Greenhouse business as the most lucrative agricultural sector in Russia

The Vedomosti (the country’s leading business newspaper) has published an analytical article on the greenhouse business in Russia. The material considers investments in indoor vegetable production as the most lucrative economic direction in domestic agriculture. Among the invited experts were representatives of large enterprises of the industry, including the Director of the Investment Department of “ECO-Culture” Yuri Voronov.

At the beginning of the article, the authors present the data of the industry expertise conducted by Rosselkhozbank with the aim to find out which directions in modern Russian agriculture bring the greatest income. The bank has more than 11,000 clients representing agricultural enterprises. Among them, greenhouse vegetable producers proved to be the most successful – over the past year, the profitability of their enterprises increased to 52%.

In the article, it is said that this sector began to develop in Russia after the imposition of the food embargo and the collapse of the ruble in 2014. Thus, the sanctions have caused the agricultural sector to rise in Russia. Over the past 4 years, investments in this industry have exceeded 200 billion rubles, with the total area of new greenhouses exceeding 1100 hectares.

According to Yuri Voronov, the highest rate of profitability was observed in 2017-18, when after the prohibition of supplies from Turkey there was a shortage of vegetable products in the greenhouse tomato market. The niche was successfully occupied by Russian producers, in particular, “ECO-culture” holding. It is noteworthy that Russian products are outperforming imported ones by all indicators.

Today the market of greenhouse cucumbers and tomatoes is filled with inexpensive and high-quality domestic products. Major market players are mastering the premium direction offering elite sorts of cherry tomatoes and branded vegetables in ecological packaging. And while this kind of goods is more expensive, the price is fully corresponding to their production costs. Mr. Voronov believes the demand for premium eco-products will only increase in the future. At the same time, the Director of the investment department mentioned the reduction of profitability during the current year. This is due to the growth of electricity prices and the abolition of the federal capital cost compensation.

Further in the article, the information on other branches of agriculture is given, in particular, the production of meat and dairy products. Apparently, the profitability indicators of the enterprises working in this area are behind the greenhouse direction.

For the full text of the article, please visit the Vedomosti official website.