Russia Eyes Latin American, New Zealand Agriculture During Ban

Greetings! The big news continuing from last week is Russia’s import ban. This following the US and EU’s latest sanctions, imposed on Russian over the crisis in Ukraine, are designed to hammer Russia's banks, oil industry and military amid an already sluggish economy. 

Russia's one-year ban includes all imports of meat, fish, fruit, vegetables, milk and milk products from the US, Canada, all 28 EU countries, Norway and Australia.

Including banned products from Ukraine, Russia has now cut off 55 percent of its agricultural imports, including about 95 percent of its imported milk, cheese and yogurt.

A recent Forbes article noted that Russia can’t fill the food gap domestically as their domestic consumption exceeds production for many of the banned items.

As the ban takes effect immediately, Russia’s Agriculture Minister, Nikolai Fyodorov, said they would turn to both Brazil and New Zealand to ease their immediate supply constraints.

Brazil, the world’s largest meat exporter, will be their go-to for beef and chicken. However, with Brazil’s infrastructure issues, it could take some time to move product.

While it sounds like New Zealand might also get a win out of the ban, The Wall Street Journal reports – maybe not. A New Zealand currency manager said that Russia is the second-largest dairy importer in the world and any “European supply destined for Russia may need to find a new home.” Increased supply of dairy products in markets outside of Russia where New Zealand, a top exporter of dairy, competes could impact the New Zealand dollar.

David Cohen, the US Treasury Dept. undersecretary in charge of economic sanctions, said all the Russians have done is limit the Russian people’s access to food.

The US exports about $1.2 billion in food and agricultural goods to Russia, which is less than 1 percent of total US agriculture exports.

The EU will take a harder hit with exports to Russia of about $15.8 billion or 10 percent of its total agricultural exports.

Canada’s agricultural exports to Russia amounted to the equivalent of $515 million, according to Agriculture and Agri-Food Canada.

Australia’s total agricultural trade with Russia was valued at A$404.7 million in 2013. Of this, the majority value was in the category of 'meat, livestock and animal products' at A$309.9 million, followed by dairy (A$78.1 million), seafood (A$0.5 million) and cereals, crops and pulses (A$0.2 million).

The fishing industry is the hardest hit in Norway; Russia was its biggest single market last year.

There’s no doubt that all this will increase Russian food prices - quite possibly dramatically over the next year. Russian President Putin has made a clear statement that he’s digging in his heels and is willing to inflict pain on his own people in defiance to the world.

Have a great week!

~Sarah