Importing Apple Trees Instead Of Apples, That’s How Vladimir Putin Secures Food For Russia
To understand how President Vladimir Putin is weaning Russians off foreign food, look no further than the apple trees growing in the Krasnodar region near the Black Sea, where a Soviet-era orchard once flourished. They’re mostly from Italy.
Russia is the world’s largest apple importer because local varieties spoil faster than those grown in Europe or China and shoppers often prefer the taste of imported fruit. When farm operator AFG National Group sought to upgrade supplies in 2015, rather than use domestic crops, the company shipped in 143,000 trees from fields 1,900 miles (3,000 kilometers) away. It’s new orchard near the Caucasus Mountains will produce about 8,000 metric tons of Gala, Red Delicious and Granny Smith apples this year.
“Deciding to use the latest technology in planting orchards, we realized that, unfortunately, national research in this area lags behind the leading European and global trends,” said Oleg Ryanov, who runs the orchard unit at AFG, which until the apple investment in Krasnodar was growing mostly rice on 70,000 hectares (173,000 acres) in southern Russia. “From the very start, we took a cue from European countries.”
Increasingly, Russia is acquiring equipment and know-how from outside the country to expand agricultural output. Over the past decade, that strategy helped to create an exporting juggernaut for major crops like wheat and barley. But consumers still rely on foreign dairy, fruits and vegetables, so farmers are importing better seeds, greenhouses and even milking cows to improve domestic capacity.
Agricultural investment reached 374.7 billion rubles ($6.6 billion) in 2017, up 3.1 percent from a year earlier, government data show. While there’s no estimate for how much of that went to foreign technology, such imports can be 20 percent to 90 percent of what it costs farmers to get new production operating, according to Agriconsult, a St. Petersburg-based consultant.
“The amount of imported equipment is large,” said Andrey Golokhvastov, Agriconsult’s director general. “It’s expensive but reliable. There are some domestic substitutes, but they aren’t as effective.”
The sense of urgency to remake home-grown agriculture has increased since Putin banned certain food imports in 2014 — in retaliation for sanctions imposed by the European Union and the U.S. over Russian incursions in Crimea. And the government has stepped in to help subsidize investments, even as a weaker ruble makes all imports more costly.
Improved technology is paying off. Russia’s food imports in 2016 totaled 23.6 billion, down about 5 percent from 2010, according to World Trade Organization data. With the huge increase in grain production, the country’s total agricultural exports are up 16-fold since 2000. A decade ago, Russia was the biggest poultry importer. Since then, it has cut purchases by 80 percent.
But further investment is needed to make Russia more self-sufficient, Putin told farmers recently at a forum in Krasnodar. In addition to importing more apples than any other country, Russia remains the third-largest buyer of foreign tomatoes and second-largest for imported cheese, based on weight.
The push for more spending on foreign equipment has meant a surge in business for European companies including DeLaval S.R.O. in Sweden; GEA Group and Big Dutchman International in Germany; and Dutch greenhouse builders Certhon and Kubo Group, according to Agriconsult and company websites.
Kubo is expanding its production capacity after sales in Russia last year more than tripled, making up 25 percent of its global business, which also is growing in other countries, according to Henk van Tuijl, the company’s export manager. That included metal structures, climate-control technology and equipment for 65 hectares of greenhouses. Shipments will increase this year, with contracts already signed for 70 hectares, he said.
“It’s an explosive growth,” van Tuijl said. “There’s a big demand for good and efficient production of vegetables. In Russia, they buy the highest level of technology.”
TH Group, a dairy producer based in Vietnam, plans to invest $2.7 billion on projects in Russia to sell in the domestic market. It hired a U.S.-based company to supply about 1,100 milk cows for a Russian farm it opened in January. Similarly, French yogurt maker Danone trucked 5,000 cows from the Netherlands and Germany to a farm in Siberia last year to ensure milk supply.
With the help of foreign technology, domestic apple production rose about 8 percent last year, while the harvest of greenhouse tomatoes rose 11 percent, according to the National Union of Fruit and Vegetable Growers in Moscow. But even with the gains, Russia still bought about half of its apples from abroad and 60 percent of greenhouse tomatoes, the grower group said.
AFG National Group is doing its part to boost apple supplies, investing 4.3 billion rubles since 2015 to plant 700 hectares with mostly Italian trees, which were each a year or two old, 1.8 meters high and delivered by refrigerated truck. AFG also has installed some Russian varieties.
Others are taking an even longer-term approach. Some vegetable growers are looking to buy tomato and cucumber seed companies abroad, said Sergey Korolev, president of the National Union of Fruit and Vegetable Growers in Moscow. Domestic companies including Ros Agro Plc are trying to develop seed industries that will compete with the likes of Monsanto Co.
“Without Russia’s own seed material, all that investment is in a big risk area,” Korolev said.