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Problems of Russia-RSA Fruit Trade Featured

09 November 2016
Problems of Russia-RSA Fruit Trade Problems of Russia-RSA Fruit Trade FruitNews.RU

The 14th session of the Joint Intergovernmental Committee on trade and economic co-operation between Russian Federation and Republic of South Africa (ITEC) will be conducted in Pretoria on 16-18 November, 2016.

It’s a very important event for business of the two countries because the current problems of bilateral co--operation become the subject of discussions in the course of the ITEC. It is known that fruit trade – a basic single item of the trade turnover between Russia and South Africa - has been put to a severe stress in the last two years.

According to statistics of Federal Customs Service of Russia for 2015 import of oranges from South Africa decreased by 40% in comparison with 2014. In the current 2016 export of SA citrus to Russia will fall even further. This is happening in contradiction to call of leaders of the two countries, President of Russian Federation Vladimir Putin and President of the Republic of South Africa Jacob Zuma, to increase exports of South African fruits to Russia sounded during visit of Jacob Zuma to Moscow in August 2014. In the opinion of South African and Russian business the main reason for the drop of SA fruits import to Russia was introduction by the Russian side of a trade barrier in the form of a special EAC transport marking mandatory from February 2015.

By itself the marking does not contain any impossible requirements. The marking (it should be in Russian) describes name of the product (apple or an orange), country of origin, producer, exporter, importer – which is something already written in shipping documents (Bill of Lading, Certificate of Origin, Phytosanitary Certificate), but in English. It is also required to specify period of validity of the product which is a nonsense for fruits: an apple can survive a full year’s storage or rot after a couple of weeks if bitten by a worm. Such a sticker can be printed by South Africans, but often with mistakes, because Russian is not a dispersed language in South Africa. What is worse is that the EAC sticker must be affixed on each carton, but this comes into a contradiction with technology of fruits preparation and sending them for export adopted in South Africa. According to the existing technology of work with perishable products, as soon as they are harvested and packed they must be delivered to cold storages in ports of loading. They are brought in already mounted and slashed on pallets to ensure safety of cargo during the long sea voyage to the client. Name and address of the concrete receiver will be often made certain at the last moment before the pallets go into the vessel or container. To break the pallets, fix stickers on each carton – there are minimum seventy on a pallet - and then again slash the pallets is not possible in conditions of port cold storages. Big exporters working under programs with big Russian importers can fix stickers at pack houses. It’s costly, but technically possible. But it is not possible for medium and small farms and exporters who work on spot basis and they are forced to leave the Russian market. It must be also noted that the medium and small fruit business is mainly operated by black entrepreneurs who are supported by South African government in line with the “black economic empowerment” policy. For them the Russian market has become closed. On the Russian end fruits become costlier, although oranges from the far away South Africa are all the same cheaper than fruits delivered from CIS countries and even domestically produced. This means that South African oranges have become socially oriented products in Russia and higher price of them harms first of all Russians with low incomes.

In the course of 2015 and 2016 business community of Russian and South African entrepreneurs have tried to attract attention of Euro-Asian Economic Commission and Federal Customs Service of Russian Federation to the abnormal situation caused by EAC stickers becoming a technical barrier to fruit trade with South Africa. It seems that we have at last been heard. At present the North-West Customs Department jointly with Russia-RSA Business Council are trying to form an alternative way of EAC transport marking, without breakage of pallets. If they succeed, it may alleviate work of the trade partners.

At the same time once again it should be regretfully noted that steps directed towards separation and exclusivity from universally accepted norms and rules are counter productive and work against interests of common people who are to pay cost of bureaucratic extravagances.

Mikhail Fateev
Head of Food & Agriculture Section Russia-RSA Business Council

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