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Helpful information

Coronavirus added problems to Russian food suppliers

The spread of coronavirus in China threatens the difficulties of Russian food suppliers in the country. In the PRC, several batches of fish raw materials from the Russian Federation have already been detained and negotiations on new contracts have been stopped, and a drop in consumer demand has led to a 10-15% decrease in poultry meat prices. Market participants are not in a hurry to adjust export plans, but they already note problems with logistics in China.

Market participants and industry analysts told Kommersant about the possible impact of the spread of coronavirus in China on Russian food exports (for other consequences of the epidemic, see “The virus has come a long way” and “Coronavirus defeats all sports”). China is a major importer of food products from the Russian Federation. According to the results of January-November 2019, deliveries increased by 23.7%, to $ 2.72 billion, Kommersant was told in the Russian Export Center with reference to the data of the Federal Customs Service. According to statistics, more than $ 1.2 billion came from the supply of frozen fish, over $ 250 million from crustaceans, more than $ 200 million from sunflower oil, and about $ 100 million each from poultry and chocolate products.

Alexander Efremov, managing director of the Dobroflot Group of Companies, notes that difficulties have already arisen with the import of food raw materials into China.

So, he is aware of the detention of at least two shipments of fish from the Russian Federation, which was intended for Chinese processing plants. “Perhaps the enterprises are idle due to quarantine. Or, China’s manufacturers fear that because of the situation with coronavirus, their products will not be bought in the world, ”he said. In any case, says Mr. Efremov, the situation with the export of fish is extremely alarming. He adds that the Chinese side seems to have stopped all negotiations with the company on the supply of fish raw materials and has not yet announced new ones.

The president of the Pollock Extraction Association, Aleksey Buglak, notes that pollock prices have already fallen by about 15%, to $ 1.42–1.52 thousand per ton. According to him, if the situation with coronavirus does not stabilize in a week, more negative consequences for Russian fish exports are also likely.

German Zverev, president of the All-Russian Association of Fisheries (WARPE), says China’s demand for crabs has fallen significantly, leading to a drop in prices from $ 15–18 last year to $ 7 per kg. According to preliminary estimates, the export volume of Russian crab in the first quarter of 2020 may decrease to 7–8 thousand tons, export revenue will decrease more than twice - to $ 60–70 million, and long-term losses, taking into account the time for market recovery could exceed $ 150 million, he calculated. According to the WARPE, some Russian crab miners are already halting fishing.

According to the president of Agrifood Strategies Albert Davleev, the spread of coronavirus in China has already led to an additional reduction in purchase prices for imported poultry meat by 10-15%, including from Russia. At the same time, he continues, prices began to decline from the end of November 2019, and now, taking into account the coronavirus factor, the decline reaches 30-50%. In combination with some ruble appreciation recently, this factor has seriously complicated the business of Russian poultry meat suppliers. The head of the Cherkizovo Group’s export department, Andrei Terekhin, however, says that the spread of coronavirus in China did not affect the shipment of products to this country. “So far, we see no reason to adjust our export plans for China,” he says. “At the same time, we note that the situation is already having a negative impact on business processes in China: in particular, there are interruptions in the work of the transport infrastructure.” Another interlocutor of Kommersant in the meat market believes that the first phase of the deal between China and the United States, according to which China agreed to purchase certain volumes of American agricultural products, had a greater influence on the fall in prices.

The lack of purchases from China in the first phase of the deal between Beijing and Washington is one of the factors in the fall in prices for Russian sunflower oil, says Sovecon director Andrei Sizov. According to him, since the middle of the month quotes fell from $ 790 to $ 740 per ton. Additionally, the fall in prices on all commodity markets after the news about the spread of coronavirus also had an effect, he notes. At the same time, the expert points out, the drop in supplies to China in monetary terms is clearly a negative factor for Russian export of products in general. The Executive Director of the Oil and Fat Union, Mikhail Maltsev, argues that the geography of Russian exports of oil and fat products is wide enough not to depend on possible problems of China alone.

Kommersant