Market study on greenhouse industry in Russia
The last few years have been rather successful for Russia's greenhouse industry. In the coming period, further expansion and modernization of the greenhouse area is expected. The feature of greenhouse production in Russia is mostly import dependent in many segments. However, import substitution takes place in some segments. According to experts, Russia is able to reach almost 100% self-sufficiency in growing greenhouse vegetables. The Russian greenhouse sector presents various opportunities to reduce investment risks and significantly improve production performance by extending the growing season.
Aim of the Report
The Dutch Ministry of Agriculture, Nature and Food Quality is pleased to share its new Market Study on Greenhouse Growing of Vegetables and Ornamentals in the Russian Federation and in the Kazakhstan Republic. By making this information available, the Ministry would like to facilitate interested Dutch exporters and suppliers in a better understanding of the specifics and future potential of the greenhouse sector in the Russian Federation and Kazakhstan. In addition, the information is meant to ensure better market access to Dutch suppliers and exporters, by providing relevant key contacts and outlining the necessary steps to be taken.
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Findings of the Study
Among the weaknesses of the greenhouse sector in Russia, the experts point to the dependence on imports and currency rate, insufficient government support, difficulties in getting loans and lack of skilled personnel. Besides, the greenhouse sector faces such threats as gradual market saturation which can decrease the cost efficiency and increase the return of greenhouse investment projects; faster growth of prices for raw materials, mainly electricity; and decrease of population incomes. At the same time the strengths of the sector are the establishment of large greenhouse holdings, including vegetable production, logistics & sales; enlargement of the investment projects and their copying in several regions and the experience of the leading producers in the greenhouse sector. Moreover, the sector is characterized by the following opportunities: high demand in Russia for greenhouse products produced commercially, profit tax relief for agricultural producers and potential of import substitution and export.
In 2019-2020, about 200 hectares of greenhouses were foreseen to be launch annually. After these two years, experts expect that the volume of launching new projects will slow down. Consequently, the volume of supply of main greenhouse equipment in Russia will decrease as well. This also means that competition will increase more with a decrease in launching greenhouse projects.
In the next one or two years the extensive growth of the greenhouse sector will carry on due to the increase of the greenhouse area. After that the development of the greenhouse sector will be caused by the improvement of operational efficiency of the greenhouses.
The experts mention that the technologies which are planned to be used in Russia include LED additional lighting; automating of lighting, monitoring, sorting, grading and packaging; and generator and storage techniques of electricity, heat and carbon dioxide. On-line management is gaining momentum. Mobile apps providing greenhouse on-line data collection and processing are offered and start to be introduced on the market. There is also an increasing interest to vertical growing/farming and indoor growing without natural light. Besides, the supply capacity of consumable and expendable materials, including innovation materials, will increase as well.
The goods and services demanded by the greenhouse sector can be divided into two groups:
- goods and services necessary for new projects implementation: the core assets are metal structures, lamps and lighting systems, climatic screens, foundation, trolleys, glass, power and heating equipment, sorting, grading and packaging lines, etc.;
- goods and services necessary for the launched and currently operating greenhouses: current assets such as seeds, substrate, fertilizers, packaging materials, biological control agents and pesticides, twine, etc.
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Regions with good prospects
The regions with good prospects are those where the greenhouse investment projects have been already implemented or will be launched. These are: Moscow region and neighboring regions like Lipetsk, Belgorod and Kaluga, southern regions like Rostov region and Stavropol Krai and some individual ans specific projects in Siberia, Urals and Far East.
Earlier the greenhouse complexes were aimed at cucumber growing. Now there are a growing number of greenhouses with tomato specialization. Egg-plant and sweet (bell) pepper growing is getting more popular. There is an interest in growing greenery and salad, especially nearby the big cities in Russia.
Greenhouse growing of ornamental plants like flowers and pot plants in Russia is still a real challenge, because of severe competition and lack of government support. The flower market is characterized by a high share of imported flowers (more than 80% of Russian market). The imported flowers are more competitive in price and are presented in a wider assortment. High seasonality of flower consumption and less suitable climatic conditions compared with the main producing countries slow down the flower market development in Russia as well.
The development of the greenhouse sector both in new greenhouses launching and modernization of the existing ones requires investment in education and training. Intensive corporate training with the involvement of foreign consultants and experts can be beneficial for both parties: the developing Russian greenhouse sector and Dutch expertise.
The full version of a new Market Study on Greenhouse Vegetable and Ornamental Growing in the Russian Federation and Kazakhstan Republic is available here.