The food embargo stimulates small producers

25 may 2016 | RBC-TV

The Food embargo is not a cause of worse living standards of Russian people that are, first of all, due to falling revenues and the overall comedown of the global economy. Ms. Tatiana Radchenko, Head of the Department for Competition Policy of the Analytical Center, told this RBC TV channel in a live broadcast.

Tatiana Radchenko
Tatiana Radchenko
Deputy Head

In general, no severe effect of the Russian embargo and counter-sanctions is observed on the European economy, said the expert. “The volume used to be supplied to Russian markets was absorbed by domestic European markets," explained Ms. Radchenko. "In this case, only some countries were affected. For example, Poland reduced supplies of apples, but managed to diversify its exports and increased supplies of apple juice almost 15-fold. Finland, that used to supply cheese to the Russian market, did suffer.” 

“If we speak of the Russian domestic consumption structure, due to lower people’s incomes we see some shift from more expensive food products to cheaper ones in the consumption structure," said Ms. Radchenko. "We do not observe an entry of new foreign suppliers in the domestic market. Almost for all product categories, the substitution, if any, is due to domestic production.”

For all food categories (meat, fish, and milk products), the market is narrowing down in real terms; namely, earnings of companies operating in this market are falling in real terms, said the expert. “At the same time, due to the exit of foreign companies which did not produce and did not have localized production in Russia, these shares were taken by large Russian producers. Perhaps, except for the cheese and cottage cheese markets only where new brands of small regional companies started to appear, replacing exited foreign companies,” said the expert.

However, we did not manage to replace foreign suppliers in fish categories, states Mrs. Radchenko. “No other country managed to reach the former Norwegian volumes. Only the Faroe Islands managed to increase their volumes. Currently, they supply 2/3 of all chilled fish to the Russian market, but this is not comparable with Norwegian supplies," summarized the expert. "In the market of meat products, Russian producers managed to replace withdrawn volumes, while in the cheese market new small producers appear for which the production embargo has become a development incentive.”

Yesterday, the Analytical Center published its report “Food Embargo in 2015” that analyzes the trends in Russian imports of key embargoed food products, changes among the exporting countries, substitution for food imports, changes in the position of various companies in the Russian food markets and other aspects of the situation.

Source: RBC-TV