What are the main effects that you're currently seeing of the Russian ban on EU produce?
Julia Ten: The main effect of the embargo on imports of European products has been the quite expected absence of the usual wide range of products for our retail customers. The forced replacement of European suppliers with those from other countries has increased transit times by an average of two weeks. This delay has significantly affected the quality of the delivered product.
What products have you struggled to replace?
JT: Due to the well-known climatic peculiarities of Russia, during the winter 90 per cent of our fruit and vegetable needs are normally covered by imported products. At the moment, therefore, we are noticing the lack of berries, fresh salads and high volume vegetables like onions and potatoes.
What alternative sources have you been looking to? What success have you had?
JT: In Russia, there has been a rapid increase in investment from the state and from the business community in the agricultural industry, which is now starting to achieve visible results. However, domestic production is not sufficient to fully satisfy the needs of the market throughout the year. Therefore the ban on European imports has compelled importers to enter alternative markets, including Syria, Bangladesh, Pakistan and India. From the moment the embargo was introduced, the percentage of imports of fruit and vegetables from Turkey, Azerbaijan and Iran significantly increased.
Is direct sourcing continuing to grow in Russia during the current embargo?
JT: Supermarkets are being forced to reduce the proportion of their direct imports from Europe and to place orders for these products from local suppliers. However, it's no secret that some importers are using illegal schemes to import European goods through Russia’s neighbours, such as through the Republic of Belarus, which gives such companies an advantage.
What other challenges are you facing in Russia?
JT: Nowadays, survival is one of the main objectives for many companies specialising in the import side. However, contrary to popular belief, the embargo hasn’t hit importers of fresh fruit and vegetables too hard. What has had a much more negative effect has been the rapid and sharp fall of the ruble. Traditionally, Russian importers had commodity credits from European suppliers, but these agreements are hard to reach when starting to cooperate with new companies. Importers have to pay in advance without even knowing what quality they will receive. This greatly increases the risk and exacerbates an already difficult situation.
