Russia lacks organic producers

The lack of a strategy for the development of the market for organic products impedes the expansion of its production and import substitution. Oleg Mironenko, Executive Director of the National Organic Union, spoke about this during the Agroinvestor conference "Agricultural Holdings of Russia - 2021".

Organic farming

Legislative background

On January 1, 2020, the law "On organic products" came into force. The law contains the basic rules, the necessary standards are adopted, but it takes time - three to four years to debug its work. When developing the law, the guidelines were to increase the volume of the domestic market for organic products from 190 million euros to 5-10 billion euros and bring the number of consumers to 20% of the population.

Lack of manufacturers

However, during the pandemic, incomes of the population fell sharply, which affected the dynamics of sales of organic products. In addition, the main problem is the insufficient number of manufacturers: now there are only 94 of them in the register, while, for example, there are about 2.7 thousand such companies in Lithuania. To fill half of the market, the sector needs about 5 thousand manufacturers. If these conditions are not created, the market will be filled with others, and it will simply help the development of organic production in other countries by means of Russian consumers’ money.

Now it is difficult for Russian organic market to replace imports. While sales channels have been formed, stores complain that they have nothing to sell: organic fruits and vegetables are hard enough to find. Anyone who switches to organic wants to switch to it completely - including milk and vegetables, so the demand is quite large.

Constrains of demand for organic

At the same time, the formation of demand for organic matter is constrained by several factors. The first is a low level of awareness of what it is. Second, for a long time there were a lot of pseudo organic products on the shelves. The third is the price, so the demand is formed in megalopolises: more than 50% of organic products are produced in the regions, and sold in Moscow. The fourth is the absence of a national system of standardization, certification and control equivalent to international rules. Fifth and most important is the lack of government integrated marketing strategies to generate demand.

LAN-Team Moscow

Source: Agroinvestor