Hamper to Pick Mushrooms and Berries in Siberian Taiga

18.12.2009 — Analysis

The West Siberia is a huge undeveloped market of wild-growing mushrooms and berries: whortleberry, cloudberry, blackberry, and blueberry. RusBusinessNews correspondents found out that the expansion of the gathering geography, the development of the network for raw materials collection stations, and the increase of the number of processing facilities in the Tyumen Oblast, Ugra, and Yamal will make it possible to bring wild-growing plants "closer to the people".

In the past few years, attempts to assess the potential of the Tyumen forest berries and mushrooms market were made by experts from Russia, Canada, and Germany. Consultants from IAK AGRAR CONSULTING GMBH have calculated that its volume amounts to millions of Euro in monetary terms. According to the Tyumen Oblast Department for Investment Policy and State Support for Entrepreneurship, over 30 thousand tons of berries and 7 thousand tons of mushrooms can be picked in the region annually. The neighbouring Ugra grows about 10.7 thousand tons of blackberry, 3.2 thousand tons of blueberry, 2.6 thousand tons of cloudberry, hundreds of tons of raspberry, currant, and rosehip.

This data has been provided by experts from the Canada-Russia Northern Development Partnership Program (NORDEP). Meanwhile, less than a third of the West Siberia's wealth of vitamins is actually gathered. This figure depends on the density of population in the area varying from 2% to 30%. What is the cause for this underdevelopment of the market?

The Inaccessible Berry

The West Siberia's berries and mushrooms are scattered over the area of 1.5 million square kilometres. However, most of this territory, in particular in Ugra and Yamal, has not been developed much: density of the population in KhMAO is 2.8 per square kilometre; in YaNAO, 0.7. "Many districts are poorly populated. The indigenous inhabitants cannot travel further than 15-20 kilometres away from their settlements and villages. Some places simply don't have roads. As a rule people gather berries and mushrooms within 2-3 kilometres from home. As a result, a substantial area of the West Siberia simply stays out of coverage, and most of the harvest perishes," Victor Novikov, director of NPO Novy Vek (New Age Scientific and Production Association) LLC, told RusBusinessNews.

The sparseness of population centres is a challenge to the sales of the products as well. In districts without well established wild-growing plants purchasing system the indigenous inhabitants are engaged in gathering with the purpose of pickling and cooking the produce for their own use and selling it "privately" in small quantities. "By the beginning of this century, the procurement and preservation system (state production farms, consumer cooperatives) was completely destroyed in Ugra. Nothing has been established to replace it. No one in the region is involved in wild-growing berries and mushrooms in a serious and dedicated manner," specialists from the Administration for Utilization of Fishing and Hunting Resources in Ugra describe the problem.

Several types of companies are engaged in purchasing wild-growing plants. The first group includes relatively large, complete cycle companies. They have their own berries and mushrooms purchasing network, raw material processing capacities, as well as a developed logistics system and direct access to retail chains. NPO Novy Vek LLC and Dikoros (Wild Growing Plant) Tyumen LLC are among them.

"Today we have more than 80 wild-growing plant collection stations within the Tyumen Oblast and Ugra. The local people deliver berries and mushrooms to us at 60-80 roubles per kilogram. Then we transport the procured raw material to our two facilities. One of them makes frozen products. The second one is for blanching," Victor Novikov tells us. "Then we mark up 30-50% on the commodity and sell it to retail chains of the Tyumen, Sverdlovsk, and Kurgan oblasts. So far we only delivered non-packaged produce. However, we are currently working on our own brand, we are going to sell packaged wild-growing plants with our own trade mark."

Novy Vek found access to markets outside the Urals: the forest produce is delivered to regions in the Central Russia as well. They used to export to Italy, Germany, Latvia, and Lithuania. "In 2010 we most likely will not work for export. Export preparation of the produce requires a large number of permissive documents. Fighting the red tape takes a lot of effort and time. It is not worth the cost: the demand for berries and mushrooms within Russia is very high. Therefore, even if we waive export contracts, we are not at risk of losing the sales market," Victor Novikov pointed out. It should be noted that, with their well established system for purchasing, preservation, and sales of berries and mushrooms, Novy Vek manages to cover just a tiny share of the market. When the harvest is big, the company procures about 150 tons of berries and mushrooms.

The other group of businesses can be called "social". It is represented by small businesses which are exclusively focused on purchasing wild-growing plants from the population (quite often such companies are established within ethnic communities). On the one hand, they make it possible for inhabitants of remote settlements and villages to obtain uninterrupted work record and continuous earnings. On the other hand, the business itself has a steady flow of valuable raw material. The company either processes it independently or re-sells it. "The indigenous people might be able to sell these berries and mushrooms at a higher price on the market. However, going to town hundreds of kilometres away from home only makes sense in case of a big batch. In this case they don't have to carry the transportation costs. Representatives of the purchasing company come to collect the raw material, and bring along essential commodities," the Kondinski District (Ugra) administration noted.

And finally the third group which is engaged in procurement of wild-growing plants in remote areas - fisheries. The local population normally uses berries and mushrooms for own consumption, or sells them as unprocessed raw material. Freezing of wild-growing plants is mostly done by fish works - the only entities which have refrigeration units on site. However, they still consider this business to be of minor importance.

Pick Some Money in Woods and Marshes

Today the West Siberia market for gathering, processing, and selling wild-growing plants is developing (or rather recovering) in a chaotic manner. This is why the level of development of the "berry" raw material potential is low. However, in the future the "wild-growing" business can yield decent income for entrepreneurs, and solve an important social problem of keeping the population in the West Siberia's remote areas busy. This is why both public authorities and private structures are getting interested in the development of the market.

Thus, in 2010 Novy Vek is intending to complete the construction of one new berries and mushrooms processing facility as well as build three to five new raw material collection stations. In Ugra, a project aimed at the expansion of wild-growing plants collection and processing facilities is being implemented as part of the Canada-Russia Northern Development Partnership Program (NORDEP) on match-funding basis. Specialists in Ugra's "High Technology Technopark" have developed a system for waste-free processing of plant raw material with further canning of the produce.

"The establishment of production facilities like these does not require much room - from just 50 square metres, and a minimum outlay of up to 500 thousand roubles. We are currently processing the documentation for patenting this technology. The Canadians view it as one of the suggestions for organizing the work in the sphere of mushrooms and berries processing. If the project gets the approval it will serve as the foundation for the Wild-Growing Plants Utilization Development Centre," Denis Dudkin, PhD (chemical sciences), Investment Projects Manager at the Technopark, pointed out.

The authorities, in their turn, are prepared to provide financial, advisory, and administrative support both to small and big business. The Tyumen Oblast Government, for instance, is ready not only to provide potential investors with a project for building production facilities for processing and deep freezing of vegetables, berries, and mushrooms, developed by a German consulting team, but also provide tax concessions and reimburse interest paid on loans.

Shifting the emphases in the industry from the establishment of individual "field" entities with a limited work area to building vertically integrated facilities capable of covering all of the region's territory and ensuring a closed cycle from collection to retail will substantially enhance the efficiency of natural resources utilization. By various estimates, the volume of wild-growing raw material procurement in the West Siberia can be increased 10-30 times without damaging the status of resource species populations.

Evgheniya Yeryomina, Valentina Mazharova