Five years ago Russia responded to the introduction of sanctions with the import substitution policy in the food industry.
External restrictions give the chance to develop local production
In August 2014 an order was signed "On the Introduction of Certain Special Economic Measures in the Interest of Ensuring the Security of the Russian Federation", and the import of certain types of agricultural products raw materials and food from the USA, EU countries, Canada, Australia and Norway was prohibited. The list includes meat and dairy products, fish, vegetables, fruit and nuts; later the prohibition was extended to live fish and salt.
According to Gleb Pokatovich, first deputy head of the Analytical Center, from an economical point if view the issue of import substitution comprises multidirectional vectors. "The significant change in the conditions made a difference, and external restrictions give local manufacturers the chance to grow", - he says. However, any investments in development are associated to high costs, the burden of which falls mainly on the consumers and the state.
The introduced measures are giving results: production in the agricultural sector and in the food industry is increasing, and we are becoming more self-sufficient in respect of food, notes Pokatovich. However, manufacturers' costs increase as they try to manage product quality, and the prices for their products increase as well: they need new technologies, equipment, raw materials of better quality, qualified workforce etc.
"Issues arise related to the population's actual income, whose growth trends is close to zero, and this limits the demand for high-quality food. People are forced to choose products offered by manufacturers who favor low prices over quality", said Pokatovich.
However, overall national manufacturers are beginning to reach the quality which previously could be found only in Western products, he noted.