The latest issue of the “Kommersant” newspaper features an article entitled “Vegetables Crossing Borders” dedicated to the current state of the greenhouse industry in Russia and the prospects for producers to recover from the crisis. The leading companies see the reorientation to the export market as one of the ways to maintain the production profitability. The authors of the article quoted the comments of the largest greenhouse farms in Russia on the matter, including Alexander Rudakov, the President of ECO-culture agricultural holding.
In the situation of a general decline in consumer demand, devaluation of the ruble, and drop in people’s incomes, vegetable producers are forced to seek alternative markets. Some companies are already now willing to start distributing their products to the European Union and the UAE. In particular, due to COVID-19 restrictions in Germany and Poland, there are not enough workers for the harvest, which puts the entire greenhouse industry at risk. Under these circumstances, the profitability of exports is very promising – the prices for vegetables abroad are higher but foreign markets are more competitive, too. In addition, consumers overseas are also affected by the crisis, which leads to lower purchasing power – especially when it comes to premium quality products.
Aleksandr Rudakov, the President of ECO-culture company, believes the Persian Gulf countries to be a priority export destination. The holding has already explored this market before and found it highly attractive. The markets of the Arab Emirates and Saudi Arabia also have a huge potential for Russian producers, especially in the summer season, when domestic production in these countries is both expensive and unprofitable. Meanwhile, in Russia, the expenditure of growing vegetables (tomatoes in particular) is minimal during this period.
According to the head of the agricultural holding, the main risks to think about in relation to exports are logistics. The optimal shipping method for such distances, which allows keeping the freshness and commercial quality of vegetables, would be by air. However, this method of transportation dramatically increases production costs. ECO-culture is willing to enter this field in the near future and will be trying different logistics schemes.
For the full text of the article, please read issue 79 of the “Kommersant” newspaper.