Collateral Effects of Russia's Food Import Ban: Winners and Losers
- Garni Gharekhanian
- Aug 28, 2014
- 2 min read
Updated: Sep 16, 2022
On August 7 the Russian government banned imports of food from countries that imposed sanctions on Russia. These countries include the USA, Canada, Norway, Australia, and all EU countries. Obviously, the intent of the sanctions was to retaliate at the countries mentioned above for imposing financial sanctions. However, there are additional effects of these sanctions, including the actors who will experience positive and negative outcomes (depending on the actor).
WHO BENEFITS:
Consumers in the US, Canada, Norway, Australia, and EU member states: They will pay lower prices for foodstuffs, as there will be an increased supply in these countries. However, this is contingent upon the lack of alternative export markets and/or the lack of crop-destruction subsidies.
Exporters in the rest of the world: I am talking countries such as Latin American countries (for instance, Brazil, Argentina, Uruguay, and Chile), New Zealand, Switzerland, Israel, Iran, Turkey, India, and African countries. For instance, Russia can source chicken imports from Brazil (instead of from the USA), beef and lamb imports from New Zealand and South Africa (instead of from Australia), fish from Iceland (instead of from Norway, Sweden, or Finland), fruit and vegetables from Israel and Turkey (instead of from EU countries), and dairy products from Serbia, Switzerland and New Zealand (instead of from Norway and EU countries). Note that Turkey and Iceland, despite being NATO members, are not covered by Russia's import ban. These "alternative" countries should see increased exports to Russia and thus increased export revenue. Agricultural producers in such countries should see substantial benefits. However, the EU (or individual EU member states) may induce candidate countries (like Turkey and Serbia) to refrain from increasing exports to Russia lest they jeopardize their chances to be accepted into the EU.
Agricultural producers in Russia: Given Russia's vast farmland, it should be able to produce a greater share of domestic food consumption. Currently, Russia imports 16 percent of domestic food consumption,* and there is significant political pressure to make Russia self-sufficient in food (to a greater degree). However, this will not be accomplished over a short period of time. There are deficiencies which need to be resolved, including unstable weather in various regions and sub-optimal management.**
WHO LOSES:
Russian consumers: They pay more for imports, with prices rising between 6 and 40 percent, depending on the commodity and location. In St. Petersburg, retail food prices rose 10 percent.***
Agricultural producers in countries subject to Russia's sanctions: The loss of an important export market**** will force them to find alternative markets or sell their goods on the domestic market.
*Reid Standish, "Following Food Import Ban, Russians are turning to an old Soviet staple," FP Blog, Foreign Policy Magazine, August 19, 2014
**"The future of farming in Russia," Farmers Weekly, December 9, 2013.
***"Russian import ban fuels food price rises," BBC, August 19, 2014
****Roberto A. Ferdman, "Russia's ban on American food imports is going to his the U. S. poultry, pork and nut industries the hardest," Wonkblog, Washington Post, August 7, 2014.
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