Russian market anticipates losses from the introduced ban on import of food products

In pursuance of the Executive Order of the Government of the Russian Federation of August 7, 2014 No. 778 On Measures to Implement the Order of the President of the Russian Federation of August 6, 2014 No. 560 On Applying Certain Special Economic Measures to Ensure Security of the Russian Federation, a one-year ban has been imposed on import to the Russian Federation of agricultural products, raw materials and food products originating from the United States of America, EU member states, Canada, Australia and the Kingdom of Norway.

The 2013 figures show that the sanctions cover commodities which account for 19.5% of food products imported by Russia. For the countries covered by sanctions the share of prohibited imports to the Russian Federation is 13% of the total food products which these countries export to the global market.

Russian market will be hit most by the sanctions imposed on export of lettuce and chicory (commodity heading 0705). Almost all products of this group of commodities were supplied to the Russian market from EU member states (95.2% in 2013). Israel began to supply these products in 2009 and Tunis in 2010, but in general they account for only 3.3%.

The Russian internal market will face serious loss from the ban on imports of fresh or frozen fish (commodity heading 0302). In 2013, the Russian Federation imported from Norway 89.5% of all these products imported to Russia, 3.7% from EU member states. Turkey was ranked 3rd, accounting for 3.1% of the total fresh or frozen fish imported to Russia.

Imports of fresh fish (commodity heading 0301) will be reduced drastically. Russia imported from Norway 72.5% of all the fresh fish imports to Russia vs. 9.4% from EU member states. Additionally, the Russian Federation imports fresh fish from Thailand (3.4% of all the fresh fish imported to Russia in 2013), Singapore (3%), China (2%), Vietnam (1%), Malaysia (1%), Sri Lanka (0.6%).

The Russian market will see a significant reduction of frozen vegetables (commodity heading 0710) whose exports from EU member states reached 73.8%. Furthermore, China has been reducing export of these products to Russia: supplies from China accounted for 15.6% of all the supplies of frozen vegetables to the Russian market in 2009 against only 8.8% in 2013. Frozen vegetables were imported from Ukraine (5.5%) and Moldova (2%), but supplies from these states are unlikely to increase.

Supplies of fresh, refrigerated or frozen pork (commodity heading 0203) will be reduced drastically. In 2013, Russia imported 61.1% of these products from EU member states, 11.5% from Canada, 0.9% from the United States. Furthermore, Russia imported 20.5% of pork from Brazil, 2.4% from Chile, 2.3% from Belarus.

Supplies of salted, brined, dried or smoked meat (commodity heading 0210), 71.4% of which was imported from Hungary, Italy, Spain, Austria, will be reduced. In 2012, Russia began to import the products of this group of commodities from the Republic of Belarus which in 2013 accounted for 21.2% of the total imports of this group of commodities.

Such food products as "Headed cabbage, cauliflower, cabbage turnip ...", "Apples, pears and quince", "Cheese and farmer cheese", "..cream, yogurt, kefir ...", "Fresh apricots, cherry and black cherry, peaches (incl. nectarines), plums and blackthorn", "Meat and poultry products account for more than 50% the Russian imports from the states covered by sanctions.

Not covered by sanctions are such food products as lamb meat, horse meat, by-products of cattle, pork, sheep and etc., rabbit meat, eggs, vegetable oil (including olive oil), canned meat and fish, vegetable products, fruits, nuts, ice cream, margarine.

Nadezhda Volovik, Head of Gaidar Institute's Foreign Trade Department