In two years, the Magnit retail network will almost completely satisfy the demand for Russian vegetables and fruits through supplies under agricultural contracts - long-term contracts with domestic agricultural producers with guaranteed shipment volumes.
In 2022, the volume of deliveries of Russian vegetables and fruits to Magnit stores under agricultural contracts exceeded 340 thousand tons, which was a record figure and exceeded the result of 11 by 2021%. The main share of supplies falls on borscht vegetables (beets, cabbage, potatoes, carrots). In addition, pumpkin, turnip, celery, as well as apples, melons and other crops are supplied under agricultural contracts.
According to the results of last year, the share of fruits and vegetables received by stores under agricultural contracts exceeded 30% of the total sales of these products. In 2023, the volume of deliveries under agricultural contracts will increase to more than 400 thousand tons, and the share - up to 50%. In another year, Russian vegetables and fruits supplied through agrocontacts will account for more than 80% of sales, which is the target for the retail network. Thus, Magnit will almost completely meet the main demand for vegetables and fruits through supplies under agricultural contracts.
The key factor in the rapid growth of supplies under the agricultural contract will be the expansion of the range of suppliers. Currently, under long-term contracts, Magnit cooperates with 77 domestic manufacturers (12 of them are new suppliers that appeared in 2022). The retailer's partner pool includes both small farms and large enterprises with tens of thousands of hectares of agricultural land. The geography of manufacturers covers many regions of the Russian Federation - from Dagestan in the south, the Pskov region in the northwest and the Novosibirsk region in the east.
Agricultural contracts with domestic producers are long-term contracts for the supply of future crops with fixed volumes. This mechanism allows the retailer to increase the availability of goods on the shelf and increase sales efficiency. Agricultural producers, in turn, receive a guaranteed distribution channel and support at all stages of interaction with the network. For example, Magnit advances its partners by providing them with funds for the purchase of seeds, fertilizers, machinery and equipment, organizes survey inspections of products at suppliers' warehouses in order to avoid returns, and provides the opportunity to export products by retail chain transport. As part of agricultural support, agronomists of the company regularly visit enterprises from the moment of preparation for the sowing campaign to harvesting and storing products for storage.
Evgeniy Sluchevsky, director of the agricultural and industrial complex of the Magnit retail chain:
“Agricultural contracts are a vivid example of mutually beneficial cooperation with domestic agricultural producers. Due to agricultural contracting, the retail network purchases vegetables and fruits without intermediaries, which has a positive effect on prices, and also controls the entire production chain - from crop rotation to shipment. Therefore, we will actively develop this area using a flexible approach: we are ready to work with any counterparties in the supply chain and build long-term partnerships that allow partners to jointly plan development.”