This is the reason for the Russian boycotts

The Kremlin recently announced the dairy import from Belarus to boycott. This while the import of . has also been stopped Brazilian pork, and European pork is certainly not welcome.

Production is rising fast
In the past, Russia was a major buyer of cheese, meat, fruit and vegetables from the Netherlands and other European countries. However, since the summer of 2014, these export flows (in response to sanctions against Russia, due to the annexation of Crimea) have been restricted. A few months earlier, European pork was boycotted because of the African swine fever in the Baltic States. The Russian producers have made good use of this 'gap in the market'.

Since 2014, pork production has increased by about 20% to 3 million tons, while the wheat production increased by 43% to 85 million tons. The Russians have since emerged as the op 1st largest grain exporter. The milk lake also grew (+1,1% to 31 million tons). Nevertheless, the dairy sector has growth ambitions. However, the realization of the plans usually takes several years. The production of cheese did increase considerably and rose to 2017 tons in 935.000 (+23%). However, there are doubts about the reliability of the Russian dairy statistics. 

That Russia often makes an exception in its boycotts for seed potatoes, seed and genetics makes sense. After all, starting material is necessary for production growth.

(Text continues below the photo)Harvesting work in the Krasnodar region. Wheat production has increased by 2014% since 43.

Almost self-sufficient
The chance that Russia will ever turn to the Netherlands for pork is small. The US Department of Agriculture (USDA) assumes in its forecast that Russia will be self-sufficient in the foreseeable future. The self-sufficiency rate is reportedly rising from 92% in 2017 to 117% in 2025. This means that Russia will go from net importing to net exporting in the foreseeable future. Foreign supply is therefore (almost) is no longer necessary.

Between 2014 and 2017, Brazil made good use of the Russian boycott on European pork. The Brazilian meat export rose sharply (+45% to 810.000 tons). At the end of 2017, Russia suddenly stopped importing pork from the South American country. This was officially because of the discovery of the banned substance ractopamine, but that reason is strongly doubted. It is suggested in the corridors that cheap Brazilian imports are depressing Russian pig prices.

Due to the advancing production, the Russian pig price is heading for lower levels, which in turn causes the affects producers' profitability. If the price falls below 92 rubles (€1,31) per kilo this year, pig farmers will make a loss. Maybe that's why Russia locked the gates to Brazilian pork? It does look like it. After all, Brazilian imports are no longer necessary now that the country is virtually self-sufficient. In the same period, Russia 'coincidentally' also closed the door to American pig(fat), although this is a relatively limited volume.

(Text continues below the photo)An employee in a Russian slaughterhouse. Additional slaughter capacity is on the way.  

European boycott illegal
Also to the boycott on European pork is a breath of fresh air. Russia has banned pork from Europe since 2014, while African swine fever has only been detected in the Baltic States. The World Trade Organization (WTO) ruled in 2016 that this boycott is illegal. After some legal wrangling, Russia finally resigned itself to the WTO's verdict. Since the end of 2017, this boycott is therefore off the table. For the export damage suffered demands the European Union now €1,39 billion, although Russia has indicated that it will not pay it.

However, it does not mean that European exporters will be able to export pork to Russia again. In August 2014, Russia introduced an import ban for vegetables, fruit, dairy, fish and (pork) meat from Europe. Since the autumn of 2014, Russia has therefore applied 2 boycotts for European pork, of which 1 has now expired. Talk about market protectionism. 

Measuring with 2 sizes
It is striking that Russia used the African swine fever to ban pork from Europe and the country is now negotiates with China to export pork there. This with a view to the approaching self-sufficiency. The striking thing is that Russia wants to export meat from the regions where the African swine fever is prevalent. Russia is also working on trade contracts with other countries. For example, a deal was recently concluded with Turkey to be able to export meat, dairy and fish there. 

The same problem arises with milk as with pork: the price of skimmed milk powder in Russia is under pressure due to the influx of cheap foreign products. That is why Russia recently announced that it wanted to stop importing dairy products from Belarus. Officially, the import would not meet the quality requirements. Dairy analysts know better, however; the reason is to support domestic market prices.

Incidentally, it is not yet certain whether Russia deed to word. It will probably remain a threat, because Russia is too dependent on the supply from Belarus. 

Grant programs
In addition to the alleged market protectionism, Russia also stimulates the agricultural sector with liquid assets. For example, the Kremlin has been stimulating the pig sector for years with grants, while also assisting the processing industry (slaughterhouses) with big investments.

In practice, however, there is a difference between wanting to do something and being able to do something. The logistics infrastructure cannot handle the influx of all the grain and the capacity of the existing ports is not sufficient to export additional volumes. Substantial investments are therefore being made in new capacity, but that takes time. It is reported that it takes at least 5 years before the effect is visible. Also destroyed are Syrian ports patched up by Russia for extra export capacity.

(Text continues below the photo)Grain storage in the Russian port city of Novorossiysk. Additional capacity is under construction.

Great power in the making
While it won't happen on its own, there's no question that the Russians are trying to play a bigger role on the global food scene. It cannot be denied that Russia sometimes takes controversial measures to protect domestic market prices. After all, the argumentation behind almost every boycott is questioned.

Despite this, the Russians are likely to continue with this policy quite stoically, as the latest boycotts announced are very recent. The Russians will let nothing and no one stop them from realizing their agricultural ambitions. Not even by WTO rules.