So in the midst of rising tensions between Russia and the rest of West due to ongoing heavy shelling, the Russians have ‘taken their ball and gone home in a sulk’. This sulk has taken the form of a food import ban that could have heavy implications on our food and beverage industry. The UK Foreign Office explains that there were ‘no grounds for Russia to impose these sanctions’, but it is clear that they have done so over the US and EU sanctions over Russia over its continued backing of separatists in eastern Ukraine.
How might this effect UK suppliers, retailers and consumers?
Well, the ban is set for a minimum of 1 year and is most likely going to implicate the prices of dairy, meat, and fruit and veg trading. The fruit and veg market is one area that could be heavily hit in the UK based on its 2 billion Euro worth! In recent years the fruit and veg industry has found itself to be in oversupply due to the favourable weather conditions of late, as a result prices of tomatoes, cucumbers, peaches and numerous other crops have been low due to excess. Factor in the Russian ban on imports and you have a double whammy on already spiralling prices. This price fluctuation will heavily impact the fresh produce industry, and in particular countries that place a big emphasis on imports and exports such as Poland, the Netherlands, Spain and Greece.
Blessing for fresh produce BUYERS in the EU
As ‘The Grocer’ so profoundly put it, ‘one man’s breath is another man’s death’, and this price drop could lead to some very appealing margins for fresh produce buyers. The lower prices will of course filter down to the consumer too, but it will mainly benefit the leading food retail chains. Not only this, other countries who rely on imports and exports such as Serbia, Azerbaijan and Turkey may also benefit from these prices. Russia are not exactly self-sufficient with their climate meaning the abovementioned countries could use this as a way in.
If Serbia, Azerbaijan and Turkey are able to step up to meet Russia’s demands then this could mean bad things for the EU. If when this ban is lifted and the borders are opened once again, the Russians may not see any need to start trading with the EU any longer…only time will tell where this one will lead.
The Grocer, (2014). Russian import sanctions will hit fruit and veg industry, warns Rabobank. Retrieved 8th August, 2014, from http://www.thegrocer.co.uk/buying-and-supplying/sourcing/russian-sanctions-will-hit-fruit-and-veg-industry-warns-rabobank/370411.article