Russia is ready to splash the cash in its horticulture industry
Published on 04/07/2017
Import substitution lies is the issue at the heart of the Russian agriculture at present. With the ban on EU produce extended for another 18 months, fruit and vegetable farming is on the cusp of a domestic activity explosion.
Horticulture, i.e. production of fruits, vegetables, and other edible plants, is in strong focus. Government support is heating up - which means more money for farmers to spend on machinery, equipment, and materials, for crop production.
Foreign companies be aware: this has created a new market entry point for you to grow your business leads and revenues in Russia.
State support increases for Russian horticultural growers
Midway through 2016, with the food embargo in full swing, Russia’s agricultural authorities came together to discuss development of horticulture throughout the country. Representatives came away from this meeting with a new determination to expand and improve Russian nurseries, fruit and vegetable farms, and agriculture as a whole.
Why? Well, Russia lags behind in domestic cultivation of some key varieties – even if yields of fruits and berries produced in Russia grew 13% in 2016. As stated earlier, import substitution is very much on the minds of Russia’s food authorities. 2016 saw Russia import over 1.5 million tons of fruit, including apples, pears, quinces, and plums.
The Ministry of Agriculture, and its head Alexander Tkachev, has stated time and again that Russia has ideal conditions for growing a cornucopia of crops, While some species, such as citrus fruits, aren’t suitable for domestic cultivation, the above types of fruits should flourish in Russia with careful attention.
Even so, geography and climate are not slowing down Russian agriculture.
Greenhouse construction is currently experiencing a boom in Russia – meaning even more products should be being pumped out of the nation’s farms and agroholdings going forward.
However, fruit, berry, and vegetable farming is expensive. For each hectare of land, around 200,000 roubles (roughly $3370) of investment is needed. For more intensive farming, costs can spiral as high as 3 million roubles (around $50,000).
That’s why state support for the horticultural sector has been steadily rising year-on-year since the Russia/EU mutual food band was put in place.
More money for Russian horticulturalists coming soon
The Putin administration is throwing its economic heft behind farming in general. By 2020, as much as $9 billion will have been invested into agriculture, including horticultural sectors. Government cash in their pockets means Russian farmers have more to spend on necessary cultivation and production equipment.
As 7.8% of all agricultural equipment bought in Russia coming from a foreign manufacturer, that’s great news for international producers.
For horticulture specifically, Russia currently provides farmers with funding worth 100,000 roubles (approx. $1685) per hectare. Essentially, this takes half the cost of running these farms out of the hands of the farmer and into the government’s.
Elsewhere, the Ministry of Agriculture is providing direct support for 90 projects throughout Russia. A credit line of 2.2 billion roubles ($37 million) has been set up, and this is what is fuelling these developments. Funding covers activities such as building new farming facilities, business modernisation, and construction/renovation of storage centres.
Funding also covers necessary planting products, such as mineral fertilisers. Imports of fertilisers came to $73.2 million in 2015, so this might be another export avenue for international firms to explore.
So there is a lot of money on hand for Russian horticultural farmers to dip into. Let’s look at why this funding will come in handy, in terms of developing the industry.
Fruit and berry farms: in focus
Support for horticulture and nurseries has been entrenched in Russian legislation since 2013 – prior to any food bans being put in place. Now though, the industry has taken on a new importance with imports cut off and their substitution a key governmental policy.
Domestic production of fruits and berries covers just 15.6% of the nation’s total recommended consumption per capita (14.8kg). This is highlighted in Russian apple output. Russia produces between 350,000-500,000 tons of the orchard fruit annually – but consumption stands in excess of 1 million tons a year.
Government subsidies are here to a) lower production costs so farmers can farm more at competitive prices, b) cover supply gaps left behind by the import ban, and c) up the appeal of Russian produce on global export markets.
But Russian fruit, vegetable, and berry farmers need the products to achieve this. At YugAgro 2017, you can put your products in front of those who need them most.
Meet the Russian horticultural sector at YugAgro
YugAgro is the largest international tradeshow in Russia dedicated to agricultural machinery, equipment and materials for agricultural production. It’s an effective tool for promoting your products in front of thousands of agribusiness professionals across Russia.
YugAgro visitors represent agricultural businesses from leading Russian agrarian regions and include agroholdings, private farmers, processing plants, grain companies, etc. Most of visitors are decision-makers.
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