Written by Ana Martinez Juan
Updated on 10 October 2014
The legal basis for the European Union (EU) relations with the Russian Federation is the Partnership and Cooperation Agreement, which came into force on 1 December 1997 and regulates the political and economic relations between the two parties. In this context, and regarding trade exchanges, Russia is the third trading partner of the EU and the EU is the first trading partner of Russia. EU exports to Russia are dominated by machinery and transport equipment, chemicals, medicines and agricultural products (Russia is the second export market for EU agricultural products, after the United States).
The Russian Federation decreed on 6 August 2014 a ban on agricultural products from the European Union, the United States, Canada, Australia and Norway, as a result of the implementation of economic sanctions against Russia in the context of the situation in Ukraine. On 7 August, the Russian government adopted a list of products to be banned for a period of one year. The list covers specific products over several sectors: fruit and vegetables, dairy products and meat. The list was further modified on 20 August. Overall, the EU will be the most affected partner among all those targeted by the measures, as 73% of imports that are banned come from the EU.
The ban caused immediate market disturbances and a negative impact on prices in some sectors. In order to deal with these initial effects, the Commission introduced several measures targeting the most critical sectors. Most of these measures are laid down in Regulation (EU) No 1308/2013 on Common Organisation of the Markets, in particular article 219 measures against market disturbance. The financial assistance approved by the Commission is set out in Regulation (EU) No 1306/2013 on “Horizontal issues”, article 25 reserve for crises in the agricultural sector. These regulations are two of the four basic EU regulations of the reformed Common Agricultural Policy 2014-2020 which strengthens the EU’s capacity for crisis management. Furthermore, since the announcement of the ban, the Commission established a task force of Commission experts and have organised weekly meetings with experts of the Member States in order to follow the situation and to analyse the market sector by sector.
An extraordinary Council meeting on Agriculture and Fisheries discussed the potential impact of the measures and the policy response on 5 September 2014.
The Committee on Agriculture and Rural Development debated with Commission representatives, the effects, implications and necessary measures for EU farmers on 4 September. For its part, the Plenary of the European Parliament debated the impact of the import ban with the Commissioner for Agriculture and Rural Development (2009-2014) Dacian Cioloş on Monday 15 September. The Commissioner said new measures will be announced in the coming weeks. The Plenary adopted a resolution on the situation in Ukraine and the state of play of EU-Russia relations (2014/2841(RSP)) on Thursday 18 September. In this resolution MEPs call for more money for EU farmers hit by Russia’s trade ban. MEPs have also submitted several written questions to the Commission on this topic which was also raised in the hearing of Commissioner-designate Phil Hogan on 2 October.
Although the Commission is monitoring the market evolution, it might be too early to assess the economic impact and implications of the Russian import ban, not only in EU agriculture, but also in other sectors concerned by the food supply chain (for instance, food industry or transport logistic).
Measures introduced by the Commission
The first reaction of the Commission was the Statement by the Commissioner Dacian Cioloș concerning the ban on EU agricultural exports into the Russian Federation , on 8 August. Three days after this statement, the Commission announced the first measures.
1. Market measures and green harvesting / non-harvesting
Market withdrawals, especially for free distribution, for peaches and nectarines and for perishable fruit and vegetables. Compensation for green harvesting and non-harvesting for perishable fruit and vegetables.
Announcement on “Exceptional measures to assist peach and nectarine producers”. Press release: IP/14/920, 11 August 2014.
→Legal act: Commission Delegated Regulation (EU) No 913/2014 of 21 August 2014 laying down temporary exceptional support measures for producers of peaches and nectarines.
Announcement on “Exceptional support measures for EU producers of perishable fruit & vegetables”. Press release: IP/14/932, 18 August 2014.
→Legal act: Commission Delegated Regulation (EU) No 932/2014 of 29 August 2014 laying down temporary exceptional support measures for producers of certain fruit and vegetables and amending Delegated Regulation (EU) No 913/2014.
Announcement on “Commission suspends emergency measures for perishable fruit and vegetables and will come forward with a more targeted scheme”. Press release: IP/14/996, 10 September 2014.
Announcement on “Further €165 million package for perishable fruit & vegetable market support”. Press release: IP/14/1061, 29 September 2014.
→Legal act: Commission Delegated Regulation (EU) No 1031/2014 of 29 September 2014 laying down further temporary exceptional support measures for producers of certain fruit and vegetables.
2. Private storage aid
Private storage aid for milk and milk products.
Announcement on “Emergency market support measures for the milk sector”. Press release: IP/14/954 , 28 August 2014.
→Legal acts:
Commission Implementing Regulation (EU) No 947/2014 of 4 September 2014 opening private storage for butter and fixing in advance the amount of aid.
Commission Implementing Regulation (EU) No 948/2014 of 4 September 2014 opening private storage for skimmed milk powder and fixing in advance the amount of aid.
Commission Delegated Regulation (EU) No 949/2014 of 4 September 2014 laying down temporary exceptional measures for the milk and milk product sector in the form of extending the public intervention period for butter and skimmed milk powder in 2014.
Commission Delegated Regulation (EU) No 950/2014 of 4 September 2014 opening a temporary exceptional private storage aid scheme for certain cheeses and fixing in advance the amount of aid.
Announcement on “Private Storage Aid for cheese closed”. Press release: IP/14/1036 . 23-09-2014.
→Legal act: Commission Delegated Regulation (EU) No 992/2014 of 22 September 2014 repealing Delegated Regulation (EU) No 950/2014.
3. Promotion policy
Announcement on “Boost for promotion of EU agricultural products as medium-term response to Russian embargo”. Press release: IP/14/961, 3 September 2014.
In the framework of the promotion policy, the Commission announced an additional €30 million of EU funding for CAP promotion programmes starting in 2015, in addition to the annual budget €60 million.
The Directorate General for the Agriculture and Rural Development of the Commission devotes a webpage on EU responses to the Russian import ban on agricultural products. This webpage gives access to relevant Commission information on this issue (press releases, legal acts, meetings, market data and questions and answers).
Overviews
Information note on the Russian ban on agri-food products from the EU . European Commission, Directorate General for the Agriculture and Rural Development. 3 September 2014. 19 p.
This information note provides information on the Russian ban in perspective, the EU market disturbances and the EU market measures, the impact of those measures by sectors, other EU instruments (trade policy measures, promotion of agricultural products etc.) and possible compensation measures for farmers affected by the ban (EU and national instruments). The note also provides statistical data (charts and tables).
Questions & Answers on the potential impact of the Russian measures against EU agricultural products and the EU response so far . MEMO 14/517 (03-09-2014). Additional questions and answers have been added on 22 September.
Embargo russe sur les aliments européens: l’Europe doit montrer l’exemple / Maxime Habran. Université de Liège, European Studies Unit, 10 September 2014. 4 p.
This memorandum note is intended to clarify the measures taken by the European Commission.
What you need to know about the Russian import ban: from the agri-information specialists . Infograhaphic. Agra Europe. 1 September 2014.
Analysis
General analysis
EU-28. Livestock and products annual: Russian ban mitigates full recovery . United States Department of Agriculture. Foreign Agricultural Service, 09-09-2014, 14 p.
Report highlights: Both EU beef and pork production are forecast to increase in 2015. Beef production is supported by the liberalization of the dairy sector, while improved efficiency in the swine sector and an abundance of feed will reinforce pork production. Both sectors will have to increase sales to alternative markets, as demand on the domestic market is weak and Russia, the largest third country market, has closed. Due to the absence of strong competition on the world market, EU is expected divert the trade flows and expand export sales next year.
Russia’s restrictions on imports of agricultural and food products: an initial assessment . FAO, 12 September 2014. 10 p.
The note by FAO food trade economists examines the implications of the ban for the domestic market, particularly the possible effects on consumers, producers and imports. It also discusses factors that will influence the dynamics of supply and demand response to the ban
L’Évaluation de l’Organisation mondiale du commerce des sanctions commerciales russes contre l’UE / Roberto Bendini. European Parliament Directorate-General for External Policies, September 2014. 7 p.
This briefing note analyses the implications of the Russian ban of EU agricultural products under the agreements of the World Trade Organization.
Russian food sanctions against the EU / Allan Matthews. Capreform.eu (blog), 15 August 2014.
Member States
Austria
Russian import bans to hit Austrian agricultural exports . United States Department of Agriculture. Foreign Agricultural Service, 14 August 2014. 4 p.
Report highlights: In 2013, Austrian agricultural and food products of about 240 million Euros value were exported to Russia. It is estimated that the value of Austrian agricultural and food products banned by Russia in total account for more than 40 percent of total Austrian agricultural exports to Russia.
The Baltic Member States
Review on Macroeconomics in the Baltic States. Riga: LETA, August 2014, 14 p.
This paper analyses the economic impact of the Russian food embargo on Latvia, Lithuania and Estonia. Tree sectors are likely to suffer more than others: companies that work with products which have short shelf life and need to be sold fast, companies that specialise on goods meant specifically for the Russian market and the transport sector, which will happen if transport volumes across the border reduce.
Belgium
Embargo russe: quel impact sur les entreprises belges? . Industrie- und Handelskammer Eupen-Malmedy-St. Vith, September 2014. 2 p.
This note analyzes the impact of the ban in Belgium exports.
Finland
The economic effects of the EU’s Russia sanctions and Russia’s counter sanctions . Ministry of Finance (Finland), September 2014. 16 p.
This paper analyses the effects of the ban in Finland: Finland’s food wxports to Russia are expected to decline to less than a quarter of the normal situation. As a result of the direct effects arising to food exports, pressure will be further directed to domestic agricultural production. Particularly in the dairy sector, the fall in sales might result in a decline in producer prices and a deterioration of profitability.
France
Note de synthèse embargo Russie . ANIA (Association Nationale des Industries Alimentaires), 2 September 2014. 6 p.
This note analyses briefly the effects of the ban in the UE and in France.
Greece
Russian food ban will hit Greek farmers hard . Oxford Analytica, 20 August 2014. 3 p.
Greek economy has suffered a fresh blow from Russia’s imposition of ban on food imports from the EU. In addition to direct losses suffered by Greek farmers, the ban is expected to have a ripple-effect through the economy (in the packaging industry and transport), potentially increasing the number of banks’ agricultural non-performing loans and rendering whole regions dependent on state aid.
Germany
Russian ban hits German food preparations industry . United States Department of Agriculture. Foreign Agricultural Service 19 August 2014. 3 p.
Report Highlights: Russian sanctions have the potential to harm over USD 0.8 billion in German agricultural exports. The German food preparation producers and some horticultural sectors will be hit hardest by the Russian ban. The German Minister for Food and Agriculture has announced to discuss the situation with his Polish and French counterparts on September 2, 2014.
Hungary
Russian ban hits Hungarian pork and poultry sector . United States Department of Agriculture. Foreign Agricultural Service, 18 August 2014. 3 p.
Report highlights: Russian sanctions are expected to harm USD 100 million in Hungarian agricultural exports. The Hungarian pork and poultry sector will be hit hardest by the Russian ban.
Poland
Reaction to EC suspension of support to fruit and vegs producers . United States Department of Agriculture. Foreign Agricultural Service, 15 September 2014. 3 p.
Report highlights: Polish Minister of Agriculture strongly criticized the decision of the European Commission suspending support to the EU producers of fruit and vegetables affected by the Russian ban on imports of agricultural products. Polish fruit and vegetable producers are among the most affected by the Russian ban on imports of agricultural products within the European Union which creates strong economic and political pressure on the Polish Minister of Agriculture.
UK
Russia’s ban on food imports: impact on the UK . NFU. (National Farmers Union). Last updated: 1 September 2014.
The UK exports relatively little food to Russia. So any risk to Britain’s farmers of the now 3 week old Russian ban was always going to be through the indirect impacts as a result of a congested market in Europe as Russia closed its doors to imports from all European countries.
Russia
Food Fight / Maria Antonova. Russian Life, 57, September 2014. 1 p.
The author comments the effects of the ban on Russian citizens.
Russian agriculture will suffer from Ukraine crisis . Oxford Analytica. 26 August 2014.
In the short term, Russian agriculture will largely be able to weather the storm of Western-imposed sanctions and cope with some of the immediate strains of Russia’s own food embargo, but in the medium-to-long term, key lenders such as Rosselkhozbank (Russian Agricultural Bank) will suffer and continue to need government support as a result of the sanctions, which could raise costs for agricultural producers and may in turn lead to price increases.
Russian food prices will rise due to embargo . Oxford Analytica, 9 September 2014. 3 p.
According to this brief note the ban will increase reorientation of the food economy towards Asia and Latina America. Food price increases will stimulate inflationary tendencies in the economy. Russia likely to adopt a more protectionist agricultural position in the future after the ban is lifted.
Third countries
What does the Russian food import ban mean for Latin America? / Carl Meacham. Center for Strategic and International Studies. 23 September 2014.
As Russia’s ban on food imports pushes the country to diversify its supply chain, Moscow will likely continue to look to Latin America to fill some of its needs—both commercial and diplomatic. But the nature of the situation makes it very unlikely that Latin American countries will develop significantly stronger commercial ties with Russia—especially in the long run.
Russian ban provides opportunity for Brazilian pork . BPEX (England). 21-08-2014.
Brazil is now the only major global pork exporter with access to the Russian market. Will it be able to fill the gap left by other suppliers and what will that mean for the global pork market?
Stakeholder views
Comment se tirer une balle dans le pied… Chambres d’agriculture de France. Lettre économique, Septembre 2014, n° 343 (page 1).
Copa-Cogeca says new aid package for EU fruit and vegetable sector step in right direction to alleviate impact of Russian ban but stronger action will be required. 30 September 2014. 2 p.
Copa-Cogeca urges EU farm Ministers and Commissioner Ciolos to take further measures to alleviate pressure on producers hit by Russian ban on farm exports. 5 September 2014. 2 p.
Copa-Cogeca says European Commission action in EU dairy sector in response to Russian ban step in right direction but does not go far enough. 28 August 2014. 2 p.
Copa-Cogeca steps up calls for additional support for EU farm sector in response to Russian ban, as polish farmers take to the streets. 26 August 2014. 2 p.
Copa-Cogeca welcomes EU Commission move to take action to help alleviate crisis hitting peaches and nectarine sector but calls for stronger measures. 11 August 2014. 2 p.
FoodDrinkEurope’s statement on Russian agri-food imports sanctions. 7 August 2014. 1 p.
The Russian food embargo as the paradigm of a changing world. Momagri (Mouvement pour une organisation mondiale de l’agriculture). 8 September 2014.
