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Banned

The EU market has already suffered significant economic damage, arising from the Russian ban on imports of EU pig meat in January, following the spread of African Swine Fever into a number of Member States. The decision by the Russian authorities to impose a ban on a much wider range of EU food products, in retaliation for the trade sanctions imposed in the wake of the Ukraine crisis, will have far-reaching effects on the whole of EU agriculture – and on the internal market for foods in Russia itself.

The fanfare, which greeted the Russian Federation becoming members of the World Trade Organisation (WTO) during the autumn of 2012, following 18 years of tortuous negotiations, seems very muted today.

Little more than twelve months later, the Russian authorities banned all EU pig meat imports from the EU, following discovery of sporadic cases of African Swine Fever (ASF) in both Lithuania and Poland, a short distance from their Eastern borders.

 

 

The recent Russian outbreak has its origins in Georgia in 2007 and initially spread within Russian borders. More recently the disease has spread to a number of countries on Russian borders (Belarus and Ukraine) and over the EU border to Lithuania and Poland, and, more recently, in Estonia and Latvia.

As indicated in this map produced by Pig Progress, all the outbreaks occurred in close proximity to the borders with Belarus and Russia and most cases have been discovered in the wild boar population, as opposed to commercial herds. Further spread of ASF has been confirmed within Russian borders, especially in the north-west regions of the country.

 

 

As strict quarantine protocols were swiftly implemented following the discoveries of ASF, the EU claimed that the action taken by the Russian authorities was wholly disproportionate and registered a formal complaint to the WTO.

The impact of the ban has been partly offset because the Russian meat industry has looked to additional supplies from Brazil and other South American countries. The impact was most markedly felt in the EU market for manufacturing meats and by-products, which comprised most of the products purchased by the Russian meat industry and prices of these products have halved since the beginning of the year. In 2013, 60% of Russian imports came from EU countries and the Russian market accounted for 25% of all EU exports.

Negotiations to unlock the trade dispute made little progress in the early days after the ban and trade relations have deteriorated still further, following the EU and US sanctions introduced following the Russian support for pro-Russian factions in the Crimea and the eastern areas of the Ukraine.

At home, the main beneficiaries of the trade dispute have been Russian farmers, who have enjoyed a rapid escalation of prices since January. If the current ban is maintained in the longer term, Russia may become largely self-sufficient in pork much sooner than expected, provided government support is granted to help expand domestic production capacity. Previously it was expected that Russia would achieve self-sufficiency in pork products by 2021. 

The breakdown in trading relations reached a new low in early August, when the Russian Prime Minister, Dmitry Medvedev, announced a one year embargo on a wide range of foods from the EU, US, Australia, Canada and Norway – including beef, pork, fruit and vegetables, poultry, fish, cheese, milk and dairy products. This action was taken in retaliation against those countries that had already imposed economic sanctions on Russian companies and citizens living in their countries.

 This action will create major problems for EU producers of fruit, vegetables and dairy products, who have traditionally exported significant quantities of goods to the Russian market. The EU Commission are considering the introduction of a range of market support measures, as it is estimated that EU export losses in 2013 alone may amount to €5 billion.

 

In the short term, Russia will urgently seek to replace these many sources of staple food commodities from other trading partners but Russia’s less affluent citizens will not welcome the ban on such a wide range of foods. Already stories of rapidly rising food prices, ‘empty shelves’ in supermarkets and restaurants closing down are starting to abound.