Uncertainty over ruble and Crimea hits Russian produce importers

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Uncertainty over ruble and Crimea hits Russian produce importers

Russian fruit and vegetable importers are having a tough time planning distribution programs with their buyers, due to heightened uncertainty around the value of the Russian ruble and political relations with the west.

Moscow-based RK Marketing director Irina Koziy told www.freshfruitportal.com yesterday that the Russian currency has fallen significantly since early January.

"Everything that's being imported is currently much more expensive than it was two months ago," said Koziy, who also heads up Fruitnews.ru.

"Comparing the exchange rates of today with yesterday, the dollar is cheaper by five kopeks but at the same time the euro is more expensive - it's 18 kopeks up.

St Petersbourg port panorama

Fruit traders shipping to the hub of St Petersburg are facing an exchange rate dilemma.

"This is probably the worst thing for the market. It's not only the drop in the exchange rate, but that the exchange rate is unpredictable now; buying product now in Chile for example, you'll bring it to Russia within the next six weeks and you don't know what it's going to cost then if you calculate into Russian rubles."

Agrikoop import manager Arkady Khaybullin said there was "no opportunity" to properly analyze the ruble and make calculated predictions for fruit and vegetable supply deals.

"Everybody is very worried about this situation, and we have to take a lot of care because you can lose a lot of money," he told www.freshfruitportal.com.

"We as a fruit company are working with supermarkets and they make up most of our client base. To supply them we need to make loading plans between two to three weeks before selling to the supermarket this week.

"For example, this week we are discussing next week's loading in Spain, for bringing in fruit and vegetable products in week 14."

The Russian ruble's exchange rate with the euro has fallen by 21.5% since late March, 2013.

As a result of this uncertainty, Agrikoop has had to draw a line in the snow in how it handles transactions with retailers.

"At the moment we have to sell under freight on board (FOB) conditions in euros to our clients. If they want to buy only in rubles, it's not possible for us."

While Koziy mentions there have been exchange rate depreciations for many emerging markets, she believes the Crimea's break-off and the political tensions between Russia and the west have their part to play in the ruble scenario.

"For Russia I think this drop is much higher due to the problems in the Ukraine and the business being uncertain about the future in Russia," she said.

"For the future, we don't know how the relationship will be between the Russian Federation and Europe. It all depends on the political situation," added Khaybullin.

At the time of writing, the European Union and the U.S. had placed sanctions on Russian and Ukrainian officials, while the Russian government was reportedly preparing a list of U.S. officials for retaliatory sanctions.

"The sanctions that were announced by Europe and the United States do not really touch the actual economy of Russia," Koziy said.

"We don’t really know if there are going to be any additional measures implemented by Europe or the United States.

"It's too difficult to speculate [on trade sanctions] because rationally speaking, it will be very harmful for Russia and for Europe, because over half of the Russian budget is based on export of oil and gas, and a huge portion of the Russian market in food, consumer goods and machinery, depend on foreign suppliers."

Koziy said she could only hope the situation would improve.

"We hope the situation will settle down somehow and we'll be able to work and move the market further."

As a side note she added that while the produce supply situation was fairly normal aside from the currency difficulties, there seemed to be an increased presence of goods supplied from the Middle East and North Africa.

Speaking with industry publication Capital Press, Washington Apple Commission president Todd Fryhover said a scenario of U.S. trade sanctions on Russia would likely lead to retaliation from the Kremlin, which would hurt a U.S. apple export industry that is already affected by a ban in China.

Photo: www.shutterstock.com



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