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Russia imports Granny Smith trees instead of apples

Agri-firms are becoming more self-sufficient by growing their own produce instead of relying on foreign imports

Farm operator AFG National Group's new orchard will produce about 8,000 tonnes of Gala, Red Delicious and Granny Smith apples this year.


TO UNDERSTAND how President Vladimir Putin is weaning Russians off foreign food, look no further than the apple trees growing in the Krasnodar region near the Black Sea, where a Soviet-era orchard once flourished. They're mostly from Italy.

Russia is the world's largest apple importer because local varieties spoil faster than those grown in Europe or China, and shoppers often prefer the taste of imported fruit.

When farm operator AFG National Group sought to upgrade supplies in 2015, rather than use domestic crops, the company shipped in 143,000 trees from fields 3,000 kilometres away. Its new orchard near the Caucasus Mountains will produce about 8,000 tonnes of Gala, Red Delicious and Granny Smith apples this year.

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"Deciding to use the latest technology in planting orchards, we realised that, unfortunately, national research in this area lags behind the leading European and global trends," said Oleg Ryanov, who runs the orchard unit at AFG, which until the apple investment in Krasnodar, was growing mostly rice on 70,000 hectares in southern Russia.

"From the very start, we took a cue from European countries." Increasingly, Russia is acquiring equipment and know-how from outside the country to expand agricultural output. Over the past decade, that strategy helped to create an exporting juggernaut for major crops such as wheat and barley. But consumers still rely on foreign dairy, fruits and vegetables, so farmers are importing better seeds, greenhouses and even milking cows to improve domestic capacity.

Agricultural investment reached 374.7 billion rubles (S$8.5 billion) in 2017, up 3.1 per cent from a year earlier, government data show. While there's no estimate for how much of that went to foreign technology, such imports can be 20 per cent to 90 per cent of what it costs farmers to get new production operating, according to Agriconsult, a St Petersburg-based consultant.

"The amount of imported equipment is large," said Andrey Golokhvastov, Agriconsult's director general. "It's expensive but reliable. There are some domestic substitutes, but they aren't as effective." The sense of urgency to remake home-grown agriculture has increased since Mr Putin banned certain food imports in 2014 - in retaliation for sanctions imposed by the European Union and the US over Russian incursions in Crimea. And the government has stepped in to help subsidise investments, even as a weaker ruble makes all imports more costly.

Improved technology is paying off. Russia's food imports in 2016 totalled 23.6 billion, down about 5 per cent from 2010, according to World Trade Organization data. With the huge increase in grain production, the country's total agricultural exports are up 16-fold since 2000. A decade ago, Russia was the biggest poultry importer. Since then, it has cut purchases by 80 per cent.

But further investment is needed to make Russia more self-sufficient, Mr Putin told farmers last week at a forum in Krasnodar. In addition to importing more apples than any other country, Russia remains the third-largest buyer of foreign tomatoes and second-largest for imported cheese, based on weight.

The push for more spending on foreign equipment has meant a surge in business for European companies including DeLaval SRO in Sweden; GEA Group AG and Big Dutchman International GmbH in Germany.

Others are taking an even longer-term approach. Domestic companies including Ros Agro Plc are trying to develop seed industries that will compete with the likes of Monsanto Co. BLOOMBERG