Russian Government incentives have spurred a rush to produce local fruits and vegetables, but international expertise and technology are needed for the initiative to reach its full potential.

Irina Koziy

This is the message from Irina Koziy, who leads consultancy RK Marketing and news website Fruitnews.ru.

While some countries have been able to capitalize on the general absence of EU fruits and vegetables in the marketplace, the lower value of the currency has also put the strain on exporters that still have access to Russia.

In response, the government and the private sector have taken heed of the country's low level of fruit production, which Koziy estimates to be around 520,000 metric tons (MT) for a population of 144 million people.

To put this figure in context, Koziy says in 2013 the country imported 6.2 million MT of fruit, which declined to five million MT in 2015.

"There is still a possibility to trade with Russia in the fresh produce sector, just from a different angle. The growth is on the side of supporting local production," she tells www.freshfruitportal.com.

"Unfortunately the majority of the opportunities are not in fruit and vegetable shipments, but shipments of equipment for processing, technologies for growing or greenhouse construction or lighting, packing equipment, sorting equipment, everything related to local production," she says, adding there are also increased possibilities for purveyors of seeds, pesticides and bio-insecticides.

She says Russian companies are now able to receive subsidies of 20% to cover the cost of greenhouses and storage facilities for fruit and vegetables, which has really helped movement in these two sectors. Additionally, there is a program allowing producers to cover a certain percentage of the credit rate for loans.

"In general commercial credits are extremely expensive in Russia and mostly prohibitively expensive for agricultural investments because the majority of investment projects have payback periods of about eight to 10 years even with this support; without it, it’d be a complete disaster.

"The Russian government increased the financial help it provides to the Russian growers for new plantings, new orchards and so on, and also for keeping the development of their own vegetable and fruit production.

"Right now we see a lot of businesses that decided to invest in agricultural production - there are quite a lot of new projects, greenhouses, new processing plants - it's a kind of new market, a new reality."

When asked about specific crops, Koziy says there has been increased production of mushrooms, cabbage, carrots, and especially cucumbers and potatoes.

"About probably 30-40% of the total market of cucumbers used to be imported, and this share is changing pretty slowly just because the market is large - the most frequently consumed salad is with cucumber and tomatoes," she says-

"The southern part of Russia is a major supplier of all types of fruits and vegetables, excluding probably cabbage, carrots, potatoes and beets, but the season for the majority of vegetables is very short and the production is not extremely large for such vegetables as tomatoes, bell peppers, eggplants and so on."

She adds one of the main suppliers of cucumbers used to be Turkey, which also had its exports blocked at the start of this year in response to the downing of a Russian jet near the Syrian border.

It is unpredictable whether improved relations between the two countries will lead to renewed trade, but she says the majority of produce traders are hoping for a reopening in the fall.

Koziy clarifies one of the biggest challenges for greenhouse production in Russia is the high cost of electricity, which is one of the reasons crops like bell peppers have not seen such a strong uptick.

From processed to fresh

She says a lack of fresh fruit in the market has prompted many growers to redirect fruit that used to be sent to processing to the fresh market.

"That was pretty significant. We estimate that about maybe 15-20% of the total share of fruit that previously used to be processed now goes to the retail trade," she says.

"That raised the cost of fruit for processors extremely, and developed a deficit of mostly apples, and unfortunately decreased the quality of the product on the retail shelves.

"Another interesting consequence we see is apples, which are the major fruit type, the favorite fruit consumed by Russians, are losing their market share to citrus fruit and bananas."

She clarifies this does not mean there has been increased imports of citrus and bananas, but the decline has been smaller relative to apples.

"In citrus it's mostly oranges and mandarins, and also significant consumption of lemons also - it's another tradition in winter that we consume lemons – it’s seen as a product that helps to overcome cold with Vitamin C. We consume a lot of lemon in tea as well.

Koziy says these issues and new opportunities will be highlighted in a special conference on Sept. 13, as part of the exhibition World Food Moscow, with talks to be streamed by Fruitnews.ru with English translation.

www.freshfruitportal.com