Import bans: Russia’s new macro policy?

7

August 7, 2014 by AK

Some smart people have suggested to me that the EU/US foods import ban is a crude way to increase the current account surplus, providing extra euros and US dollars for Russian corporates to service and repay their short-term debt. The government may expect some of the import gap to be closed by domestic producers and some by imports of cheaper and/or lower-quality goods from Latin America or Asia. In simple terms, they don’t want Russians to spend on expensive foreign food.

I would buy this theory if the ban were limited to high-end cheese and exotic vegetables (and the fact that it does not cover alcohol is baffling). From USDA data (direct pdf link), I can see that Russia imported 26% of the cheese it consumed in 2013 from the EU and 6% from Ukraine. Most of that import was not Brie or Camembert but value-for-money stuff. The Netherlands topped the list of 2013 exporters to Russia, and to the best of my knowledge it mostly sells modestly priced types like Gouda, Maasdam and Edam. Poland and Lithuania offered even more affordable produce, Polish cheeses lately becoming rather varied in type and taste.

From the same USDA report, it appears that Russia does not import much milk from anywhere besIdes Belarus, so the question of import substitution for cheese (ignoring quality for the time being) could be reduced to logistics and spare capacity. I doubt that Russian and Belarusian producers have the spare capacity to boost cheese production by 30% within two-four months.

Even a hint at a specter of food shortages from the late 1980s would be extremely undesirable for the Russian authorities. It’s not hard to imagine prices shooting through the roof in supermarkets, local authorities trying to put a cap on them, empty shelves, panic, angry serpentine queues on chilly November mornings… an occasional riot. This is why I feel that Dutch (but not Polish) cheese may make a speedy comeback.

Update. Streetwise Professor discusses the Russian food ban; I add my 2¢.


7 comments »

  1. Tim Newman says:

    So the Russian population is going to be asked to substitute foreign cheese, amongst other things, for Russian and Belorussian produce? I know nostalgia for the USSR runs strong in some circles in Russia, but I didn’t realise it was this strong! Lucky, lucky them.

  2. JCass says:

    Yet more evidence Russia is slowly turning into North-West Korea. Because autarky worked so well in the past. I wonder if Putin will get one of his weirdo ideologues, such as Dugin, to come up with Russia’s own Juche philosophy.

  3. […] sanctions over its behaviour in Ukraine by banning imports of stuff Russians like to eat.  Other blogs have covered the story well in terms of its stupidity and likely impact, but I’d like […]

  4. […] protest over lowered living standards. Do they not blame the government for the economic downturn? Since “[e]ven a hint at a specter of food shortages from the late 1980s would be extremely undesirable […]

  5. […] protest over lowered living standards. Do they not blame the government for the economic downturn? Since “[e]ven a hint at a specter of food shortages from the late 1980s would be extremely undesirable […]

  6. […] expected food prices to rise, which of course they did, but I thought the higher prices would be so […]

  7. […] might  inquire whether it is Obama who is preventing Russia from buying value-for-money Polish cheese and Lithuanian […]

Leave a Reply

Archives

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 10 other subscribers

%d bloggers like this: