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Russia’s import ban means big business for Latin America

Published time: August 07, 2014 15:27
Edited time: August 09, 2014 16:32
Reuters / Amr Abdallah Dalsh

Reuters / Amr Abdallah Dalsh

​Russia’s 1-year ban on food products from the EU, US, Canada, and Norway will force Russia to increase food imports from Latin America, specifically Ecuador, Brazil, Chile, and Argentina.

Russia will ban meat, dairy, fruit, and vegetable imports from countries that have imposed sanctions on Russia over the Ukraine conflict, which opens the door to Russia’s partners on the other side of the world.

Russia will have to fill an 8 percent gap in its total agricultural imports that it sources from the EU, USA, Canada, Australia, and Norway. The Netherlands, Germany, and Poland are currently Russia’s biggest food suppliers in the EU.

Meat and dairy products from Ecuador, Chile and Uruguay may appear on Russian supermarket shelves as early as September, said Julia Trofimova, a at Rosselkhoznadzor, Russia’s consumer watchdog.

On Wednesday the three countries confirmed they are ready to start supplying Russia with agricultural goods and Moscow will soon hold meetings with ambassadors from Brazil and Argentina.

Import bans could be expanded to any country that has a sanction policy against Russia, including: Albania, Australia, the United Kingdom, Germany, the European Union, Iceland, Canada, Latvia, Liechtenstein, Lithuania, Moldova, New Zealand, Norway, Poland, the USA, Ukraine, France, Montenegro, Switzerland, Estonia and Japan.

Here's what the key Latin America economies have to offer.

Brazil

Brazil’s main agriculture exports are soybeans, raw sugar, meat, coffee, and tobacco. In 2012, the turnover of trade between Russia and Brazil reached $5.9 billion, and total exports to Russia were $3.14 billion, or about 7 percent of the total $43 billion of goods Russia imported from now sanctioned- countries last year.

The 2014 World Cup host has already expressed interest in expanding into the Russian market and is ready to export meat and dairy products to Russia. In order for this measure to go through, Russia’s consumer watchdog, Roselkhoznadzor, will have to annul a restriction against Brazilian meat companies it imposed in July 2011.

"Given the results of the negotiations, the interest of Russian importers, taking guarantees from the Veterinary Service of Brazil, Rosselkhoznadzor considers it possible to cancel the temporary restrictions on the number of Brazilian companies for the production of animal products," the Russian watchdog said.

Before the restrictions in 2011, Brazil was the number one meat supplier to Russia.

Argentina

Agricultural products dominate Argentina’s export tally. Russia imports Argentinian pears, grapes, apples, citrus fruits, beef, peanuts, butter, and cheese, and in 2012 trade turnover exceeded $1 billion. Meat producers in Argentina are considering the possibility of increasing meat exports to Russia, but like Brazil, it faces trade restrictions.

Chile

In 2013, Chile exported $567 million worth of agricultural products to Russia, mostly salmon, trout, fruit, pork, and wine. Russia imports a large amount of gelatin - an ingredient used to make jello and cakes – from Chile. Regionally, Chile exports an array of fruits, including grapes, avocadoes, berries, plums, and kiwis.

Ecuador

Even though Ecuador primarily sends exports to the US and EU, it still has the potential to cut into the Russian agriculture and raw materials market. At present, bananas, cut flower, and coffee and tea are sent eastward to Russia.