Aggravated Relations between Russia and Turkey will Negatively Influence Cooperation in Agribusiness

26 november 2015 | RIA Novosti

'RIA Novosti' asked experts what consequences aggravated relations between Russia and Turkey in the field of agriculture would carry, assuming that Turkey would have to seek grains more expensive and of lower quality, and Russia would face the need to replace significant amounts of vegetables and fruits. Experts largely confirmed these assumptions: this break in the food supply will have negative consequences for both countries.

Elena Razumova
Elena Razumova
Department for Expert Analytics

‘The total of Russian exports to Turkey cocerning wheat, corn and sunflower oil in 2015 amounted to about $1.4 billion. Russian grains are generally cheaper and yet of sufficiently high quality. They are essential for the Turkish flour-milling industry, products of which are exported to Asian markets,’ 'RIA Novosti' quotes Elena Razumova, the Expert of the Analytical Center. According to her, in case trade is restricted or prohibited Turkey will be able to replace Russian grains in the international market - in Ukraine or in France. However Russian exporters will be forced to be engaged in predatory pricing in foreign markets, carrying losses, considers the expert. Ms Razumov also sees some advantages in this situation - decline of domestic prices in the medium term, as well as possible abolition of the export duty. However, in general, in her opinion, Russia will face difficulties in redirecting large volumes of grain exports which went to Turkey to other countries.

Ms Razumov pointed out Russia's dependence on Turkish tomatoes, as their share in imports in 2015 amounted for more than 50%. ‘Replacing these volumes will be practically impossible in conditions of the embargo of the European Union. Therefore, when restrictions in Russia are introduced that will increase the price of tomatoes and their derivatives. There are also more specific products - cherries, used primarily in dairy, juice and confectionery industries. Replacing them is even more difficult, primarily due to climate opportunities for the commercial cultivation,’ said the expert. In these segments in 2014 Turkish imports by volume were inferior only to Spain, according to Ms Razumov. The expert’s conclusion is disappointing: if the ban on trade with Turkish processors of these berries is introduced that will not just level up prices, but will reverse or even shut down the production.