Flowers are put in quarantine. Against the pandemic background the producers want to limit imports

While the government is looking for ways to combat the growth of prices for food and medicines, including consideration of export restrictions, the other markets are threatened by opposite trends. Thus, the Russian producers of flowers are on the contrary asking to limit the imports. The fact is that the flower prices in the world market collapsed due to the epidemic for an order of magnitude down to € 0,03-0,08 per stem, and Russian players are afraid of competition and reduction of prices.

Alexey Antipov, head of National Association of Florists (NAF, uniting 11 factories that grow up to 80% of flowers in the country) made a request to Prime Minister Mikhail Mishustin to limit the import of flowers. Kommersant has a copy of the letter. As noted by Mr. Antipov, due to the spread of coronavirus in Europe the price of a fresh-cut flower decreased tenfold. If earlier a Dutch stem was sold at € 0.3-0.4 per piece, in the middle of March the price of flowers was already at € 0,03-0,08 per stem, specified to Kommersant in NAF. They explained that prices have collapsed due to the situation on the Dutch flower exchange, where 48% of production was eliminated for a week. “Producers were informed to stop the delivery of flowers. In this situation, the farmers will sell the flowers at a reduced price to those, who are ready to buy,"- a representative of the Association said.

According to Alexey Antipov, Russia is the main market for Europe, in total the country consumes 15% of the global flowers sales, so we can expect the product delivery at dumping prices.

He warns, the Russian producers will fail to compete at such a price. Mr. Antipov asks Prime Minister Mikhail Mishustin to develop a set of measures to support the floral industry, including possible restrictions on importation of fresh flowers to the Russian Federation for the quarantine period. The office of the Prime Minister did not respond to Kommersant.

Overall, 1.47 billion of cut flowers is sold in Russia per year, the share of Russian producers accounts for less than 15% of the market. The main supplies come through Belorussia, which accounts for almost 50% of the import. NAF expect, that the cheap flowers from Europe will come to Russia exactly through Belorussia.

Such a sharp step, as a complete ban on imports is considered to be excessive even by Russian players: a top manager of a large agricultural holding believes that this will lead to a shortage of flowers. However, NAF insists that they are capable to meet the demand of the internal market, moreover, as the demand for flowers against the spread of coronavirus also began to decline in Russia.

For one week the consumption decreased by 60-70%, which forced the producers to reduce the price per stem almost twice.

A source of Kommersant close to Eurasian Economic Commission explains: a prohibition of flowers imports from Belorussia, which is incorporated within a united customs area with Russia, is impossible, even under conditions of the fight against the infection. “The most we can do is to submit a request to the government for an anti-dumping investigation against Belorussian suppliers," - he says. Ministry of agriculture told to Kommersant that they are monitoring the current situation and, if necessary, initiate the application of anti-dumping actions within the platform of Eurasian Economic Commission. In addition, they added, today, the issue of cut flowers exclusion from the list of goods provided with tariff preferences in import into the territory of Eurasian Economic Union is on the table.

Earlier, NAF asked the government to reset or reduce VAT for the sector from 20% to 10%, and to increase the import duties for the cut flowers from 5% to 15%. If these measures are not undertaken, the industry may cease to exist, despite the fact that the construction of new flower factories is currently virtually frozen, the Association assured. In turn, Ministry of finance made it clear that reduced VAT rate is applicable only with respect to socially important goods, and the flowers are not referred to as such goods, and an increase in import duties will be a violation of international obligations on the part of Russia.