Fruit and vegetable firms to cash in as Moscow bans EU and US imports

Fruit and vegetable exporters in China expect to increase sales to Russia, which has banned such imports from the European Union and the United States in retaliation to Western economic sanctions imposed over the situation in Ukraine.

A customs control zone was set up in Heilongjiang province last month, allowing direct exports of fruit and vegetables across the Russian border.

"Russia's ban on vegetables and fruit from the US and EU is encouraging for our exports, which are gaining momentum," said Cao Xinyi, general manager of Dili Group's subsidiary in Mudanjiang, a city in Heilongjiang provinces.

"Judging from our future orders, this boost is very obvious and will become stronger in the second half of this year," Cao said.

He expects sales to Russia this year to rise by 80 percent from last year to $3 billion yuan ($487.58 million). Exports in the first half rose by 20 percent to 800 million yuan.

On Aug 7, in retaliation to economic sanctions imposed by the West amid the crisis in Ukraine, Moscow imposed a ban on all meat, fish, poultry, fruit and vegetables from the EU and the US for one year. Russia is by far the largest importer of fruit and vegetables from the EU.

The EU's ambassador to Russia, Vygaudas Usackas, says the ban will result in an EU export loss of 11.8 billion euros ($15.8 billion) worth of food and farm products to Russia, or 10 percent of total EU agricultural exports.

An unnamed source at fruit and vegetable company Lontrue was quoted by Security Times as saying it will "seize this great opportunity" to expand sales and enhance exports to Russia.

Liu Guohua, deputy manager of the operations department at Greenwood Business Park in Moscow, said the Russian ban on the Western imports will be a very good chance for Chinese fruit and vegetable exporters to increase sales to Russia.

Zhang Jianping, a researcher at the Institute for International Economic Research at the National Development and Reform Commission, said the boost to Chinese fruit and vegetable sales in Russia will be hard to estimate in the short term. "Europe and Russia are both exchanging blows and we have to wait and see how long this lasts," Zhang said.

"If the EU and Russia standoff continues or deteriorates ... in the medium to long term, there is the opportunity for Chinese agricultural enterprises to increase their global strategy and operations and production in eastern Europe, from where they can enter the Russian market."

Baorong Co, a branch of Dili Group's Mudanjiang subsidiary, established the customs control zone in Dongning county.

Video cameras, set up by customs and quarantine authorities, will supervise the warehouse in the zone round the clock, avoiding the double-checking of cargo and improving customs clearance.

"The Baorong zone project marks direct exports for the company's fruit and vegetables. The zone will develop into a logistics, distribution and price-setting hub for exports of fruit and vegetables to the Russian Far East," Zhang Chunjiao, chairman of the Heilongjiang Province Applied Economic Association, told Interfax News Agency.

A similar customs control zone will be set up at Suifenhe port in southeast Heilongjiang with investment of 1 billion yuan. Work will be completed in late 2015, Cao said.

A China-Russia cross-border e-commerce platform will be launched at the end of this year to boost trading in agricultural products.

China and Russia signed an agreement on August 8 allowing specific goods, including fruit and vegetables from China to Ruyssia and timber from Russia to China, to directly pass through Suifenhe-Pogranichnyy port and Dongning-Burtaphca port after one inspection in the country of origin.