Russia’s food industry in 2016: Your big news roundup
Published on 22/02/2017
2016 was another topsy-turvy year for Russia’s food and beverage industries. Import bans remained in place, while some have been partially repealed, leading to lower export opportunities for foreign companies.
However, the forecasts were not entirely stormy throughout the last 12 months. There was cause for celebration too.
As 2016 steadily comes to a close, ITE Food & Drink has taken a look at four big talking points regarding the Russian food and beverage sector over the past year. The main topics will come as no surprise to followers of Russia’s fortunes, yet there may be some small surprises tucked away.
Russian food import bans remain in place…
If you are a food and beverage producer located in an embargoed country, then you may want to revise your Russian export plans. Western states and EU member countries remained banned from exporting major product categories, including meats, fruits and vegetables, to Russia.
President Putin announced in November 2016 that he wished the food ban to “last as long as possible”. It has been over two years since Russia imposed its trade embargo in retaliation to Western anti-Russian sanctions first put in place during the summer of 2014. For EU producers, plus those in North America, the future remains uncertain.
An all-purveying sense of dread, however, was not on everyone’s minds in 2016.
…While optimism in Russia’s food & drink sector returns
Attendees to WorldFood Moscow in September 2016’s recorded more optimistic outlooks regarding Russia’s food and beverage sector from 2017 onwards. A
market research survey, conducted by the ITE Food & Drink team at the show, revealed more than 85% of respondents were at least cautiously optimistic about prospects on the Russian food market.
After a couple of bumpy years, especially after the placement of food bans, it is reassuring for exporters to be seen thinking positively about Russia’s need for imported food once more. The fact the world’s largest country cannot currently grow all the varieties in demand by its 143 million population was a key reason for optimism amongst survey respondents.
For non-embargoed countries, the future is looking bright. While the Putin government is pushing self-sufficiency targets, these are a long way off. For now, Russia will remain a market for exporters to explore – provided they are located in a country not under the yoke of Russian food embargoes.
Agriculture production explodes leading to machinery export gaps
We briefly mentioned self-sufficiency above. While this might seem like a shadow looming large over the possibility of food-related exports heading to Russia indefinitely, that is not the case. Agriculture Minister Alexander Tkachev wants to increase production output countrywide by 24.8% by 2020, making Russia self-sufficient in producing food.
Agricultural production is on the rise throughout Russia. Last year’s harvest smashed records, making Russia the world’s leading grain supplier. Meat and dairy are also seeing production volumes increase across the board too. So why is this good news for exporters?
Simple. A drive for higher production output is pointing towards an increased demand for production facilities, services and machinery, including:
• Greenhouses & plant growing equipment
• Heavy equipment such as tractors, combine harvesters and other farming machinery variants
• Harvesting equipment
• Food processing, animal breeding & vegetable growing facility equipment
• Agricultural consulting
Foreign firms are well positioned to capitalise on Russia’s increased agricultural activity until at least the 2020 self-sufficiency deadline – another reason to stay optimistic regarding Russia.
Russia & Turkey relationship repaired?
Perhaps not fully, but one of the biggest stories coming from Russia’s food imports market was its year-long re-establishment of cordial relations with Turkey. Following November 2015’s jet crisis, Russia had slapped a ban on all Turkish food imports entering the country.
For Turkey, and indeed Russia, the effects were massive. Russia, traditionally Turkey’s biggest export market for fresh produce, saw a big rise in food prices. Some commentators, such as investment bank Morgan Stanley, noted the quality of fruits and vegetables on Russian shelves also dropped thanks to the Turkish export ban.
Fast forward to December 2016 and the picture looks a little different. Following on from an August apology from Turkish President Erdogan to his Russian counterpart, a re-normalisation of relations between the two states is closer than ever.
Rosselkhoznadzor, Russia’s food health and safety watchdog, has been gradually paring down its list of banned Turkish export products throughout the year. Only a handful of products remain under embargo. Both sides are now committed to hitting $100 billion a year in bilateral trade, with food and beverages playing a major role in this activity. A vital lifeline for both countries – both economically and practically – looks close to restoration.
Russia’s food & drink industry in 2017 & beyond
To paraphrase Winston Churchill, Russia remains a riddle, wrapped in a mystery, inside an enigma. It is hard to make any solid forecasts on Russia at present. One thing is certain: Russia’s Western food import ban is here to stay for the foreseeable future. However, with the nation’s increased architectural activity comes further machinery and equipment export opportunities.
Another constant in Russia’s food and drink industry in 2017 will be the 26th instalment of
WorldFood Moscow. As Russia’s top food show, WorldFood Moscow brings together Russian buyers, producers and food figures with international companies each and every year. Why not get a head start on your competition and get in touch today to book your stall or get more information?