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Analysts urge easing import bans, part of Russian counter-sanctions

May 23, 2016, 15:57 UTC+3 MOSCOW

Since Russia imposed the food embargo against the US, EU countries, alternative importers have failed to fully substitute deliveries of certain types of goods to the country — report

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MOSCOW, May 23. /TASS/.  Since Russia imposed the food embargo against the countries of the European Union (EU) and the United States, alternative importers have failed to fully substitute deliveries of certain types of goods to the country, according to the report on the food embargo’s impact on the Russian economy in 2015 prepared by an analytical center affiliated to the government obtained by TASS.

An embargo on imports of nuts imposed as part of Russia’s response measures to Western anti-Russian sanctions should be eased or abolished, says the report summing up the results of food embargo in 2015.

"The overwhelming majority of nuts cannot be grown [in Russia] given its agricultural and climatic conditions," the chief of the center’s department for competition policy, Tatyana Radchenko explained.

Food embargo impact 

According to the data provided by Russia’s Federal Customs Service, in 2015 a total of 30,000 tonnes of fresh and refrigerated fish was supplied to the country compared with 86,000 tonnes in 2014. The Faroe Islands topped the list of Russia’s biggest fish suppliers as it doubled deliveries to the country to 20,000 tonnes in 2015.

"The Faroe Islands doubled exports to Russia in absolute terms. However, none of exporters substituted the slipped volume of fish supplies from Norway, which delivered 60,000 tonnes in 2014," the report said.

Fruit imports to Russia faced a similar situation. According to the report, Belarus substantially boosted its supplies of fruits to Russia in 2015 after a number of exporters from the EU quit the market. As a result Belarus’ share in supplies of apples, queen apples and pears surged from 15.4% to 46.2% in the reporting report. In physical terms the deliveries from Belarus rose by 88,000 tonnes to 527,000 tonnes. Besides, Serbian supplies of those fruits increased by 33,000 tonnes. Also, Moldavia and Chile joined the list of Russia’s biggest suppliers of this product category.

"However, if we combine the incremental amount of imports from Belarus and Serbia with the volume delivered from Moldavia and Chile in 2015, the total volume received accounts for only 45% of supplies from Poland in 2014," analysts said.

Meanwhile, the authors of the report noted there has been no serious negative impact on Russia’s food ‘counter sanctions’ on the local market. "The market adjusted in various ways," the report said. "The key deterrent of substitution of slipped imported volumes is currently the general squeeze of demand on food markets as a result of the reduction of people’s real incomes," the report said.

Opinion polls

According to the report, reterioration of the quality of life in Russia is the result of a drop in income and is not related to the food embargo.

The authors of the report refer to polls evidencing that Russian citizens started saving on high-value foods (cheese, sausage, meat and poultry, fish, seafood and vegetables). Traditionally, people least of all save on bread and flour products as well as cereal and pasta. According to the report, sales of a number of food categories plunged in the period.

"All in all, this demonstrates a deterioration of people’s life quality. However, this deterioration may have been triggered by a decline in real incomes rather than the food embargo," the report said.

In 2015, real disposable incomes and average wages in real terms in Russia dropped by 4% and 9.5%, respectively. This altered the structure of consumption in the country as the share of food products in the spending pattern surged to 38% while the share of non-foods went down. This seriously exceeds the levels typical for developed countries (10-20%) and even certain developing countries (17.8% in Brazil), though it is still below the level of many CIS countries, analysts said.

For incorporation of Crimea after the 2014 coup in Ukraine, Russia came under sanctions on the part of the United States and many European countries. The restrictive measures were soon intensified following Western and Ukrainian claims that Russia supported militias in self-proclaimed republics in Ukraine’s southeast and was involved in destabilization of Ukraine.

As countermeasures, Russia imposed on August 7, 2014 restrictions on food imports from the countries that had imposed anti-Russian sanctions: the US, the European Union, Canada, Australia and Norway.

Later, Russia extended its food embargo until August 2016 inclusive. The list of countries was also extended to include Albania, Montenegro, Iceland and Lichtenstein.

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