The Russian fruit and berry sector is showing steady growth against the background of an increase in the area under fruit and berry plantations, an increase in gross yields and an expansion of state support. In 2022, the gross harvest of fruits and berries amounted to 4.3 million tons, which is 5.8% more than a year earlier. The average annual growth rate of fruit and berry production since 2011 was 5%. The main types of grown products in Russian horticulture are still apples, plums, cherries, cherries, currants, raspberries and strawberries. In recent years, there has been a tendency to increase the share of pome fruits in the structure of the gross harvest of fruits and berries. Over the period from 2011 to 2022, their share increased from 49% to 68% against the background of a decrease in the share of stone fruits and berries. Among the main growing regions are the Krasnodar region, the Kabardino–Balkarian Republic and the Republic of Dagestan.
Diagram 1. Gross harvest of fruits and berries in Russia, thousand tons
Source: according to Rosstat
Among the main systemic problems of the development of the fruit and berry sector are the shortage of large-fruited, early–fruiting domestic varieties suitable for cultivation in intensive gardens (60-70%, according to expert estimates, are now imported varieties); insufficient production of high-quality healthy seedlings that meet the requirements of intensive gardens; low availability of storage and processing capacities for fruit and berry products; low rates of laying of modern intensive plantings (orchards, berry fields, breeding); unsatisfactory level of mechanization of production processes (tree pruning, fruit harvesting etc.); high level of competition with imported products.
According to various estimates, Russia's dependence on imported seedlings of fruit and berry crops ranges from 40% to 50%. As part of the support of the industry, the Ministry of Agriculture of Russia plans to amend the rules of the incentive subsidy, which will allow providing support for the laying and care of perennial plantings of pome and stone fruits, subject to the use of Russian-made plantings.
Opportunities for the development of the fruit and berry sector in Russia
Despite the economic difficulties, there are still significant opportunities for growth in the fruit and berry sector against the background of high dependence on imports and insufficient consumption of fruits and berries compared to the norm recommended by the Ministry of Health of Russia. The volume of imports of fruit and berry products has been declining in recent years, but the share of imports in resources is significant - over 40%.
Figure 2. Import volumes and the level of self-sufficiency in fruits and berries in Russia, thousand tons, %
Source: according to Rosstat, the calculation of GC "Interagro"
Currently, the average per capita consumption of fruits and berries in Russia is 63 kg per year, which is 37% less than the consumption rate recommended by the Ministry of Health of Russia. Over the past 10 years, the consumption of fruits and berries in Russia has increased at a slow pace – at the level of 0.6% per year on average. The main limiting factor is the income of the population. According to Interagro, by the end of 2022, against the background of external challenges for the Russian economy and the deterioration of the standard of living of households, the consumption of fruits and berries per capita decreased by 5% to 60 kg/person per year.
Diagram 3. Consumption of fruits and berries in Russia, kg/person per year
Note: РНП - recommended consumption rate by the Ministry of Health of Russia
Source: according to Rosstat, the Ministry of Health of Russia
According to the calculations of Interagro, taking into account the current dynamics of fruit and berry consumption and recommended consumption rates, the potential capacity of the fruit and berry market in Russia is 14.6 million tons. Against the background of the forecast by the Ministry of Economic Development of Russia of the recovery of real disposable income growth in 2023 by 1.6% and in 2024 by 2.8%, we can expect some recovery in fruit and berry consumption to the level of 2021 at the end of the forecast period, i.e. to the level of 63 kg /person per year.
Diagram 4. Calculation of the potential capacity of the fruit and berry market in Russia, million tons
Source: calculation of GC "Interagro" according to Rosstat, Ministry of Health of Russia
The expansion of the gross harvest of fruits and berries is facilitated by the implementation of a number of projects both in the field of raw materials production and processing. In 2022, in the Kaluga Region, the Unionpark company commissioned a greenhouse for year-round raspberry cultivation. The area of the plant is 0.7 hectares, on which 9.5 thousand bushes are planted. The harvest is planned three times a year. The production capacity of the greenhouse is up to 100 tons of berries per year. Raspberries are grown using modern technologies of hydroponics and drip irrigation. The volume of investment in the complex amounted to 400 million rubles.
JSC "Gardens of Pridonya" plans to invest 400 million rubles in the development of its branch in the Saratov region and by 2025 will increase its production capacity for processing apples almost threefold. Now the plant can process 27 thousand tons of apples per year and produces 3.6 thousand tons of concentrated apple juice per season. After reconstruction, it will process 70 thousand tons of apples per year and produce 10 thousand tons of juice. Every year 300 hectares of a young garden are laid in the company's division. To date, the total area of the gardens is 2 thousand hectares. Within the framework of the new project until 2025 it is planned to increase the area to 3 thousand hectares.
Kaliningrad Fruit Orchad LLC will build a workshop for shock freezing and drying of fruits and berries in the Kaliningrad region. The raw materials will be used for the production of jams and juices. Black currant, chokeberry, sea buckthorn, gooseberry, blueberry, raspberry and apples will be grown. Local berries and fruits are planned for processing.
JSC "Essen Production AG" in the next two years will invest about 200 million rubles in expanding the production of jams. In 2021, the company launched two new packaging lines and purchased cooking equipment. Now the company has five lines, on which it produces 20 main types of jams, and also produces phytomarmelade and jam in different packages. The company's product portfolio includes more than 40 types of products, including those with unusual tastes. Raw materials are supplied from Egypt, China, Serbia, Macedonia and Kazakhstan. In Russia, purchases of wild plants are mainly carried out: cranberries, blueberries, lingonberries, blueberries. However, the volume of supply of Russian raw materials at the moment is still insufficient.
According to experts, apples and strawberries will have the highest potential in the domestic market. This is followed by blueberries and pears.
The increase in demand for semi-finished products, the growth of the catering industry, the trend towards healthy eating, according to Interagro experts, contribute to the growth of the fruit and vegetable processing market. "The growth of domestic production, as well as the consumption of fruits and berries, of course, should be supported by the creation of new capacities for their deep processing," comments Ekaterina Babaeva, CEO of the company. — The domestic processing industry is now developing and being rebuilt in such a way as to close empty niches that were previously occupied by foreign manufacturers. In this sense, now is a good time for an investor who wants to invest in the processing of fruits and berries."
It should be noted that as part of the support of the fruit and berry sector in 2020 The Russian government has approved a roadmap for the development of fruit and berry production in the country until 2023 inclusive. According to the results of the implementation of the roadmap by 2030, Russia is expected to increase the production of fruits and berries to 2.2 million tons. In the face of sanctions pressure and logistical constraints, the Ministry of Agriculture of Russia also intends to accelerate work on import substitution in breeding, genetics and biotechnology. According to expert estimates, for the further development of the industry, it is necessary to limit the import of imported products during the period of mass collection and sale of domestic fruits and berries, adjust the trade margin in retail chains, as well as introduce measures of state support for the construction of fruit storage facilities.
*according to the dynamics of consumption, an expert assessment of Interagro is given based on the prerequisites of 2022 and a decrease in household incomes.
