Mikhail Fateev has been at the origin of trade and economic co-operation with South Africa since 1993. Working in the Department of Food Resources of the Moscow City Government and responsible for supplying the Moscow market with fruit and vegetable products, he was involved in establishing trade relations with representatives of the South African fruit and vegetable industry for the supply of citrus fruits, setting up logistics chains, and creating a system for transporting fruit from South Africa to the ports of St Petersburg.
In recent years, Fateev has been the head of the Food and Agriculture Sector of the Russia-South Africa Business Council, a non-governmental organisation under the Chamber of Commerce and Industry of the Russian Federation (CCI RF). In an exclusive interview with TV BRICS, he spoke about the vectors of co-operation between Russia and South Africa in the trade and economic sphere.
How do you assess co-operation between Russia and South Africa in the field of agriculture and what are the immediate prospects for the development of the two countries in this area?
Agriculture as a sector of the economy has different components. The South African economy is also diverse. There are different categorisations of it. For example, the EAC [Eurasian Conformity] and therefore the Russian Federation include it in the list of developed countries, but the South African government disagrees, believing that South Africa is a developing country. By being classified as a developed country in the Russian classification, South Africa has lost the customs preferences given to developing countries and, consequently, has weakened its position in the Russian market for agricultural exports. This refers to the supply of fresh fruit to Russia, mainly citrus fruits, which are not grown in Russia.
In many aspects, South African agriculture is at the highest global level of development. Russians know this from the quality of South African fruit, which has taken a firm place in the food consumer basket. South Africa currently accounts for about one third of the total volume of citrus fruit supplies in Russia. For South Africa, however, the Russian market is not so decisive; its share in world supplies is less than 10 per cent.
Agricultural products, in particular fresh fruit, account for about half of South Africa’s exports to Russia – varying from year to year. In 2022, their share was 85 per cent, according to statistics.
Grain is supplied from Russia to South Africa. Its share in trade turnover is also large, about 50 per cent of total Russian exports to South Africa. It can be stated that agricultural products form the basis of trade turnover between the two countries.
In this regard, it is logical to assume that the development of economic relations should be based on this successful area of co-operation.
South African agriculture needs things that Russia has in abundance, such as petroleum products, fertilisers, cardboard or pulp for its production. South African agriculture has problems with water supply and energy. And here, I believe, Russian equipment and expertise could be in demand. It is time to move from declarations of intentions to actions to realise them.
What role does the Russia-South Africa Business Council play in the development of co-operation between the business communities of the two countries in the field of agriculture and food?
The Business Council is designed to promote the development of small and medium-sized businesses. The Business Council platform is not only a meeting place. Our task is also to inform the governments of the countries about the problems in the sphere of business development that cannot be solved without the participation of state bodies. This is done through our participation in the work of the JIC, a joint intergovernmental committee for the development of trade and economic relations between the Russian Federation and South Africa.
Some issues, mostly of a private nature, are being resolved, while others require continued efforts. Let me give an example from my area of responsibility – food and agriculture. This is the problem of paper stickers of the so-called EAC mark (Eurasian Conformity Labelling). This labelling was introduced in 2015 by decision of the Eurasian Economic Commission and has caused many problems and losses, primarily for participants in foreign economic activity, as well as for mass consumers. It does not carry any information different from that in the shipping documentation.
However, these markings need to be printed on a piece of paper without errors in Russian, which is incomprehensible to the average South African, and then pasted on each box. If the shipping address changes, which is normal for the logistics system adopted in South Africa, the pallet has to be destroyed and then reassembled and tied together, which is technologically very difficult in a port warehouse.
Hence the losses, sometimes considerable, as Russian customs do not forgive mistakes – the cargo may not be allowed to be imported simply because of an error in spelling. By the way, the sticker costs money, about 0.5 US dollars for each sticker, which the poor Russian consumer has to pay. Why all this? All the more so because each box already has the most complete information about the product in digital form on a barcode, applied by South Africans, but which is refused to be read at the Russian customs.
What projects and initiatives could be launched in this area, taking into account the results of the BRICS summit held in South Africa?
I have already said that the time has come to move from words to deeds, and I mentioned the areas in which concrete deeds could be implemented. Now you have the word, comrades entrepreneurs. In the economic formation of a free market, the state cannot force a private investor to make certain commercial decisions. However, the private interest will not go far either. In my opinion, it would be right if the governments of the two countries agreed within the framework of intergovernmental agreements on the implementation of the selected range of projects, allocating the necessary resources in the form of loans, privileges, special conditions.
Our country has experience of such an approach to the development of economic relations. I am referring to the work of the USSR State Committee for Foreign Economic Relations, under which the Soviet Union built and commissioned hundreds of facilities of national economic importance in socialist and developing countries.
The Russian Federation is a young country in its current state. BRICS is also a young entity. We have a common road to the future, and we will take it step by step, kilometre by kilometre.
In your opinion, how will the intensification of settlements in national currencies between Russia and South Africa affect trade turnover?
Settlements in the national currency are just settlements. Business is not charity; the goods and services supplied must be paid for. And what to pay with: dollars, euros, yuan, roubles, rands, rupees – this should be the free choice of the partners. But they live and work in the real world, where, for example, restrictions are imposed on Russian companies to use US and Euro currencies for settlements. What should be done? Restrict mutual supplies of fruit and grain in the case of Russia and South Africa?
This would be wrong and unfair to ordinary people, food producers and consumers. I believe there should be an open channel for settlements in national currencies, in our case rands and roubles. The mechanism can be different.
As far as trade volumes are concerned, the possibility of settlements in national currencies is of great interest to small and medium-sized businesses. Using such an instrument, they will increase the nomenclature and volumes of commodity exchange, which, in turn, entails the activation of trading in national currencies at the exchange. Unfortunately, at the moment there is no settlement instrument in national currencies between Russia and South Africa.
Read the original article at https://tvbrics.com/en/news/head-of-the-food-and-agriculture-sector-of-the-russia-south-africa-business-council-assesses-coopera/
Photo by Evi Radauscher on Unsplash
