Archive of numbers / Archive of headings


1 (2015)


Russian Wine Market
Research of the Center of Investigations of Federal and Regional Alcohol Markets (CIFRRA)
Review of Russian Beer Market
Research of the Company GfK Rus

Review of Russian Tea Market
Research of Information-Analytical Company VVS

Review of Russian Bread Market
Research of the Company Step by Step

Review of Moscow Poultry Market
Research of Marketing Agency FDFgroup

Review of Russian Market of Vegetable Oil
Research of the Company ID-Marketing

Review of Russian Market of Milk and Dairy Products
Research of the Company Intesco Research Group
Review of Cheese Import
Research of the Company I-Marketing

Review of Russian Market of Snacks
Research of the Company Market Analitika

Review of Russian Flour Market
Research of the Company Global Reach Consulting

Review of Russian Market of Fresh Vegetables
Research of the Company RBC.research

Review of Russian Market of Flexible Packaging
Research of the Company Abercade

Russian Market of Lease Service in Q3 2014
Research of Rating Agency Expert RA

SIAL 2014 Food Show
International Exhibition of Gelato - MIG

Review of Russian Market of Fresh Vegetables

Research of the Company RBC.research

Questions of food security are getting more and more important today. High level officials are talking about support of Russian agriculture and about opportunities opened to Russian economy including olericulture by sanctions introduced in August 2014.
In this review analysts of RBC.research are trying to forecast changes in consumption of fresh vegetables and economical consequences of political events of 2014 using official data of Rosstat and of Federal Customs Service.
Let us remind that deepening conflict between Russia and western countries caused by Crimean crisis started the war of sanctions: Russia responded with sanctions to limitations introduced by EU countries and USA. Resolution of Russian government No 778 dated August 7, 2014 developed to fulfill the Order of the President of Russia No 560 dated August 6, 2014 On Application of Some Special Economical Measures to Provide Security of Russian Federation for one year limited supplies of some food categories to Russia from USA, EU countries, Canada, Australia and Norway. A number of food categories were banned including meat and processed meat products; fish and seafood; milk and dairy products; vegetables and edible roots; fruits and nuts; products based on vegetable fats. Embargo on import of vegetables covered all categories in TN VED of Russia, from 0701 to 0714 inclusive. Therefore, Russian manufacturers will have to do their best to offer Russian consumers vegetables able to substitute import both in volume and in range of varieties (as far as it is possible). Foreign suppliers are willing to help Russian agricultural companies.
Meanwhile substitution of import from EU countries is not a very hard task. According to RBC.research estimations, in 2013 Russia imported 2,440.2 thousand tons of fresh vegetables. Compare: volume of the review market that year was 45,409 thousand tons. At a rough guess in 2014 consumption volume of fresh vegetables will come to 44-45 thousand tons.
Distribution of import of fresh vegetables between supplying countries is also important. In 2013 EU countries, USA, Canada, Australia and Norway supplied to Russia 702.8 thousand tons of fresh vegetables or 1.5% of market volume. In 2014 share of these countries plus Ukraine in import of fresh vegetables will be far smaller. On October 22, 2014 Rosselkhoznadzor (the Russian Federal Service for Veterinary and Plant Control) laid a temporary ban on import and transit of all kinds of plants from Ukraine. The reason was increased import from Ukraine after introduction of sanctions by Russia in August 2014. Federal Customs Service registered upswing in supplies of apples, tomatoes, cucumbers, pears and plums to Russia from Ukraine in August and September 2014 in comparison to the same period of 2013. The majority of products were re-labeled or had no marks of manufacturers.
The problem deepened because imported products were contaminated with pests like codling moth and Californian thrips. Repeated inquiries made by Rosselkhoznadzor to Gosvetfitosluzhba of Ukraine asking to explain this situation were left unanswered, so in October 2014 Rosselkhoznadzor as a representative of Russia laid a temporary ban on import and transit of all kinds of plants and their parts from Ukraine.
Such restrictions are not new on Russian market. For instance, temporary restrictions were imposed by Rosselkhoznadzor in May 2011 upon import of vegetables to Russia from Germany and Spain; on June 2, 2011 same restrictions were applied to import from other EU countries due to revealed contamination of products with E. coli. However, in the beginning of August 2011 Russian Sanitary Service allowed to lift the ban on import of fresh vegetables from EU countries as the outbreak of acute gastrointestinal infection was over.
Truth be told, Russian consumers practically did not mention the consequences of that ban. It is quite possible that sanctions introduced by Russia in August and October 2014 will not affect consumption of fresh vegetables in the country.
For instance, in segments of the most popular categories of fresh vegetables share of import from the countries mentioned in sanctions does not exceed 4%. The only exclusion is the segment of tomatoes: in 2014 cumulative share of tomatoes imported to Russia from EU countries, USA, Canada, Australia and Norway constituted 7.3% of consumption volume, from Ukraine 1.4%. But Turkey and China are willing to fill this dent. Besides, fast construction and start of new greenhouse complexes in Russia will reduce import dependence of Russia in the category of tomatoes during the next 2-3 years.
Thus, fresh vegetables will hardly disappear from Russian retail after the introduced limitations of import, meanwhile these sanctions significantly affect agricultural manufacturers in Europe. The strongest negative consequences will be seen by Netherlands, Poland, Spain and Ukraine. In 2013 these countries supplied to Russia respectively 257, 154, 139 and 104 thousand tons of fresh vegetables. And though the named volumes seem impressive share of each country in import of fresh vegetables to Russia did not exceed 11%.
However, sanctions introduced by Russia look not as drastic as rapid devaluation of the ruble. The ruble gets weaker due to fundamental factors (like falling of market quotations of raw oil) and because of currency speculations. Consequences of the ruble's volatility were already suffered by many Russians in the end of 2014 and beginning of 2015. Increase of prices for imported vegetables is the strongest trend of the review market. However, these challenges faced by the review market can provide an extra stimulus to Russian agricultural manufacturers to improve competitiveness of their products.
Attention to urgent problems of the review industry caused among other reasons by counter sanctions of Russia makes Russian agricultural manufacturers quite optimistic about the future. In this context many industrial farms plan to extend planting areas to increase production and sales. This certainly will stimulate development of this industry in 2015-2017. This trend is proved by information in mass media about start of new greenhouse complexes and extension of planting areas.
For instance, according to, production volume of fresh vegetables in greenhouses of Kemerovo Region is to increase by 70% already in 2015 and is to reach 17 thousand tons due to start of 11 ha of greenhouse complexes Kaltanskoe in Novokuznetsk District and in KDV Agro (Kemerovo Region). By 2017 agricultural manufacturers of Moscow Region plan to increase production of fresh vegetables by more than 700 thousand tons (where 375 thousand tons fall on potato and 370 thousand tons on other kinds of vegetables). Agricultural manufacturers of Rostov Region work on import displacement plan which implies extension and construction of new greenhouse complexes during the next 3 years.
Start of construction of a new Center for Selection and Seed Breeding in Leningrad Region was announced in November 2014. One of programs of this Center will be seed potato.
Construction projects of trade and logistics complexes are also very important. Start of a large storage, processing and pre-trade treatment complex for vegetables in Astrakhan Region was announced in November 2014. This complex includes 6 isolated blocks for vegetable storage with total area of 5 thousand sq. m. and processing capacity of 120 tons of vegetables per shift. Alexander Zhilin, Governor of Astrakhan Region mentioned that in 2015 agroindustrial complex of his region will get more support than in 2014. According to the Governor, this support will include subsidies on bank loans' interest rates, help in organization of melioration jobs and some other projects.
Thus, weakening of ruble and the war of sanctions can stimulate development of Russian olericulture and we already have proofs of this trend.

Inga Mikaelyan
Senior Analyst