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Russia's Food Sanctions: Boon for Some, Bust for Others

Russia's Food Sanctions Raise Price Worries, Hopes for Domestic Production
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Russia retaliated against Western sanctions imposed for its actions in Ukraine by halting food imports from the West. The temporary import ban on food from Australia, the European Union, North America, and Norway has Russian consumers concerned that they could face sharp increases in food prices. But in an ironic twist, the restrictions have made Russia's domestic food producers hopeful this can boost their business.

Russia's largest meat producer, the Cherkizovo Group, supplies about 4,500 tons of chicken products per day to the Moscow area.

Growth in domestic production has reduced Russia's dependence on meat and agricultural imports.

But the Kremlin's sanctions on Western food imports has some people worried that prices could go up. Among those troubled is Moscow shopper Yelena.

“Certainly I am very concerned. If the price of Russian-produced food goes up, I will feel it," she said. "But right now [Russian food prices] are competitive with [the price of imported] Western food."

Russian authorities say the import limits will not drastically affect food supplies or prices. They expect to use suppliers in Asia and Latin America to replace their Western sources.

Russia is one of the largest buyers of frozen poultry from the United States. Halting those imports could help companies like Cherkizovo gain market share.

Spokesman Yuri Cherchenko says the firm will soon double its output of semi-processed fresh poultry, and is ready to replace U.S. suppliers.

“I think that the sanctions against imports are good for us, as national producers," he said. "They are an additional impulse to further develop Russia's own agricultural production."

But it is not only the big Russian producers who stand to benefit from a ban on Western foods.

The dairy company Mosmedyn says its European-style cheeses, like mozzarella, are better than imports because they are delivered fresher.

Deputy director Sergei Rezunenko says there is increased demand for his products, but he still is opposed, in principle, to market limits such as those created by the Russian ban on Western imports.

“In view of world values, we should not build up a fence to separate ourselves. Because today we produce our milk with Swedish equipment," he said. "If the Swedes were not allowed in here, we would not have this plant and their equipment in it.”

The sanctions related to Ukraine could result in a trade war between Russia and the West. The Kremlin is threatening a lawsuit at the World Trade Organization over the Western sanctions.

Ironically, Russia's joining the WTO in 2012 was supported by the U.S. only after the two sides negotiated an end to an earlier Russian ban on American poultry products.