At the First International Conference on digitalization of agriculture and organic production, Oleg Mironenko, Executive Director of the National Organic Union of the Russian Federation, said that now organic producers need to develop organic agriculture primarily for the domestic market, where they need to win the trust of customers, and only then go to export sales, writes The DairyNews.
In his speech, the speaker spoke about the state of foreign and domestic markets for organic products and the prospects for the development of the organic industry in Russia.
According to the manager, the global organic agribusiness has been developing quite actively over the past 20 years, which became especially noticeable during the pandemic, when people began to monitor their health more closely. If, as previously expected, the market for global organic products will grow at a rate of 10-12% per year, then last year's figures set a record - an average increase of up to 30%. Thus, for example, in the UK, production volumes increased by 4% per year, this year it is 30%. The situation is similar in all EU countries.
‘Since 2010, there has been a steady trend that most countries that consume organic products – the United States, the EU, Japan and China - cannot fully provide themselves with their own organic products, as they have publicly stated,’ the expert stressed. ‘For example, in Germany in 2020, 15 billion tons of organic products were eaten, and they produced only 2 billion tons, so 13 billion tons were imported. The situation is similar in other EU countries. The reason that developed countries cannot fully provide themselves with organic products is the lack of necessary resources – land, water and air. The above-mentioned countries therefore turned their attention to Central Africa and South America. In addition to the necessary resources, there are no innovations that are currently used in organic agriculture.
According to the speaker, the EU began to develop international trade in organic products with the post-Soviet territories. Ukraine and Kazakhstan actively "joined" this; the latter increased the volume of exports to Europe by 70%, and rose in this segment from 22nd place to tenth.
‘Unfortunately, Russia was in the red, having lost a part of the European agronomic market,’ the manager believes. ‘But with all this, there are still export supplies at the moment.’
According to the above-mentioned data, 70 million hectares of land are currently being processed for organic products in the world, of which 16% is arable land, and it gives the main increase in products that are present on the international organic market. According to experts, from 1 million hectares of pastures they receive organic products for about 300-350 million euros, and 1 million hectares of arable land gives products for almost 2 billion euros.
‘There is no such amount of abandoned arable land as in Russia anywhere else,’ the expert said. ‘On the one hand, this is an advantage for the domestic organic business. However, there are other points: first, we are not expected on the world market of organic products, and secondly, all that we can supply to foreign markets today is raw materials worth 20-40 billion euros. The production of deep processing products for export is out of the question now.
The executive director presented his arguments in favor of developing a domestic organic business, comparing domestic and export prices for organic milk, the average cost of which in the EU is 1.1 euros per liter, while the cost of domestic milk is 72 rubles. Therefore, it is not profitable for Russian producers to supply milk abroad. On the other hand, on the shelves of stores in Moscow and St. Petersburg, the cost of organic milk is approximately 1.5 €.
‘I believe that we need to pay attention to domestic consumption,’ the speaker said. ‘Despite the pandemic, when we were limited in supplies across the country, sales of organic products grew quite actively. Thus, the company Globus, having opened an organic shelf, showed an increase in organic sales of 154% in 2020, in 2019 - 114%. However, the shelf is filled mainly with imported organic products. Its assortment is small, and this is due to the fact that in the organic business there are only old companies that are increasing production, and there are practically no new companies. We have a huge resource, but we do not have new companies coming to this market.
According to the expert, in the near future, sales in the organic sector of the agro-industrial complex are expected to grow by approximately 20-30%, which is due to the entry into force of Federal Law No. 280 "On Organic Products and Amendments to Certain Legislative Acts of the Russian Federation of 3.08.2018" since January 1, 2020.
‘We have high hopes for this law,’ the expert concluded. ‘But there is another important point, which is related to consumer confidence in Russian organic products. It is not here yet. Therefore, I believe that the priority direction for today is the development of the domestic market of organic products, and only then access to the external market.