In August, the Russian Federal Antimonopoly Service (FAS) opened a complaints hotline for consumers. Recently, the service reported the results. 679 phone calls came from Moscow and the surrounding area, of which 169 complaints were specifically about fruit and vegetable prices. From other regions in Russia, 1479 complaints were taken, almost all of them about increasing prices in supermarkets, particularly about more expensive fruit, vegetables and meat.
End of boycott? West has to lift sanctions first
The Russian minister of Economic Affairs said that the boycott of Western products will be maintained until the West lifts its sanctions against Russia. Experts fear that Russia won’t be capable of fully compensating the lost import with domestic production. For some products, the import share is so large that it’s impossible to compensate in the short term. In August, Russia announced a one-year timeframe for the boycott.
Ukraine suspected of re-export European fruit and vegetables
The Russian phytosanitary service suspects Ukraine of illegal re-export of European products to Russia. According to the head of the service, export from Ukraine has increased significantly in September. Apples, pears, tomatoes, cucumbers and other products were exported more often. Russia has asked Ukraine for clarification regarding the increased export volumes. If the suspicion can be proven, Ukraine is facing restrictions.
Belarus boycotted
Russia has announced to neighbouring country Belarus that it will impose restrictions on import from the country, starting October 20. The decision follows several warnings to Belarus regarding re-export of banned European products. According to the Russians, 82 unlabelled shipments have been intercepted over the past months. Export from Belarus to Kazakhstan via Russia, is still permitted through a limited number of border crossings.
Moldovan export to Romania increased
This year, export of fruit from Moldova to Romania has increased. Romanian authorities report that the import of Moldovan plums has increased 42-fold. For grapes, import is 12 times larger. Volumes for other products, such as wine and apple juice, also went up. The growing trade with neighbouring countries is caused by the boycott.
Greenhouse centre Dagestan opened in December
In December, the Russian republic of Dagestan will open a greenhouse centre. The centre is being built with the help of Turkish and Israeli techniques, and started in April 2014. The greenhouse was realized by investors and a grant from the regional government.
Ukrainian tomato price increased sharply
According to Fruit Inform statistics, tomato prices are increasing sharply. Since the end of last week, prices have gone up with 15% on average. Growers are asking 15-16 hryvnia (1.16-1.24 dollars) per kilo. These prices are a third higher than in the same period last year, and 50% above the average over the past five years. The price increases coincide with the end of the season in Ukraine. The value of the hryvnia has also gone down, causing imported tomatoes to be too expensive for most consumers. Imported tomatoes sell at 19-20 hryvnia (1.47-1.57 dollars) per kilo.
Ukraine asks EU to increase quotas
Ukraine asks the EU to increase export quotas for agricultural products. Since the EU established the favourable export conditions in April, Ukraine has fully utilized the space offered: 10,000 tonnes of apple juice, 5,000 tonnes of honey. For poultry and grain, the country has used 77% and 70% of the quotas respectively. The favourable export requirements were established unilaterally by the EU. That’s why Ukraine can only ask the EU to increase the quotas. If the agreement between the EU and Ukraine comes into force, there will be some room for negotiation. The free trade agreement, signed by both parties earlier this year, is coming into force next year.