Moscow authorities have threatened to impose the embargo from January 2016, after the Ukraine signed a free trade zone agreement with the EU. The measure now seems inevitable, as trilateral negotiations on the issue have failed to resolve the situation.
Russian prime minister Dmitry Medvedev said: “The ban on imports of agricultural products [from Ukraine] will only come into force if the Ukrainian government implements the economic part of the Association Agreement with the EU, which Kiev signed in June last year. If this happens, a normal trade regime will be established for Ukraine [today the import regime allows zero import duties on all goods] as well as a food embargo.”
However, Ukraine has remained bullish on the issue. The country’s Minister of Economy and Trade Aivaras Abromavičius claimed: “Ukraine will not suffer from a possible food embargo by the Russian authorities.” According to him, trade turnover with Russia has dropped significantly in recent years to around 12.5% of total trade.
Reduce exports
But other industry observers take a different view. Ukraine trade representative Natalia Mykolskiy has said a ban on imports of Ukrainian products would reduce the country’s exports by $140 million-$200 million per year.
And, according to Victor Nadein-Rajewski, a senior researcher at the Institute of World Economy and International Relations, Russian Academy of Sciences, the embargo will hit Ukraine's economy hard.
“The amount [of losses] for Ukraine will be significant, given the overall situation for the country’s economy,” he stated. “Of course, they can try to compensate [supplies] via Belarus, as the border is virtually open, but it will be quite difficult, as it will require negotiations and the need to find appropriate partners. Another question is whether the embargo will cause damage to our own [Russian] market, but at the moment it seems that the food products we receive from Ukraine can be replaced,” he stated.
Meanwhile, Ivan Starikov, head of the Russian Center for Economic Strategies at the Institute of Economics, said: “This decision is premature: food inflation is already over 25% at the end of this year, and the closure of the Ukrainian market will contribute to an acceleration in the rise in food prices.”
Ukraine increases meat exports
According to official information from Ukraine’s Institute of Agrarian Economics at the National Scientific Center, in the first nine months of the year the country’s meat exports reached a total value of $278m, up 3.2% on the same period last year. Russia’s share of the total was 32.2%, reaching $89.6m, which is two times more than in the same period of 2014.
Iraq was the second-largest importer of Ukrainian meat, with a share of 17% or $47.3m.
“Ukraine is also actively developing trade with Jordan, accounting for 3.2% of meat exports and worth $8.8m in the January-September 2015 period, or three times more than the same time last year,” said Nikolai Pugachev, director of the Institute.
According to Pugachev, several other Asian markets strengthened their meat imports from Ukraine, including Egypt (at a 2.5% share), the United Arab Emirates (2%) and Hong Kong (1%).