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Russian food embargo could end in 2017 – Deputy PM

The saga of sanctions and counter-sanctions between Russia and the West could be over before 2018. That is the message coming from Russian Deputy Prime Minister Igor Shuvalov after speaking at an economic conference in Moscow on Friday 13 January 2017. 

"Perhaps it is time to understand that the sanctions or counter-sanctions will cease to have effect soon,” Mr Shuvalov is quoted as saying by Russian news agency RIA Novosti. “In any case, in my work I, and the ministers of agriculture and the minister of the economy more than anyone, need to assume that counter-sanctions [imposed by Russia] will be lifted.”

Russian food & drink reconciliation coming soon?

Mr Shuvalov’s statement has big significance. Prior to 2014’s food ban, the EU was sending billions of dollars of food and drink products to Russia annually. Data from 2013 shows the EU’s Russian exports totalled $11.9 billion.

EU member states were not the only countries blocked from exporting to Russia in 2014.The United States, Norway, Canada and Australia all had substantial presences on Russia’s export market prior to sanctions being put in place. Norway alone shipped $1.1 billion worth of fish and seafood to Russia annually. So, with the sheer level of potential trade returning, Mr Shuvalov’s call to “prepare” for an end to sanctions should be welcome news worldwide.

This a ray of cautious optimism coming from otherwise cloudy skies, with regards to Russia’s food import market. Factors behind Mr Shuvalov’s statement include rocketing food prices, particularly for fruits and vegetables, after EU produce was banned from Russian entry.

The EU currently has its own embargo on Russian produce. It will not be until July 2017 that these sanctions are repealed, if they are not extended, but Mr Shuvalov’s words suggest a possible thawing in the political situation between the two powers – all good signs for exporters.

Optimistic news but caution urged

While sanctions may not be extended, caution is still urged for producers in currently sanctioned nations. It may take time for Russia to allow products from embargoed nations back into the country.

“That will be difficult because a long time has passed and many changes took place.” Alexei Alekseyenko, Assistant Head of Russian agricultural watchdog Rosselkhoznadzor, commented around the time of Mr Shuvalov’s announcement. “There will be no automatic return to the earlier list of suppliers that existed before introduction of our economic measures.”

This approach can be seen in the ongoing efforts of Turkey to get its agricultural products accepted by Russia. Turkey was subject to its own round of sanctions starting in November 2015. Despite being one of Russia’s biggest suppliers of fruits and vegetables, Turkey has been subject to numerous inspections from Rosselkhoznadzor throughout 2016. 

The full list of banned Turkish products still is being gradually cleared as of January 2017, suggesting the same will occur throughout the EU and sanctioned states if food bans are not extended by Russia this year.

Keep your eye on Russia’s food market throughout 2017

At WorldFood Moscow 2016, over 75% of exhibitors, including those from sanctioned countries, expressed optimism regarding Russia’s food market sector. Mr Shuvalov’s comments are cause for even more positive feelings regarding one of the biggest food and beverage markets in the world.

If you are a producer from one of the sanctioned nations, be sure to keep your eyes peeled on Russia throughout 2017. A renormalisation of trade could be coming soon.

Image: © Lyudmila Izmaylova


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