Niyazi Gasymov: wholesale suppliers have less space for operation
Shortly before the New Year, FruitNews requested participants of the fresh produce market and representatives of related sectors to describe the most significant events and achievements in 2016, and share their expectations and plans for 2017.
Niyazi Gasymov, President of the Association of Producers, Importers and Exporters of Fresh Produce, head of SoyuzPromContract.
Niyazi Gasymov, President of the Association of Producers, Importers and Exporters of Fresh Produce, head of SoyuzPromContract
- The year 2016 was slightly weaker than 2015. But it had been anticipated. We are living in the period of isolation. I understand that sanctions are not an end in itself. However, if the government made such a decision, we have to follow this policy. A positive outcome is that many Russian [products] started to appear on Russian store shelves. First of all, it is nice that Russians have joined this process and realize that the period of free resources is finishing, and that it is necessary to work to deserve good living standards. We can see that people have started really investing in agriculture.
- A very encouraging fact is that Russian agricultural companies are luring foreigners – the Dutch, the Israeli, and the Egyptian. For instance, I know the Egyptian company Daltex. It is planning to establish its own firm in Russia to grow seed potatoes. It is good that many Europeans, being aware of importance of the Russian market, are heading to Russia. I am confident that in the next five to ten years (agriculture is long-term money) Russia will be capable of filling certain gaps regarding plants grown in our country. It concerns apples, in particular. I know that some companies plant 200 to 300 hectares of gardens per year. And we hope that in the near future domestically grown plants will be able to fully substitute the currently imported produce. Obviously, we do not mean tropical or subtropical types of produce that are not grown in Russia.
- The biggest problem in 2016 was, probably, related to Turkey. Over the past few years this country has been a supplier of cheap fruits and vegetables. We should give a credit to Turkish suppliers. Firstly, over the past few years they have been producing what the Russian market requires. Secondly, the quality of the Turkish produce corresponds, more or less, to the European produce. Thirdly, they found the way, quite quickly, to fill the gap that emerged as a result of sanctions against European products. When it was decided to close Turkey, I immediately realized that it would affect the consumer basket. Cutting off Turkey was extremely painful for all of us. It affected our market very much.
Many countries indeed began joining supplies. The Russian Federation became open for the Iranian produce, but the latter’s quality is much lower. From the beginning importers understood that the Iranian produce was not the proper produce. And the time has proved that assumption was correct.
- At present, with Turkey being party open, we can boldly state that Russians again can buy, for instance, citrus fruits at low prices. I understand that Turkey is not fully open yet, but there have been reports that Turkish vegetables will be allowed soon. We hope that it is really true, and this produce will be again available to every citizen of Russia in terms of price and quality.
- As far as general changes on the market are concerned, I can express only my subjective sentiment. At the current stage, old stereotypes are being broken on the market. Many retail chains have started directly importing fruits and vegetables. And wholesalers are beginning to realize that they are losing this competition to retail chains. There was very strong volatility in 2016. No product had stable prices on the market. In the meantime, chains are becoming stronger, and the number of markets is decreasing everywhere, and wholesale suppliers have less space for operation. And in the near future, retailers will defeat wholesalers. They will understand that some 60% of the whole produce on the market is sold through them, and they will dominate.
- We – a large importer in the past – realize our current place on the market as service provider. Not everyone agrees to such an approach. Many chains think that it is easier for them to import independently. We understand that it is correct in case of short-distance deliveries. But many chains try to import directly in long-haul cases, e.g. Magnit. Lately, they have been offering some produce almost like wholesale producers. They bring a lot but cannot sell it, and supply the produce to the wholesale market. As long as there is no antidumping law in Russia, they can behave like that. But what will happen later?
- We believe that wholesalers should play a certain role on the market. Due to the crisis, retail chains will be calculating their losses, including losses from mistakes made at purchases, and in the end they will realize that importers should not be fully destroyed, that it is possible to rely on importers, that they can assist in finding ways out of complicated situations. And then the market will stop seesawing.
- As far as expectations from 2017 are concerned, we, as always, are looking for something positive. If oil prices grow, Russia’s budget will get a bit more money. If there is more money, people will consume more.
- On my own behalf, I would like to wish all citizens of Russia, first of all, be very careful about the quality of products they consume, and timely eat fruits and vegetables. Good fruits, good vitamins mean being in a good mood. And a good mood contributes to longevity of all of us. Only people of sound body and mind can be creative. I wish prosperity to our citizens, so that they have the money to buy our produce. Not to forget that it is necessary to eat fruits and vegetable, to eat berries and not to forget about salads.