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Monday, August 11, 2014

Russia sets one-year import ban on ag products

by Traci Eatherton, WLJ Managing Editor

Last week, Russian Prime Minister Dmitry Medvedev delivered Russian President Vladimir Putin’s announcement that he was banning imports of meat, fish, milk and milk products and fruit and vegetables from the United States, the European Union, Australia, Canada and Norway. The ban has been introduced for one year, and is in retaliation of sanctions by the countries over the ongoing Ukraine conflicts.

The ban will likely leave some empty spaces on store shelves in Russia, and will also put a dent in ag export dollars for the countries affected. U.S. ag exports to Russia total about $1 billion per year.

“Until the last moment, we hoped that our foreign colleagues would understand that sanctions lead to a deadlock and no one needs them,” Medvedev said in a televised report. “But they didn’t, and the situation now requires us to take retaliatory measures.”

U.S. soybeans, pork, chicken and nuts are expected to take the biggest hit, according to a Dow Jones report. U.S. meat and poultry exports to Russia totaled about $329 million last year, according to U.S. Census Bureau data. U.S. soybean exports to Russia last year were valued at about $157 million.

American Soybean Association President Ray Gaesser said that Russia’s actions will hurt U.S. soybean customers, but there is a bigger picture to the ban. Gaesser highlighted soybean farmers’ concerns with the ban that would halt the import of, at press time, a yetto-be-determined complete list of farm and food commodities from countries that have placed sanctions on Russia as a result of its building aggression in neighboring Ukraine.

“Russia is a key trading partner for U.S. agriculture, and the Russian people are our customers like so many others in the world’s emerging markets. However, we would add that Russia, while very important, is only one of hundreds of our customers worldwide. By limiting his people’s access to American soybeans and other products, he does a great disservice to his Russian countrymen and women,” Gaesser said.

“ASA pushed hard for the establishment of permanent normal trade relations (PNTR) with Russia last year because of the significant growth and opportunity presented in the Russian marketplace. Soybeans are the biggest crop export from the U.S. to Russia, due in large part to that country’s burgeoning economy and growing demand for meat. Sanctions and bans like the one proposed by President Putin serve only to hurt the Russian people by limiting their access to the food and products they need and want,” Gaesser added.

“It remains to be seen which commodities and products appear under the Russian ban, and while we certainly want to see a key market protected, it is equally important for American farmers to demand a higher standard from our trading partners. In this case, that standard is not being met, and we urge President Putin to rescind this ban,” he added.

American Farm Bureau Federation President Bob Stallman said, “This is clearly a political move. It is unfortunate that the biggest losers in this will be Russian consumers, who will pay more for their food now as well as in the long run.”

“America’s farmers and ranchers would have been more surprised if Russia’s leaders had not announced bans and restrictions on food and agricultural imports. They do so regularly for seemingly small reasons and now they have to deal with sanctions imposed by our nation and others,” Stallman added.

With restrictions placed on U.S. beef and pork over ractopamine, Russia had already, for over a year, severely hampered beef exports, Chase Adams, National Cattlemen’s Beef Association Director of Communications, pointed out.

“Russia, of course, is not nearly as important of an export market for U.S. meat and poultry companies as it once was,” Steve Meyer and Len Steiner of the CME Daily Livestock Report pointed out. “U.S. chicken exports to Russia are down 11 percent year-to-date versus 2013 through June. U.S.

chicken companies’ produce weight exports have averaged 20,500 metric tons (mt) per month this year where they averaged 68,441 mt per month in 2008 and 60,492 mt per month in 2009.”

“The real question is: ‘Where does Russia intend to get its food?’” Meyer and Steiner questioned. “One report cited Russian data as indicating that Russia imported about one-third of its food last year. It has banned pork from the EU due to cases of African Swine Fever (ASF) in eastern Europe— even though ASF is present already—and pretty much endemic in some areas in Russia. This all reinforces the oft-stated viewpoint of our friend Dr. Paul Aho of Poultry Perspectives in Storrs, CT: Russia is proof that some customers are so bad they are not worth having.”

A leading market for U.S. red meat exports until it closed in February of 2013, Russia was in the sights of American exporters, hopeful that discussions would produce a solution to the impasse on beta agonist residues, according to the Unites States Meat Export Federation.

According to the U.S. Meat Export Federation, Russia suspended all imports due to its policy on the use of beta agonists (the most common being ractopamine) in livestock production. U.S. beef has been effectively shut out of the market since that time, although there is one U.S. veal plant currently approved to ship to Russia.

U.S. pork was also out of the market until March of this year, when Russia agreed to resume imports of U.S. pork produced under certain conditions, including documentation that the hogs from which the pork is derived have not been fed beta agonists. Only two pork slaughter plants are currently approved to export to Russia, so this year’s exports are far below the volumes shipped prior to the February 2013 ban. Monthly export totals have been increasing, however, even with only two plants eligible:

• March: 284 mt, valued at $648,000

• April: 1,429 mt, valued at $6.4 million

• May: 6,851 mt, valued at $22.7 million

• June: 9,371 mt, valued at $34.3 million

In 2012, the last year the U.S. industry had full access to the Russian market, the export totals for the full year were:

• Beef: 80,408 mt valued at $307 million

• Pork: 98,830 mt valued at $281.7 million

All of the totals include both muscle cuts and variety meat.

Other countries included in the ban concurred with the concerns.

Canada will not be intimidated by Russia’s ban on its food imports, Industry Minister James Moore said last week, also pointing out that the sanctions will hurt Russian consumers more than Canadians.

“We will certainly look at the impact of these sanctions on the Canadian economy, but they will in no way cause us to have any hesitation in the principled position we’ve taken in opposing [Russian President] Vladimir Putin’s regime,” Moore said during a news conference in Montreal.

Australian Foreign Minister Julie Bishop shared her disappointed over the “full embargo.”

Bishop told reporters that Australian farmers will feel the effects of the sanctions. Australian beef exports to Russia were worth $159 million in 2013, butter exports accounted for $64 million, live animals excluding seafood accounted for $55 million and meats excluding beef were worth another $48 million.

Overall, two-way trade between Australia and Russia in 2013 was worth about $1.79 billion in 2013, according to Department of Foreign Affairs statistics.

“It is disappointing that Russia has acted in a retaliatory manner rather than respond to international concern by halting the supply of heavy weapons to the separatists, including the surface-to-air missile systems believed to have been used in the downing of Malaysia Airlines flight MH17 that resulted in the tragic deaths of 38 citizens and residents of Australia,” Bishop said. — Traci Eatherton, WLJ Editor

 
 


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