The tit for tat food fight that broke out following Russia’s ban on imports of meat, fruit, vegetable, dairy and fishery products from much of the Western world may soon spill into the Bering Sea and points east, as American crab fishermen in those waters and major seafood packers in Alaska and Washington are calling on the US government to prohibit all seafood imports from Russia.
“We did not start this fight, and we hope the Russians will call off their embargo,” said Terry Shaff, president and chief executive officer of Redmond, Washington-headquartered UniSea. “A US ban will signal to President Putin that America will not sit idly by while Russia disregards international law and tries to coerce the world into ignoring its transgressions through retaliatory actions.”
UniSea, which processes a wide assortment of seafood ranging from pollock roe and fillets to frozen crab, pacific cod and halibut, has joined with members of the Alaska Bering Sea Crab Crabbers (ABSC) and an allied contingent of seafood processors in calling for an immediate prohibition of imports from Russia. The other companies demanding boycott action are Alaska General Seafoods, Alyeska Seafoods, Icicle Seafoods, North Pacific Seafoods, Ocean Beauty Seafoods, Peter Pan Seafoods and Trident Seafoods.
In a decree issued on August 6, Russian President Vladimir Putin banned for one year all food and agricultural imports from nations that have imposed economic sanctions against his country that resulted from Moscow’s annexation of Crimea and its support of pro-Russian rebels fighting Ukrainian government troops. The list includes the USA, Canada, all European Union member states, Norway and Australia.
“Mr. Putin has demonstrated that he is more than willing to flex Russian economic muscle to achieve its foreign policy objectives. It’s time for the United States to follow suit and flex some muscles of its own,” declared the ABSC in a recently issued statement.
It should be noted that Bering Sea crab fishermen on the Alaska side of the maritime border with Russia have long complained about what they claim is the illegal, unregulated and unreported (IUU)harvesting of king crab in Russian waters that ultimately enter the US and other markets, depressing prices. According to one estimate, illicit Russian crab catches have cost US fishermen more than $560 million over the past 13 years.
Alaska’s seafood industry, valued at $6 billion, is the source of most US fishery products exported to Russia. According to the United States Department of Agriculture, of the $86.5 million rung up in sales last year, more than half of the revenues were for salmon roe used to make the Russian red caviar delicacy.
Russia’s exports of seafood products to the US in 2013 far exceeded its imports, as American buyers paid $320 million for crab, salmon and pollock. King crab and snow crab accounted for almost two-thirds of the receipts, fetching $220 million.
The value of seafood procured from the United States by Russia last year was a fraction of its purchases of American poultry (primarily frozen chicken), which amounted to $310 million out of total US food and agriculture exports of $1.3 billion to the Russian Federation.
The biggest impact of the embargo of fish and seafood exports to Russia will be felt by Norway, which shipped more than $1.1 billion of salmon and other fish to that country last year.
When one takes into account all foodstuffs, Poland potentially stands to lose the most, as it exported products valued at over $1.117 billion to its eastern neighbor in 2013. After Norway, according to figures from Statista, the Netherlands and Spain ranked third and fourth, ringing up almost $851 million and $793 million in trade (mostly non-fishery products) last year.
By some estimates, Russia imports 40% of the food it consumes. It is believed that the trade sanctions will have an impact on more than half of the nation’s imported meat and fish requirements, and as much as 30% of its vegetable needs, which will have to be produced domestically or sourced abroad, if a likely shortage is to be avoided.
Meanwhile, in an apparent anti-American show of national chauvinism, agents of Rospotrebnadzor, Russia’s consumer protection bureau, were dispatched last week to “safeguard” the health of Muscovites by temporarily shutting down a number of McDonald’s restaurants for alleged violations of sanitary regulations. Better not check the Fillet-O-Fish Sandwiches sold under the Golden Arches too closely, inspectors, or it just might be discovered that the main ingredient was not sourced from the US, but instead is Russian-caught pollock that was block-frozen in China before being transformed into value-added fish burgers.
It would seem that Putin’s government believes that it can compensate for a self-imposed food deficit by importing from countries that have remained silent on its recent foreign policy behavior in Ukraine. Success for Moscow will largely depend on two factors in the near term. First, can non-sanctioned suppliers gear up production sufficiently to meet demand? Second, how much legally edible inventory lies is cold storage both at home and beyond Russia’s borders?
On the seafood front, Chile could benefit significantly at the expense of Norway, as the South American country is a major producer of farm-raised salmon.
“I do not doubt that we would increase exports up to three times, if we signed a free trade agreement,” said Fernando Belloni of the Russian-Chilean Chamber of Commerce. “Exports could exceed $1,000 million.”
As for meat, Russia imported more than 619,000 tons of pork last year. Most of it came from Brazil, Denmark, Germany and Canada. The US exported only $19 million worth of swine products to the Russian Federation, compared with more than $249 million earned by Canada in exchange for shipments of 79,300 tons of pork.
Russia’s total imports of frozen meat in 2013 amounted to almost $2.9 billion, with Belarus and Brazil ranking as the biggest suppliers. More will have to be brought in, most likely from India and China, to fill the gap this year.
Russian Federation imports of meat, fruit, vegetable and dairy items reportedly account for approximately 16% of the EU’s total exports of such products. So far the Europeans are standing firm in solidarity against Moscow’s actions in Ukraine. Farmers will receive financial aid of up to EUR 125 million ($167 million) to help them deal with the impact of Russia’s prohibition of Western food imports, which has created a glut of fruit and vegetables during peak harvest time.
Angela Merkel, Germany’s chancellor, on August 23 pledged over $690 million for the rebuilding of war-ravaged areas of eastern Ukraine and aid to refugees. The German assistance, the latest in a series of European funding offers to help Ukraine since the ouster of President Viktor F. Yanukovych last February, echoes the intention of EU leaders not to permit Russia to become the solitary benefactor of the Russian-speaking eastern region of Ukraine.
Meanwhile, according to the Fitch Ratings agency, middle-class consumers in Russia could feel the coming pinch of Putin’s Western food boycott the most. “Imports from the EU and the US will gradually be substituted by higher (priced) imports from other countries,” it predicted. – JMS
