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Interview with experts of commercial fruit-, grape-, and berry growing industry  

We interviewed the lead experts in the field of Russian agriculture, including:   

We posed a series of questions regarding further prospects for development of fruit-, grape-, and berry-growing, and asked to outline the main challenges which are currently faced by producers, ways to overcome those challenges, availability of machinery and materials for production. We also asked the experts to name the most successful projects of Russian commercial production of fruits, berries, and grapes.  

Inna Rykova, Head of Sectorial Economy Centre, R&D Finance Institute under the Ministry of Finance of the Russian Federation (NIFI)

How would you comment on the status of fruit-growing in Russia? What are the prospects of the industry?  

To date, the industry is in the course of brisk growth. This is a result of unsatisfied demand in domestic market, which is in turn, the result of underproduction and slowdown in imports by 20-26% starting from 2015.


The number of regions which produce pome fruits in a volume of 81% reduced from 24 to 20 within 2007-2017. The largest portions of produce grow in the Krasnodar province – 21%, Kabardino-Balkaria – 13%, Volgograd region – 6%, Dagestan republic – 6%. Gross yield of pome fruits accounts for agriculture companies – their share increased from 39 to 45%, and the share of private farms reduced from 60% to 49%. When assessing the efficiency of production, we noted significant growth in yield of agriculture companies and KFH (family farms) – by 117% and 311% within 2010-2017, while yield growth in private farms increased just by 3%.  

The number of regions which accounted for 81% of all produce of stone fruits within 2010-2017 reduced from 26 to 22. The largest portions of produce grow in the Krasnodar province – 13%, Dagestan republic – 12%, Rostov region – 7%, Volgograd region – 7%, Crimea – 6%.  It is important to say that 90% of stone fruit produce belongs to private farms, but for the last 10 years their dynamics have been very slow – 14%, and the production growth rate of agriculture companies and KFH amounted to 145% and 166% respectively. This proves the fact that large agri-producers apply intensive and advanced technologies for production of pome fruits.  

The same situation can be noted with regards to berry production (2010-2017): private farms produce 98% of all berries in the country, but the production dynamics is negative – –11%, but the growth in production of agriculture companies and KFH amounted to 2% and 299% respectively.  

To date, 82% of grapes in Russia grow in 4 regions: Krasnodar province – 42%, Dagestan republic – 36%, Crimea – 15%, Stavropol province – 7%. Grapes are mainly grown by agri-companies – 68,6%, and private farms – 27,5%, KFH (family farms) account for just 3,9%. For the last 10 years the share of agri-companies has reduced by 5,7% due to growth in the number of private farms by 3,7% and KFH – by 1,9%. 


Fruit processing today is concentrated mainly in 4 regions which account for 82% of revenue of the country: Moscow region – 31%, Saint Petersburg – 26%, Krasnodar province – 21%, Belgorod region – 4%. Among the southern regions 89% of revenue accounts for Krasnodar province – 89% and Kabardino-Balkaria – 10%. Stavropol province, Dagestan and Crimea together account for 0,5% of all revenue, which is not a positive trend – is means that the producer is remoted from processing facilities. It, in turn, makes the processed raw material more expensive due to expenses on logistics, it also lowers the added value.   

If we speak about grape processing, we note that fact that 82% of revenue is generated by regions which do not produce grapes. For example, Saint Petersburg does not produce grapes but processes 13% of total produce and it is one of the leaders of grape importation.  

The development prospects of grape processing sector in other regions today and in the coming 2-3 years are insignificant in terms of investment growth. The positive dynamics of grape processing can only be noted in the Leningrad region.   

What risks do the market participants face? What are the ways to overcome them?  

In our opinion, the main risks of fruit-growing are, first of all, price risks related mainly to imports and inner logistics in the country. High price volatility in the period of harvest, uncontrolled importation of fruits from other countries and their price policy create condition for pushing down the competitive advantages of local production.   

We also notice the risk associated with distribution of end-produce of pome and stone fruits, berries, which is the result of the large share produced by private farms. That is exactly the development of storage and processing facilities in close proximity to production assets is capable to solve the problem with price growth of end-produce.    

It is also worth noting high dependence on importation of planting stock, 82% of which accounts for Belarus, Poland, the Netherlands, Hungary, Lithuania and Ukraine. High growth in imports from Belarus is also observed. If we analyse this import, the fact becomes obvious – it is re-import from European countries which was reduced in 2014. This economic phenomenon is capable to increase the prime cost of end-produce in Russia. It also leads to increase in state expenses on supporting sub-programmes on development of fruit-growing. This negative trend can only be eliminated through the development of fruit nurseries within the country.  

What can boost the development of fruit and grape growing industry?  

First, I would like to mention the insufficient data support for the industry.  For instance, Russian Statistics Agency is now preparing analysis only by types of produce: pome fruits, stone fruits, berries. It makes it difficult to assess food balances by product. 

We also have two issues: support of domestic producer and preservation of retail prices.  

Industry development could be boosted through establishment of adjacent industries related to fruit-growing, establishment of production of organic fertilisers. This approach can reduce the cost of prime produce by 33%, and labour productivity and profitability will almost double.  

How do you assess the level of availability of materials and machinery for production of fruits and berries?  

To maintain the annual rate of intensive orchard establishment on the area of 14,5-15,5 thousand hectares if planting 1500-2000 young plants per hectare, about 31 million young plants of fruit trees are required. And even if this dynamic is preserved, in 4-5 years if the yield is 20 tonnes/hectare, the country will produce just 1046,25 thousand tonnes by 2025.  

Maintaining high yields will become possible through application of organic fertilisers and high-quality planting materials. According to our estimates, the demand for organic fertilisers will amount to 108,5 million tonnes per year, which is now hard to achieve due to lack of this resource, i.e. in 2017, the country produced only 214 thousand tonnes of animal and plant-based fertilisers. It means that selection of the right varieties of seedlings is of crucial importance.  

The main portion of planting material is imported from Europe. Industry development plans offer not just prospects for nurseries, but also pose strict requirements to quality of planting stock to ensure high yields. As representatives of fruit nurseries say, today their main challenge is the provision with local machinery for production. Development of this machinery together with nurseries could cutdown the prime cost of released produce, and, as a result, cutdown expenses of those who produce fruits and grapes.  

One more important thing is to store the fruits harvested. Shelf life of collected harvest increases in three times if fruits go for storage in the first day of the harvest.  

Are the adopted national support measures capable to make Russia a confident player on the international arena?  

In our opinion, the adopted support measures for boosting fruit and grape-growing are enough to maintain the current production rate. The objective of the existing national agriculture support programme does not imply Russia entering international market. It is required to pose new objectives, to assess the probable niches for export, and the cost of entry for the producers and for the country in general.   

To conclude, I would like to say a few words about the possible amendments to existing support measures, which, in our opinion, will allow to drive the development of fruit and grape growing in the country:  

  • Upgrade of foreign economic policy in the field of quotas and regulation of period of importation;  
  • Intensify the development of fruit nurseries, to start the production of planting stock in Russia;  
  • Incentivise fertility growth through establishment of agriculture-related auxiliary facilities;  
  • Development of measures to incentivise the increase of market value of fruits produced by private farms;   
  • Create measures to support processing industry in regions;  
  • Incentivise the development of production in KFH and production cooperatives.  

Tamara Reshetnikova, General Director, Research Company Growth Technologies

How would you comment on the status of commercial fruit-growing in Russia? What are the prospects of the industry?  

Fruit business in Russia is now on its initial stage of intensive development. Unlike the majority of countries (with the exception for former Soviet republics) in Russia the majority of orchards belongs to population not to companies, which makes the industry specific. The peculiar features of national fruit-growing if compared with international trends are:

  • Prevalence of traditional tall orchards;
  • Prevalence of outdated farming technologies;
  • High dependence of business on foreign materials;
  • High dependence of business on imported machinery and equipment;
  • Low market value of the major portion of produce;
  • Low average yield;
  • Insufficient number of refrigerators for storage;
  • Surplus of fresh fruits in harvest season;
  • Scarcity of locally produced fruits for 8-9 months;
  • High dependence on importation of fresh fruits and berries;
  • Growth in interest of end-consumer to fresh fruits and berries out of harvest season.

What risks do the market participants face? What are the ways to overcome them?  

The development of local production of fruits and berries during the entire post-soviet period was restrained by a series of challenges the main portion of which is still relevant.  

The key problem of commercial fruit-growing is outdated technology. There are not enough orchards of intensive type in the country – high-density orchards capable to bear 35-50 tonnes per hectare. More than half of all Russian orchards are above the age of 30, their nameplate yield is up to 15 tonnes per hectare.    

Locally produced fruits often do not comply with modern standards of storage and distribution, which in turn results in lower market value. The produce of old “soviet” selection faces the critical problems associated with market value and storage. 

The biggest problem is still lack of local planting stock for intensive and super-intensive orchards, which forces investors to acquire planting stock abroad. The establishment of own nurseries in Russia is afoot, but the process cannot be fast.  

The specific risk of fruit growing in Russia is climate. We cannot influence on the weather, but the application of modern techniques, equipment, and machinery can significantly reduce unfavourable impact. For example, drip irrigation, anti-hail nets, trellis, etc.  

What can boost the development of fruit-growing?  

Recently, high capex of the industry and long payback period have been making it unattractive for business. However, now investors are becoming more and more interested in commercial fruit-growing.  Important impetus for the establishment of new orchards is state support for new projects.  

Apart from orchards, investment in long-term storage is crucially required. Russian business has entered the phase when investing in apple growing for seasonal distribution is not commercially viable.  

But the most reliable driver for industry could become the growing consumer demand for fresh berries and fruits. There are two conditions for demand growth: restoration of per capita income of population (unfortunately, it has not been started yet) and promotion of healthy lifestyle. The second factor forms the consumer demand.   

What projects for modernisation of existing orchards, establishment of intensive orchards, expansion of processing/storage capacities, development of nurseries do you consider the most successful?  

Sad Gigant in the Krasnodar province (Sad Gigant is one of the largest producers of fruits and berries in Russia. The orchards are located in the Slavyansk district of the Krasnodar province. The main activity area is cultivation and distribution of fruits, planting stock, seedlings).  

Sad Gigant Ingushetia in the Ingushetia republic (The company is engaged in production of fruits. The first orchards were established in 2013 in the Nesterovsky settlement in Ingushetia. The company grows fruits based on Italian technology which implies harvest in the first year of planting. In 2018, about 20 thousand tonnes of apples were collected).  

Alma Production in the Krasnodar province (Alma Production is engaged in growing apples in the Krasnodar province. Orchard area is 330 ha. The company used French and Italian planting stock).  

AFG National in the Krasnodar province and Volga region (AFG National is country’s largest producer of rice. It has been developing a project for establishment of super-intensive apple orchards since 2015).  

How do you assess the level of availability of machinery and materials for fruit-growing?  

Our fruit growers still depend heavily on foreign producers, whose machinery and equipment is updating for several generations of owners. For example, in Italy family farms with 50-70-year history are operating. They really know everything about the needs of growers, they analyse the efficiency of each type of trellis or other equipment, they track changes in selection and consumer demand, and benefit from receiving the findings.   

Local manufacturers of orchard machinery still rely on general production principles and do not strive to become experts in the field with huge accumulated knowledge and practice to improve the business of their clients.  

Are the adopted national support measures capable to incentivise fruit-growing in Russia, and make the country a confident player on the international arena?  

Local business and investors can improve the status of Russia in the international fruit market, and if the government helps, it will accelerate the process. Investment appeal of commercial fruit-growing depends not only from national support, but also on its stability.   Payback period of intensive orchards is 7-8 years, that’s why predictability and consistency of governmental solutions are important.   

Sergei Lebedev, General Director, Alma Valley

Please, tell us about your cutting-edge winery. What are your distinctive features?  

Our winery operates based on gravity principle. To date, Alma Valley in Crimea is the only project of this kind.  

We successfully apply modern technology in wine-making and combine it with accumulated experience considering the peculiarities of the location. We rely on organic principles of land use only.  During the process of fermentation, we pay special attention to temperature control with regard to white wines mainly. The fermentation is conducted under 15 degrees of Celsius. As for red wines, we apply 5 different extraction methods.   

How would you comment on the status of wine-making industry in Russia? What are the prospects?  

For the last few years, the wine market in Russia has been relativity stable, but we observe clearly the following trends: 

  • Growth in volumes of imported wine and reduction of local wine  
  • Growth in low-cost wine segment (up to 250 roubles per bottle on the shelf) and reduction of mid-price wine segment (400-550 roubles per bottle)  

For the last three years our country has been “flooded” with cheap, and unfortunately, low-quality imported wine. If previously the price of imported wine started from 500 roubles per bottle on the shelf, now we can find wine from France, Italy, Spain at a price of 200-250 roubles. Simple calculations show that if we subtract the cost of: importer’s churning surcharge, retailer’s surcharge, customs tax, excise duty, expenses on transportation from abroad, price of bottle, label, bottle top, there will be nothing left for the liquid in the bottle! It is not wine in the bottle! Unfortunately, Russian consumer knows practically nothing about wine and generally reacts on producing country. However, I believe, that national wine-making has good perspectives for development. The government has already paid attention to the negative situation in that field and it is now preparing the associated measures to protect consumers and support local wine producers.  

What difficulties does you company face? What are the typical risks for market participants? What are the ways to overcome these difficulties?  

All wine-makers face the same risks. Our business requires heavy investment at the initial stage, and the payback is 3-5 years later. Don’t forget about climate and poor yield risks. But, thanks to national support in the form of subsidies – grape planting, amelioration, purchase of machinery, etc. – we are feeling confident. A few years ago, our government adopted a policy for development of national wine-making. Now we understand, that this policy should also include retailers.  It is not possible to deliver advantages of Russian wine without them!  

How did you manage to succeed over a short period of time, become one of the leaders of local wine-making?  

There are no secrets. To succeed one needs raw materials, high-tech equipment, high-quality produce, spread distribution. We have established all these and the main goal for us now is to persuade the consumers that our wine is one of the best in the market and its quality surpasses the majority of imported wines.  

What can boost the development of wine-making industry?  

The government has been done a lot for it. But we still have a problem with the lack of labour force. We need to develop infrastructure in villages, to persuade our young people not to leave villages but to work in vineyards.   

What projects is your company implementing?  

We are switching to our own planting stock. I mean our own nursery. It is a crucial thing for full cycle production.  

Crimean nursery farming was in depression. Our nursery was built near the winery, the capacity is up to 3 million inoculations per year. That means that in the future we can meet the demand for planting stock of other Crimean wineries.  

Every year we expand our plantations, to date, we have 300 hectares of own vineyards. We monitor the development in production technologies.  

How do you assess the level of availability of materials and machinery?  

All wine-making companies which are market leaders apply the most advanced technologies, equipment, and machinery. Today, it is impossible to succeed without it!  

Are the adopted national support measures capable to incentivise wine-making industry and make Russia a confident player in the international market?  

As I have already mentioned, the government has already done a lot for the wine-making industry. We need a law on wine-making which hasn’t been adopted yet.  

Alexander Lukyanchenko, Director, Yagody Chernozemia

Introductory remark: “Our company Yagody Chernozemia” was founded in 2017, it is part of Korolev Agro Group. Since 1988 we have been engaged in provision of services to agriculture in the field of design, supply, and installation of equipment for irrigation; we also supply fertilisers, seedlings, and offer consulting services. We studied the production technologies and dived deeply into the topic which drove us to create own production sites.  Initially we were choosing from orchards and berry plantation but decided to develop commercial berry plantations as it is the most underdeveloped agriculture sector in Russia. Among a wide range of berries, we chose to go with blueberry. I’ll explain why. Strawberry is still the most consumed berry. Its share is over 85% of all import and over 80% of all production in the country. Considering the volumes of import we understand the volume of underproduction.  The second most spread berry is raspberry. The share of import and production is almost the same – about 8%, the remaining are other berries.  The global trend shows development in production, consumption, and processing of niche crops – blueberry and honeyberry.  These crops practically do not grow in commercial production sites. The share of blueberry import is almost 99,9%. That’s why, we started our production from blueberry.  To date, we have the most advanced blueberry plantation in Russia. Next year we plan to establish the first 50 hectares of modern commercial varieties based on advanced production technologies 

How would you comment on the status of Russian berry-growing market? What are its prospects?  

If we look at the statistics of import and production within the country for the last several years it becomes clear that this industry is one of the most promising areas in agriculture.  Importation of fresh berry in 2015 was 36 thousand tonnes, in 2018 it was 58 thousand tonnes, including blueberry in 2015 – 1,7 thousand tonnes, and in 2018 – 6,1 thousand tonnes. So, we see the emerging trend on consumption of fresh berries in Russia.  At the same time the production of berries in Russia remains the same for two years – 15 thousand tonnes of gross yield (for fresh segment and for processing).  

What are the difficulties you company faces? What are the typical risks for the market participants? What are the ways to overcome them?  

One of the main difficulties is the release of high-quality produce which influences on the system and distribution price. There is often a perception that berry consumers are rich people, that is why, the profit from retailing is obvious.  But this perception can be easily disseminated – berries are not consumed by rich people only. Today, very few producers cooperate with retailersThe majority of producers prefer to sell their produce through third parties, who, in my opinion, hardly influence on sustainability of the market. Cooperating with them is easier of course, they do not need certificates, product checkup, pack of documents, etc. But at the same time, this type of distribution is associated with certain risks. So, despite the fact that cooperation with retail chain requires certain efforts, it provides stability and predictability.  Besides, sales technologies of retailers are far more developed. Of course, we need to learn how to achieve the results our peers from Europe have, but we should not forget about quality which will suit retail chains, and this could be achieved only through high technology and package.  Average wholesale price of distribution in retail store is about 600 roubles in big package of about 500-700 g., and 1280 roubles in a package of 124 g. Price in the market is 350-400 roubles. We also plan to develop seasonal trade in the city of Voronezh – distribution at a higher price, brand promotion, collection of marketing information. Now we face the problem with seeking for planting stock of high quality. Unfortunately, it is very difficult to find planting stock of good quality.   

What can boost the development of berry farming?  

In my opinion, the development of berry farming can be bolstered by changing national support measures and credit conditions. Such projects are now poorly supported.  It is also important to change conditions of getting state support and loans for young companies. Today, there are a lot of business diversificators, concerned parties, who are interested in investing in berry business, but berry is a precise crop which is unforgiving to production mistakes.    That is why, young companies are afraid of establishing plantations on big area, because there are a lot of vague things – varieties, technology, knowledge, etc. The cost of entry to berry business is high. For example, average cost of starting 1 ha of advanced plantation of blueberries starts from 2,5 million roubles. 

You are planning to grow strawberry, raspberry, and blueberry in film tunnels. Please share your first results.   

We plan to install tunnels in 2020. Now we are scrutinising thoroughly the issue.  

What projects is your company developing now? 

Now we are working on the project for construction of a refrigerator which is aimed at year-round operation. As I have already said, we plan to plant an apple orchard, and already have been distributing planting material of strawberry, raspberry, honeyberry, and blueberry.  Thus, we can ensure year-round operation of the refrigerating complex. Starting from spring there will be turnover of fresh berries in our refrigerator, and in May we will start collecting honeyberries, in June we will harvest strawberry, and further on blueberry. Then in August we collect perpetual strawberries and late blueberries, and after that apples will be collected to be stored in refrigerator.   Distribution of the produce will end in December-February. During this period, we supply planting stock for sales which will be sold till May, and then the cycle repeats. We also plan to establish own blueberry nursery.   

Are the adopted support measures on boosting fruit-growing capable to make Russia a confident player on the global arena? 

For apple orchards, I think, yes, but for the berry industry the answer is no…  


We thank our interviewees and looking forward to seeing you at the Forum and Exhibition “Orchards of Russia 2020”!  


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