Russia’s import ban isn’t all bad news for EU food sector
Russia is a major importer and switching suppliers will cost it extra money, which will be reflected in higher prices for Russian consumers and unwanted inflation.
Food and farming sectors in exporters like the EU and US will suffer, but can be protected by the $79.6bn Food Bill in the US, and the €59bn CAP in the EU, while the EU and US seek out new export markets. If Russian turns to Latin America, Africa, and Asia for supplies, some other part of the world will go short of food imports, leaving a gap in the market for the displaced produce.
The import ban primarily affects the US and the EU by halting or significantly limiting fruit, vegetables, meat, fish, milk, and dairy imports for a year. Imports from Australia, Canada, and Norway have also been blocked.
Information from Russia (which may be unreliable) indicates its government plans to support Russian farmers and food firms to increase their share of the local market, in a bid to further reduce its dependence on imported foods, estimated to have decreased from 30%-40% of all consumption at the start of the century to 25%-30% now.
However, development of local production will take time, and massive funding.
On the other side, the EU and allied food exporting countries of other continents have scope to come together to reduce the bargaining power of the Russians.
Internally, the EU has several response options to be considered today at a meeting of senior agricultural experts from all 28 member states.
It is likely the EU’s €425m reserve for agricultural crises will have to be dipped into to help farmers.
First in line for aid will be growers of summer fruits, especially peaches and nectarines, who had already been getting 30%-50% lower prices than in 2013, due to high production and unexpected weather conditions.
Some specialist exporters to Russia will also need immediate aid.
The Russian ban isn’t all bad news for the EU food sector. When the surplus food is turned back and comes onto the internal EU market, EU retailers and consumers stand to gain through lower prices.
Supplying schools and deprived citizens with this food could be an option.
National organisations have already acted, with Bord Bia establishing a dedicated support unit for companies hit by the Russian ban. It can be contacted at 01-6142292.
