The oil crisis and its impact on the greenhouse business

The new issue of the “Expert” weekly business magazine featured an analytical article devoted to the world oil crisis and its impact on Russian business and financial institutions. The authors of the article comprehensively analyzed the context, voiced ways out of the difficult economic situation and possible solutions to minimize the consequences.

The invited experts – representatives of private business in Russia – expressed their opinion about the ruble devaluation, the real extent of the damage, and options to support entrepreneurship in the country. Among them was Alexey Shemetov, the Vice-President for Production of the “ECO-Culture” agricultural company.

According to the authors, the two world crises that lay on top of each other – the collapse of oil prices and the spread of the coronavirus pandemic – led to the beginning of a long recession in the world economy. The devaluation of currencies is accompanied by the devaluation of any long-term forecasts – the situation is changing so rapidly that no analytical scenario can take into account all the factors of influence and draw an adequate picture of what is happening. However, some preliminary conclusions can still be made. Experts believe that it is too early to give up on the Russian economy and predict the complete devastation of private business. Oil prices will undoubtedly affect all spheres of entrepreneurship, but the negative consequences of this can and should be minimized.

A quick survey conducted among private business representatives revealed that for some players the crisis was not so unexpected, while others were trying to find new opportunities for development in the current circumstances.

Aleksey Shemetov, in particular, said that ECO-Culture was prepared for the fall of the rouble. Thus, when planning the budget for this year, the values from 76 to 80 roubles were taken for the calculation of the euro. Now the only thing that may be affected by the fall in the national currency is the purchase of new greenhouse equipment in Europe, which has no analogs in our country. Meanwhile, operating materials i.e. fertilizers, plant substrates, seeds – are now being successfully produced in Russia.

The Vice President of Agroholding for Production believes that even the most negative scenario (if the euro price does not return to pre-crisis levels) will produce some advantages for the greenhouse industry. The share of imported vegetables on the market will decrease as a result of falling demand for such expensive products, and domestic consumers will choose Russian tomatoes. And they not only are comparable to imported tomatoes in terms of taste and products but also outperform them. In this situation, the key challenge for the company will be to maintain selling prices for its products.

For the full text of the article, please see the 12th issue of “Expert” magazine for 2020.