On the development prospects of the greenhouse industry in Russia

Delovoy Peterburg (“Business St. Petersburg”) newspaper has published an article titled “The Struggle for Greenhouses”, in which the authors tell about the current state of the greenhouse industry in Leningrad Oblast and in the whole country. The abstract says, large investors massively refuse to invest in the construction of new facilities for growing vegetables in greenhouses, believing this sector to be no longer as promising as it was a few years ago. The companies which are completing the facilities planned have to compete with those who unite against them.

The article is mostly focused on the Krugly God (“All Year Round”) greenhouse complex located in Boksitogorsk District of Leningrad Oblast. The enterprise is a part of ECO-Culture, the largest agroholding in the country. The second stage of greenhouses is planned to be launched in 2021. With the first stage launched in 2014, the amount of vegetables (tomatoes, cucumbers, and lettuce) grown in the GC reaches 6.2 thousand tons annually.

According to the complex’s CEO Maria Butkina, the new complex with an area of 5.5 hectares will be used to grow tomatoes and Frillice lettuce (3.2 thousand tons of vegetables per year). The total amount of investments in the second stage of construction is estimated at 2.07 billion rubles.

According to experts, the greenhouse industry in Russia has undergone fundamental changes in recent years. This is due both to the embargo on imported products and to the temporary state support of local agrarian businesses. Both factors had a positive impact on the domestic greenhouse industry. ECO-Culture managed to carve a niche in the tomato market because there were only a few enterprises growing this crop on an industrial scale at the time.

Investments in greenhouses have a payback period of 8-10 years, making it difficult for investors to risk their money without support from federal and municipal authorities. Besides that, the industry is being under the negative influence of some other factors, such as the falling ruble, delayed equipment supply, and lower buyout prices for vegetables coming from retailing companies.

Nevertheless, ECO-Culture does not intend to cancel its construction plans. The demand for fresh and eco-friendly vegetables in Leningrad Oblast and its neighboring regions is still steadily high – the market is not yet able to fully meet the needs of the population, which is why the prospects for launching the second stage are quite certain.

Meanwhile, the holding is not the only representative of the agricultural industrial sector in the region. Right now, ECO-Culture has to stand against a joint venture resulting from the merger of several large enterprises. However, according to experts, such a serious level of competition between major players of the greenhouse market will only be a win for the country’s economy.

For the full text of the article, please read the October 5, 2020 issue of Delovoy Peterburg.