The Russian economic crisis is beginning to impact the Indian agricultural and processed food exports.

It could affect corporates such as Mahindra & Mahindra and Tata Coffee. Specialised and perishable products such as gherkins and grapes seem to be the early casualties.

Shipments of gherkins to Russia has virtually come to a halt as a sharp fall in rouble against the dollar is forcing Russian buyers to cancel their contracts.

Grape exporters

Also, the fresh grape exporters, including companies such as Mahindra and Mahindra, are feeling the heat, while firms such as Tata Coffee are closely watching the situation. Russia is a major market for the Indian instant coffees, guargum, grapes and gherkin among other products.

“Forget about payments, customers are asking us to take back the containers,” said a Bangalore-based gherkin exporter, preferring anonymity.

Russian problems, which unfolded in the last few weeks, is expected to pose problems not only to gherkin exporters but also growers as the peak season is set to commence from January, said the exporter, who did not wish to be identified.

Intervention

The Russian rouble which hovered around levels of 34 against the dollar in July collapsed to a low of 68 recently and has since scaled back to around 59 on the Government's intervention.

Low crude oil prices and trade sanctions coupled with speculative attack on the currency have triggered the economic crisis in Russia.

“The crisis has some impact on our exports to Russia, which accounts for a small portion of our total shipments,” said Ashok Sharma, Chief Executive of Mahindra & Mahindra’s agri and allied business.

Mahindra, which has emerged as a large exporter of grapes from India in recent years, has not faced any cancellations, but bookings have been slow.

“Of our total shipments of around 1,000 containers, we were earlier planning to export about 30 to 50 containers to Russia, but now will be doing about 15-20,” Sharma said.

He said that the company has not faced any payment related issues.

“Russian troubles have started early this week. It is no panic situation as yet, but we are monitoring the situation on a daily basis. A clearer picture is likely to emerge by January,” said Hamid Huq, Managing Director of Tata Coffee, one of the major exporters of instant coffees to Russia. Tata Coffee, Huq said, has long term deals for its instant coffee with customers in Russia and there has been no impact on the shipments or renegotiation of contracts.

“The crisis is an issue of concern. We are not sure how it will pan out,” said Ramesh Rajah, President of Coffee Exporters Association. Russia is the fourth largest buyer of Indian coffee. Ajai Sahai, Director General and CEO at the Federation of Indian Exports Organisation, said the Russian crisis has not only hit exports from India but also other countries.

Depreciation

Russia is in need of agricultural commodities, especially after the recent sanctions. The sharp depreciation in currency will make the products expensive and consumer demand will take a hit, thereby impacting the exports.

However, rice exporters do not see much problem in the Russian crisis. “It is not an issue as the Russian imports are regulated,” said S Venkatesh, Head of Ruchi Soya Ltd’s rice business.

Russia has been importing both basmati and non-basmati rice from India.

Exporters of frozen and fresh vegetables such as Mother Dairy, which were looking to tap the Russian market are keeping a close watch on the developments. Amul, which sees potential for products such as butter, cheese and milk powder, is awaiting orders from the Russian buyers.

A Russian team recently inspected Amul's facilities in India.

Related Topics