How will sanctions against Russia affect the country's agricultural industry?

There are no direct sanctions against agricultural products, but they affect farmers indirectly. The Ukrainian crisis can sharply raise grain prices. What can cause this and what difficulties in agriculture can arise?

Problems will be, but not critical. US and European sanctions do not yet affect domestic agricultural products, but they will affect farmers indirectly. Basic foodstuffs are localized by 80%. The exception is beef and raw materials for dairy products. The most dairy Holstein breed of cows in Russia does not take root, so it is constantly imported. Marina Petrova, an expert on the dairy market, General Director of Petrova 5 Consulting, says: “In just a few years, we will begin to reduce the number of livestock, and as a result, a decrease in milk production. “Maybe we can come up with something?”





“You can't think of anything. We have not learned how to play Holstein, this is the main problem. That is, it makes sense that after three years the animal is eliminated, in fact, it must be cut. Let's say for an enterprise that has 2 thousand heads, they buy 200 heads annually, and you will have minus 200 heads from 2 thousand annually. And now count on 4 million livestock. Holstein is reproduced in Europe, America, Canada. Everybody. No China .

Vegetables and fruits are mostly imported by those that do not grow in Russia because of the climate. Russiacompletely self-sufficient in poultry meat. But at the same time, up to 70% of the eggs for breeding poultry are imported from abroad. Russia produces the same compound feed itself, but vitamin supplements are purchased mainly in Europe. From there they bring the so-called hybrid breeds of chickens, which rush well. While domestic egg producers report full import substitution. Sanctions will hit grain exports, says Professor, former Deputy Minister of Agriculture and Food Leonid Kholod:

Leonid Kholod, Professor, former Deputy Minister of Agriculture and Food:

“There is annoyance, because, as far as I know, VTB and VTB companies participated in the lion's share of grain operations. If the subsidiaries of this bank fall under sanctions, and these are serious grain traders. Financing, respectively, from this bank: whether this bank will have financing of such volumes, whether it wants to do this, is also unclear. Another question: how much will the currency cost?”

Only a few banks fell under the sanctions, so all the necessary calculations will take place. But it's time to learn how to import-substitute the seed fund. Georgy Ostapkovich, Director of the HSE Center for Market Research, comments:

Georgy Ostapkovich, Director of the HSE Center for Market Research:

“90% of beet seed is imported. No beets, no sugar. This is where the problem is. The problem that is imposed on us from the point of view of the regulation of the main banks is not so terrible. It does not impose an embargo on the entire financial banking system, so the same VTB and the same Sberbank can make a conditional payment through Prom-drom-trombank from Verkhnyaya Pyshma. It will lengthen, complicate, increase the cost, but it will not be a problem.”

The most important thing that experts say is that agricultural equipment has been hit. Now sanctions have been imposed on high technologies, and in this technique there are a lot of them: these are the same chips and microcircuits. In addition, now for years proven suppliers require a 100% prepayment. Says the head of the National Meat Association Sergei Yushin:

Sergey Yushin, head of the National Meat Association: 

“Without receiving 100% payment, we may not be able to ship equipment, machinery, agricultural machinery, and so on. But this is a matter of development. There are questions of current activity. We depend a significant part on the supply of essential amino acids, some vitamins, up to 100% dependent on imports. In addition to the fact that they will rise in price again, there will be a question of the need for additional working capital in order to pay for these goods in advance. With today's credit, commercial rates in Russian banks, the cost will grow.

Russian food producers are looking for a replacement for imported ingredients The 

Ukrainian crisis could drive up grain prices sharply, writes Bloomberg. The fact is that the Black Sea is one of the main channels for its supply to the world market. Russia and Ukraine together occupy a quarter of the world wheat market and a fifth of the corn market. In the next two weeks, shipments from Russia are likely to be delayed due to uncertainty, and Ukrainian ports are now closed.