Russian counter-sanctions affected food imports, but when they were introduced five years ago, the government counted not only on the diplomatic effect, but also on the development of national agricultural production. However, Vasily Uzun, the chief researcher at the Center for Agri-Food Policy of the Institute of Applied Economic Research of the RANEPA, stressed in his conversation with RT that even before the embargo was introduced, the country had a process of increasing agricultural production, and counter-sanctions only accelerated it.
“There was a fairly fast annual growth, new poultry farms, new pig farms were built. And after the embargo, production increased even more and gradually managed to replace part of the products imported before 2014, ”RT Uzun recalled.
After the introduction of counter-sanctions, there was a significant increase in agricultural production. So, according to Rosstat, in 2013, 3.46 trillion rubles worth of products were produced in the agricultural sector. In 2018, this figure amounted to 5.12 trillion rubles.
Moreover, Russia has become much less dependent on imports of agricultural raw materials. According to the Federal Customs Service, until 2013, agricultural imports grew steadily and reached $ 43.23 billion. But in 2017, imports fell to $ 28.92 billion. In 2018, imports amounted to slightly more than $ 29 billion.
“The level of import substitution should not be lower than 85% for basic food products. I do not take into account pineapples, kiwi and other exotic that we do not have in production. Basic goods should be produced at 85% —90% domestically. Russia overcame this barrier in the production of pork, poultry, and almost - in beef. We now have the only negative - milk and dairy products. But increasing the production of milk and beef is a long process, because, for example, cows only grow for four to five years, ”said Georgy Ostapkovich, director of the Center for Market Studies at the Institute for Statistical Studies and Economics of Knowledge, HSE.
Return to Leadership
Russian producers of the agro-industrial sector were able to increase exports and enter foreign markets for some items of agricultural goods. For example, Russia was able to regain leadership in the export of grain crops.
For the 2018-2019 agricultural year, the volume of grain exports amounted to 43.3 trillion tons. Such data are provided by the Ministry of Agriculture. In addition, the Russian embargo also significantly affected the export of countries that became the target of counter-sanctions.
“Europeans also suffered enormous damage from the introduction of the food embargo, in addition to almost three thousand tons of sanctioned goods destroyed in five years, we also need to include products“ not sold to Russia ”, of course, there were new markets, but they were unable to completely replace the volumes that fell out. ”, Said Goldman Group CEO Dmitry Gelemurzin in an interview with RT.
The largest part of Russian exports of agricultural products is still accounted for by the EAEU and the CIS countries. However, food imports from Kazakhstan and Belarus also increased. Over the past five years, scandals have repeatedly occurred related to Russia's partners in the Eurasian Economic Union. The Russian authorities suspected Belarusian suppliers of circumventing the sanctions regime and reselling banned European agricultural raw materials.
A new course on import substitution
According to the Ministry of Agriculture, over the five years of pro-embargo, Russia was able to exceed the food security indicators of the domestic market for grain, sugar, vegetable oil, potatoes, meat and meat products. However, the share of domestic milk, dairy products and salt is still insufficient in the total volume of food.
In addition to ensuring security, another priority in the development of Russian agriculture is to increase exports. So, President Vladimir Putin set a goal for the government - to increase the export of agricultural raw materials to $ 45 billion by 2024.
Economists argue that in order to achieve it, it is necessary to solve logistics issues, and especially competition in the food market. Thus, the largest recipients of the benefits of restricting access to imported agricultural products were the largest agricultural holdings. In his article published in the journal of the New Economic Association, Boris Frumkin, head of the sector at the Institute of Economics of the Russian Academy of Sciences, pointed out that the next year after the embargo was introduced, the total revenue of the 50 largest agricultural companies increased by 28%, amounting to about 1.5 trillion - almost 30% of total production in the country's agricultural sector.