Russia's restrictions on food imports has disrupted the product balance of the country, according to the findings of the research company Tekhnologii Rosta (Technologies Of Growth).
The embargo on imports from the countries of the European Union (EU), Norway, Canada, US, Australia and Ukraine, adopted by the government of the Russian Federation on August 7, affected a large list of food and agricultural products, especially affecting fresh food.
According to the statements of officials, standing in front of Russian producers are wide open opportunities to increase production volumes in the absence of competition from imports. At the same time, Turkey, China, Belorussia, Kazakhstan, Argentina and Chile are preparing to increase shipments of food products to Russia.
According to Tekhnologii Rosta, under the current situation, there is a high probability that the following tendencies will be noticed in the near future:
Domestic producers in the near future will not only increase volumes, but also their sales prices.
A rise in prices for a significant portion of products is inevitable. The increase in price for the end of 2014 – early 2015 is expected to range from 5 percent to 20 percent depending on the market segment.
The increase in supplies of fresh-products from Turkey and China will lead to an increase in the proportion of low-quality imports that violation of phyto-sanitary norms on Russian shelves
The deficit of food products will primarily be felt in the premium segments of the original products
To ensure food security in Russia requires three conditions: a huge amount of private investment, "long cheap" money from banks and a target-rich support for agricultural producers from all sides of government. We do not have any of these conditions.
The potential growth of domestic production and full import substitution, as experience shows, should be based on the actual production capacity. At the very least, the production cycle cannot be shortened or accelerated at the request of officials. To collect apples, you need to plant the garden, to get cream, to need to get a cow.
Domestic producers will be able to increase volumes of vegetable production no sooner than the end of the summer – the beginning of 2015. Production volumes of stone fruit could be increased between the years 2018-2020, apples and pears – between 2020-2023. In this case, the most critical question remains the huge deficit of modern vegetable and fruit storage facilities, and implementating the necessary technology to preserve the harvest until next year.
The year-round production of fresh tomatoes, cucumbers, eggplants, peppers and greens in greenhouses could fully meet domestic demand between the years of 2015-2030, which requires significant investment on the part of private business and working target programs on the part of the state.
The introduction of the year-long embargo that has blocked several million tonnes of food products, which traditionally had been shipped to Russia, has also seriously violated the established product balance. More than that, changes and restrictions will affect not only the end food products and food production, but also those of the domestic producers.
The modern technology of growing vegetables and greens in greenhouses require the use of special equipment and structures, as well as fertilizers, pesticides, soil substitutes, and most importantly, the seeds of tomatoes, cucumbers, eggplants, etc. of Dutch, French or German selection. Without all of these components, developing greenhouse horticulture in Russia is simply impossible.
By the end of summer and autumn, the impact of the embargo on Russian counters has been minimal. Therefore, from the political point of view, the timing of the embargo couldn't have been better timed, in that sense. Domestic consumers will feel the obvious deficiency and the associated significant increase in prices by the end of November- beginning of December. The "peak" of the problems, connected with the embargo, will be seen in February – May.
As a result of an analysis of market tendencies, the company Tekhnologii Rosta said that the likelihood of the ban being lifted in January-February of next year, is very high. FruitNews article (Russian)
Source: Tekhnologii Rosta