Agricultural holding Eco-kultura have announced the launch of the second construction phase of a major year-round greenhouse complex, Krugly God in the Boksitogorsk area of the Leningrad region. The first phase, with an overall amount of investments of 31.6 million euros, was launched in April 2014. The production volume has comprised 6.2 thousand tons of cucumbers, tomatoes and lettuce. Currently the company is a leading greenhouse grower in Russia, first of all in terms of tomato growth.

The general director of LLC Krugly God, Ms. Maria Butkina, has reported that the complex would grow 2.3 ha of frillice lettuce; another 3 ha would be allocated for tomatoes. According to her, the investments in the project would reach 22.6 million euros. The production capacity is planned at the level of 3197 tons of vegetables per year and the overall acreage should exceed 12.4 ha.

Construction boom
Within the past five years, the greenhouse business has changed dramatically. Until this year, the construction of new greenhouses has been in full swing. The reason for that were the sanctions imposed by the Russian government in relation to imported fruit and vegetables, which stimulated the interest of many investors in horticulture, considers the general director of research company Technologii Rosta, Ms. Tamara Reshetnikova. According to her, in 2014 they reached a collapse due to the lack of non-seasonal produce. Before the embargo was introduced, 95% of fruit and vegetables in the local market were imported.

Back then, in 2014, the governmental import replacement strategy was announced. Many investors took the decision to fund greenhouse projects, and the government developed a series of state support measures: from preferential loans to partial compensation of construction expenses. According to Ms. Reshetnikova, this boosted the rapid growth of horticulture, which resulted in meeting the market demand for cucumbers.

“It is a lot more complicated with tomatoes. Most of the greenhouses grow cucumbers because of their high productivity. Therefore, Eco-kultura found a niche in the greenhouse tomato market right on time”, noted the expert.

The boom is over
The greenhouse sphere requires considerable investments, and the return on investment in such projects comprises 8-10 years. Currently the trend of constructing major greenhouse complexes is over, as very few investors go to the lengths of a new construction without state support, considers the president of the National Union of Fruit and Vegetable Producers, Mr. Mikhail Glushkov.

He notes that this year the construction is limited not only by the extended terms of equipment supplies but also by the ruble devaluation and further decrease of the greenhouse vegetable wholesale prices.

With that, according to Mr. Glushkov, the agricultural holding Eco-kultura would not consider the construction of the second phase of the greenhouse, if it were not economically reasonable. “They understand the current situation with the demand in the Leningrad region: what produce should be bet on and what possibilities for distribution there are. Since they continue the construction of such a greenhouse complex, it should be profitable by their calculations”, underlined the expert.

Two against one
In addition to the above mentioned, there is a new tendency in the market: agricultural holdings and greenhouse complexes liaisons. For instance, GC Rost has recently reached an agreement with the group Dolina Ovoschey, a major producer of cucumbers, tomatoes, eggplants and greenery. The overall acreage owned by Dolina Ovoschey reaches 195 ha and those of GC Rost comprises 193 ha. Thus, their combined acreage will reach 388 ha. What concerns Eco-kultura, their acreage is at the level of 233.26 ha.

In addition, in the beginning of August, GK Rost purchased another project of a greenhouse complex in the Volosovsky area of the Leningrad region, with an acreage of over 23 ha, from LLC Agrotechnologii. The investments in the project comprised 40.3 million euros. The company acted as a lifesaver for the Agrotechnologii, who could not finish the project. Now the question is how quickly Rost can adapt to its own diversification.

According to the forecast by Mr. Mikhail Glushkov, Rost could become a country leader in greenhouse vegetable production. With that, the expert noted that the competition between Eco-kultura and Rost would only be beneficial for the internal market.