Commentary: Russian ban shows the folly of using food as a weapon

By Stewart Truelsen; AgAlert

We can only guess how the decision was made for Russia to ban food imports from most of the Western world, but perhaps it went something like this: President Vladimir Putin was sitting with some of his old pals from his KGB days. Putin was desperate for a way to retaliate against the West for its economic sanctions leveled against Russia for intervening to help the rebels in Ukraine. He asked for suggestions.

“Why not a boycott of their food?” suggested a former Soviet general, remembering the grain embargoes of the 1980s. “The Americans, they hate food boycotts and embargoes.”

That much is true—American farmers and ranchers hate the use of food as a weapon. In January 1980, President Jimmy Carter announced a U.S. embargo of grain and oilseed shipments to the Soviet Union because of its invasion of Afghanistan. The American Farm Bureau Federation thought it was unwise to single out American farmers by using food as a weapon of foreign policy. If sanctions were needed, AFBF preferred they be across the board, not just on food.

The grain embargo of 1980 proved to be a failure. It stimulated more grain and oilseed production in South America to fill the void left by the U.S. Fifteen months later, when President Reagan ended the Carter embargo, it had cost American farmers around $1 billion in lost export business.

This time, the biggest losers will not be American farmers.

“This is clearly a political move,” said AFBF President Bob Stallman of Putin’s ban on food imports. “It is unfortunate that the biggest losers will be the Russian consumers, who will pay more for their food now as well as in the long run.”

The old Soviet Union was dependent on American grain and oilseeds in the 1970s and ’80s, to make up for harvest shortfalls that were common under the communist system. Beginning in the 2000s, the three major grain-producing regions of the former USSR—Russia, Ukraine and Kazakhstan—became major grain exporters.

In 2013, Russia was the 20th largest market for U.S. agricultural and related product exports, accounting for less than 1 percent of total U.S. agricultural exports. Approximately 55 percent of these export products will be affected by the ban.

(For California, Russia ranked as the 15th largest export market in 2012, with shipments totaling $144.7 million, or about 1 percent of the state’s total agricultural exports. Almond shipments accounted for roughly 70 percent of the Russian purchases, but the Almond Board of California estimated Russia represented only about 3 percent of the export market for California almonds.)

Neither side, therefore, is as dependent on the other as they were in the past. Soviet grain deals once provided a huge stimulus to the American grain market. Nothing like that exists between Russia and the U.S. On the other hand, Europe supplies 40 percent of Russia’s agricultural market and will feel the sanctions more.

The idea to use food as a weapon is a bad one. American farmers could have told Putin that. Whoever suggested it to him should be put on the next train to Siberia. The Russian people have been turned into unwilling locavores, having to rely much more on locally produced food and paying more for it.

 

U.S. Chicken Farmers Brace for Russia’s Retaliation to Sanctions

Source: Reuters; The Moscow Times

Russia’s threatened ban on U.S. poultry imports, the latest move in a sanctions skirmish over Moscow’s support of rebels in Ukraine, has agriculture companies alert to the risks of a conflict that’s already roiled trading of crops ranging from soy, beef and fruit to California pistachios.

Moscow has struck back against trade sanctions following the downing of a Malaysian jetliner last month by imposing food restrictions, and would add U.S. chickens to Ukrainian soy and other products Russia has blocked since it seized Crimea earlier this year: Australian beef, Latvian and Lithuanian pork, Moldovan fruit and Ukrainian juice.

Russia’s move to limit agricultural trade is seen as a sign the conflict with Washington is heating up. Russia imported about $1.3 billion in U.S. food and agricultural products last year, or about 11 percent of all U.S. exports to the country, according to U.S. Census data.

U.S. pistachio farmers have seen sales to Russia, the seventh largest export market, cut nearly in half this year because political tensions have made Russian importers hesitant to make purchases, said Peter Vlazakis, export market coordinator for the American Pistachio Growers.

Pistachio exporters have “a legitimate fear” about the potential for trade disruptions, Vlazakis said.

Russians may turn for pistachios to Iran, the world’s second largest producer after the United States.

An armed group last month occupied a Cargill sunflower-seed crushing plant in eastern Ukraine, a region supportive of the Putin government, and commodity trader Glencore is expected to have a hard time selling grain silos in the country.

Last week, the farm sector’s attention turned to poultry after Russia’s Federal Veterinary and Phytosanitary Inspection Service said it found signs of the antibiotic tracycline in four shipments of U.S. poultry. The service could not be reached for comment.

The food safety watchdog’s threat to ban U.S. poultry imports, reported in government-controlled Russian media, came days after fresh U.S. and EU sanctions over Russia’s support of rebels in Ukraine.

Russia is the second largest importer of U.S. broiler meat behind Mexico, buying 276,100 tons last year, or 8 percent of U.S. exports, according to the U.S. Department of Agriculture. Russia’s purchases from January through May 2014 represented 7 percent of U.S. exports.

U.S. poultry exporters and producers said there were no problems with the meat. For some, the situation was hardly their first time dealing with trade troubles with Russia.

Russia has repeatedly been accused by the West of using food safety concerns and its veterinary service as instruments to ban supplies from countries with which it has strained relations or to protect its own industry. Explicitly banning a country’s products for political reasons would violate World Trade Organization rules.

Trade restrictions in prior years have caused some companies to back away from deals with Russian importers, said Jim Sumner, president of the USA Poultry & Egg Export Council.

The council has advised poultry companies to keep in contact with Russian importers so they will get early warnings should Moscow impose a ban.

For Russian President Vladimir Putin, targeting agricultural imports could be a low-cost way to retaliate against U.S. sanctions over Ukraine.

Other threats, especially any involving Russia’s export of oil and gas shipments, likely would bring additional sanctions on Moscow, said Robert Kahn, a senior fellow for international economics at the Council on Foreign Relations.

Russian sanctions on farm products would be “quite painful” for the companies affected, although the macroeconomic effects on the U.S. economy would be small, he added.

“These are fully political decisions,” Kahn said.