Russia bans some food imports from countries that implemented sanctions

RUSSIA ENERGY / FINANCE - In Brief 07 Aug 2014 by Marcel Salikhov

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Russia decided to fire back at countries that implemented sanctions against the country. Yesterday President V. Putin signed decree allowing the Government to ban or limit food imports from countries that started sanctions against Russia. In speedy manner the Government signed today a bill that contains details of the ban. Imports of dairy products, meat, fish, fruits and vegetables from EU, US, Canada, Australia and Norway will be affected. By our estimates, imports of the listed products from these countries totalled $7.9 bln in 2013. Total imports of the listed products were $24 bln in 2013. That's roughly 66% of all imports of meat and meat products, 47% of the imports of dairy products, about 50% of imports of fish. The most affected importers are Norway ($1.2 billion), the Netherlands and Germany ($0.9 billion). The main effect of the ban will be rise in prices for these products - domestic production will not be able to respond quickly to increased demand. Restrictions are imposed just for one year, so the domestic business is unlikey to invest in the expansion of domestic proudction (ban also vioilates WTO rules). A ban on imports of swine from EU since January led to 20% price increase. We think that ban will add 1,5 - 2,0 p.p to inflation in next 12 months.