Russia's New Food Diplomacy

I wrote my bachelor’s thesis about Russia’s obsession with attaining food independence; i.e. that Russian demand should be able to be satisfied by Russian food production, and the non-rationality of such a policy goal in a world food market characterized by specialization and globalization. Turns out, Russia has good reason to pursue this goal after all, since it is mercilessly following a new strategy of food diplomacy recently.

Truth, using food import bans as a bargaining tool in interstate disputes is not particularly new, and it is a rather amusing exercise to trace the application of phyto-sanitary objections to certain food imports (e.g. American chicken, Georgian wine or Ukrainian chocolate) to the political crisis of the day.

However, the country has stepped up its game after announcing on Thursday a one year ban on all food imports from countries that are boycotting Russia due to the Ukrainian crisis. The ban ranges from meat, including all forms of beef and pork, poultry and its subproducts, to smoked foods, sausages, fish, vegetables, roots, fruits and nuts, as well as milk and all dairy products, including cheese. The broadness and briskness of the policy measure leaves producers with contracts on the cusp of being fulfilled and ripe produce that now needs to be rerouted frantically.

Almost all EU countries are affected, and among the main victims are Dutch cheese and Spanish fruit and vegetables. The U.S., Norway, Australia and Canada are also suffering losses in exports to the Russian Federation (regarding fruit, salmon, beef and seafood respectively). The total value of the lost trade is estimated between 6 and 12 billion Euros.

Although food exports to Russia make up only a small share of the EU’s trade balance with the country, and an even smaller share of the region’s $18 trillion economy, the individual consequences of the ban are often harsh. The Wall Street Journal gives an example:

Among products most affected: Belgian pears, of which Russians normally buy about €100 million’s worth annually, making up half of the pear growers’ total exports. The September-October selling season is fast approaching, forcing growers to scramble for other customers, said Matty Veulemans, spokeswoman for the Belgian farmers’ association.

Belgian fruit farmer Luck Bels said he and his peers have only three weeks to find entirely new customers for a large part of their pear harvest. “We can only hope that European consumers eat more pears,” or that buyers can be found in new markets such as China or Canada, Mr. Bels said.

Thus, more and more producers’ organizations are calling for the EU to compensate producers or support prices affected by the Russian embargo, arguing that they were being used as pawns in a diplomatic tug-of-war that had nothing to do with them. ““This is serious business,” said Pieter Verhelst, European and international affairs adviser at the Belgian farmers’ association. “We show solidarity to the Ukrainian people. Now we ask for solidarity from European taxpayers and consumers to cover the losses that we suffer from this ban.”“

So far, the EU has declined to comment on whether such compensation is being considered.

On the Russian side, it is not quite clear how quickly imports will be able to be replaced and how many substitute importers can be found at short notice. Russia buys 31.5 percent of its meat, 42.6 percent of its dairy products and 32 percent of its vegetables from Europe. Overall, according to the Institute for Complex Strategic Studies, 70 percent of all its fruits and berries and almost 50 percent of its dry milk and cheese come from abroad. Local economists reckon that “Russia is unable to immediately fill the gap with its own products. With the right policy, only in a year will 15-20 percent of the goods affected by the sanctions have been substituted with Russian products. In the meantime, Russia will have to depend on foreign suppliers“.

Those suppliers could include Turkey, Asia and South America; indeed, some commentators see this situation as a great opportunity to strengthen alternative trade alliances. However, increases in transport costs as well as the disruption in provision will most probably make prices rise significantly for Russian consumers, at least in the short run.

There is one final option – according to Russia Beyond the Headlines, “it is likely that supplies of European products will continue through the back door – via the two other countries in the Eurasian Customs Union, Belarus and Kazakhstan.”

Whichever will be the consequence of this change, for me it is fascinating that food is really being used as a diplomatic bargaining chip in Russia now – the focus on food independence makes so, so much more sense now.

Are you surprised by these developments?