Russian flower industry is facing a crisis, note the representatives of the sphere. According to them, import replacement measures could help the situation. However, are the flower business representatives ready to refuse the imported flowers in favor of the locally produced ones?
The Russian Federation is a major rose consumer. According to the research by BusinesStat, up to 1.5 billion roses are sold in the territory of the country annually, which is about 15% of the amount consumed worldwide. With that, most of the flowers are imported from other countries and the share of local producers constitutes 16-18%.
The situation is being complicated with the change in tax legislation, which became effective on January 01, 2019. According to it, flowers producing enterprises have become VAT tax payers with the 20% rate. Until 2019, only the general 6% agricultural tax was applied to the flower growing sphere. According to the representatives of the agricultural area, it can cause bankruptcy of local flower production.
National association of flower growers (NAFG) was created in August of this year in order to solve this problem. Its participants and government representatives have discussed the current situation in the special conference.
According to the participants of the conference, Russian growers cannot compensate the profit drop with prices increase, as the prices would become incompatible with the imported flowers ones. Because of the massive volume, the imported goods shape the pricing policy.
The situation could be improved by increasing the customs duties on flower import that were decreased three times (15% to 5%) in 2013. The president of the association Greenhouses of Russia, Mr. Aleksey Sitnikov has announced that such measure would have a positive impact on microbusiness and flower retail.
The retailers are willing to buy locally produced flowers but the growers currently cannot meet the demand. According to the founder of the flower studio Monobouquet, Ms. Anastasia Kapranova, Russian growers cannot boast such variety of flowers as foreign suppliers and in holiday period local flowers are in short supply.
“Is there was more variety of Russian flowers, I would give preference to them. We always try to grab the seasonal flowers brought form Krasnodar region but the assortment is very limited. There are certain Russian varieties that have the same quality that the Dutch ones. For example, my florists always chose Red Naomi variety of roses, grown in the greenhouse in Moscow area. They are very aromatic, they last long and are always available. There are also Russian peony roses Misty Bubbles that have replaced the foreign competitors this year. But as soon as holidays come, they are impossible to get”, shares Ms. Kapranova.
The deputy head of the Flower shop Ms. Maria Karmaykina has had negative experience with the Russian flower producers. “We are currently buying mainly imported flowers. We used to work with the Russian ones but we have been facing many complaints. They are beautiful and cost almost twice as little as the imported ones but they do not last long. The clients were blaming as for selling not fresh bouquets, they only lasted 2-3 days, while the imported ones can last up to two weeks”.
Mr. Sitnikov, however, is confident that the issue with the local flowers variety can be solved with lowering the tax burden on the growers. “The possibilities of Russian greenhouse growers are very wide. They can produce gerberas, chrysanthemums, carnations, greenery. State support of the sphere would allow expand the assortment and replace import”, claims the president of the Greenhouses of Russia.
The head of the project Moscow Flower School Mr. Yuriy Dudarenko is his turn noted that in order to provide Moscow shop with the required quantity of flowers and reach the scale of the imported produce, first of all the growing process and logistics need to be looked into.
“Our consumption sphere has gone much further than the production one. In general, the consumers are unhappy that in comparison with the Dutch producers, one growers cannot ensure neither the quality nor the stability of shipments. I visited Dutch production facilities: in order to reach their level we need gigantic investments. They constantly work with soil, air and lighting.
In the south of Russia there are a lot of various flowers but almost none of those reach Moscow. We need to establish proper logistics”, concluded Mr. Dudarenko.