Russia-EU sanctions: who will win and who will lose?

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Earlier this year Russia banned imports of most agriculture products from the U.S., the European Union, Norway, Canada and Australia. The move was in response to countries imposing economic sanctions against Russia.

According to the EU data, Europe’s food exports to Russia were worth $15.8 billion in 2013, which made up about 10% of the bloc’s agriculture exports. Also European countries sold more than $3 billion worth of dairy products to Russia in 2013 — $1.3 billion worth of cheese, $192 million in butter and $140 million of fresh milk.

The EU Commission announced on Thursday that it will pay for temporary storage of butter, skimmed milk powder and certain cheeses. This measure will help farmers overcome the impact of the Russian economic sanctions and allow storing their dairy products for longer.

However, the ban of foreign food is more than just an inconvenience for Russians. Russia is the world’s fifth largest agricultural importer and remains dependent on food supply from abroad – its agricultural trade deficit extended to $26 billion in 2013, according to data from the European Commission.

Experts say that prices for products are likely to go up in Russia along with increased Russian inflation, which is already running at 7.5%.

Europe’s agriculture policies could also cost its members dear if the Russia ban stays in force for its full one-year duration or even beyond that time frame. Why? Because if the sanctions cause a glut of food, the EU may be forced to buy up extra stocks to keep its farmers in business.

Russia is already making a show of seeking new food suppliers like Brazil to make up the shortfall, however setting up new trade relations will require time and effort before those items make it to supermarket shelves.