Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why is Russia Destroying Its Food?

Politics / Russia Aug 13, 2015 - 06:38 PM GMT

By: STRATFOR

Politics

Forecast

  • A Kremlin crackdown on food imports that violate Russian sanctions will continue to draw criticism throughout Russia.
  • If the Kremlin continues with its crackdown, protests will expand.
  • To limit the backlash, Moscow may opt for sporadic crackdowns rather than systematic enforcement of food sanctions.

Analysis

Russia's recent show of strength toward the West may come at the price of its own internal stability. On Aug. 7, Russian President Vladimir Putin ordered a crackdown on violations of the Kremlin's food sanctions against the European Union and the United States, during which some illegally imported food was destroyed. The move was very unpopular among Russian officials and the public. Since food imports to Russia fell by more than half within a single day of Putin's order, many criticized the Kremlin for destroying food at a time when Russians are under increased financial and economic pressure. If the Kremlin continues to crack down on those who violate the order, protests will only grow louder.

Flouting Countersanctions

Russia enacted sanctions on many high-end Western food products on Aug. 5, 2014, in response to sanctions placed on Russia by most Western states because of Russian actions in Ukraine. Even though only certain foods were banned, the sanctions — not to mention currency fluctuations — contributed to an average increase in food costs of 20 percent over the past year. The price of some staple goods, such as cabbage, rose more than 60 percent in early 2015.

The Kremlin initially pledged to stem price hikes, increase domestic production and import food from new sources. Fruit and vegetable imports from European countries outside the European Union, such as Serbia and Macedonia, indeed grew by between 35 and 200 percent over the past year. 

It was the black market, however, that really cushioned the sanctions blow. To bypass the ban, countries barred from exporting to Russia began shipping through Belarus and Kazakhstan. The European Fresh Produce Association reported that EU produce exports to Belarus increased by 141 percent and to Kazakhstan by 108 percent within the first six months of the sanctions' passage; both countries then turned around and re-exported much of that produce to Russia.

In early 2015, when Russia finally closed this loophole, re-exporters simply started falsifying countries of origin on their illegal shipments. The Russian government is aware of the false documentation, and the country's agricultural import watchdog, Rosselkhoznadzor, has been particularly adamant in opposing it. The organization recently confiscated 73 tons of peaches with false Turkish certificates that were actually from the European Union. On Aug. 6, the same group in St. Petersburg burned 20 tons of German cheese mislabeled as a product of Russia. Since Putin ordered the crackdown, Rosselkhoznadzor has destroyed thousands of kilograms of food imported in violation of Russian sanctions.

Yet that is only a fraction of what has been illegally imported. According to the head of Rosselkhoznadzor, Sergei Dankvert, his organization has only been able to intercept an estimated 10 percent of illegal imports over the past year. In an effort to make a bigger impact, Rosselkhoznadzor has over the past two days whittled down daily food imports across Russia's western border by more than half, subjecting each shipment to more intense scrutiny. The Smolensk border post, for example, processed only 70 shipments on Aug. 7, compared with its usual 170. However, to fully carry out Putin's Aug. 7 order, Rosselkhoznadzor will have to expand its personnel.

Backlash 

Perhaps because of these successes, the public crackdown on illicit food imports has generated — and will continue to generate — opposition across the Russian political spectrum. More than 285,000 people have signed an online petition urging the Kremlin to give the food to the poor instead of destroying it, while Russian lawmaker Andrei Krutov proposed to donate all the confiscated food to the war-torn separatist regions in eastern Ukraine. Meanwhile, opposition heavyweight and former Prime Minister Mikhail Kasyanov sarcastically called the food policy "some real triumph of humanism," pointing out the sheer wastefulness of the order as 20 million Russian citizens remain below the poverty line.

The criticism is not limited to those among the opposition. Even pro-Kremlin TV anchor Vladimir Solovyov has publicly criticized Rosselkhoznadzor's actions. "I don't understand how food can be destroyed, " Solovyov said, "in a country that lived through the horrible hunger during the war and tough years that followed." One Russian Orthodox priest and Putin backer expressed similar frustrations when he posted his own critique of the food policy on a religious website: "My grandmother always told me that throwing away food is a sin. This idea is insane, stupid and vile," he wrote.

These strong reactions seem to have taken the Kremlin somewhat by surprise. Until now, the government has come under little criticism for its countersanctions over the past year. In fact, when the food ban was first put in place, nationalist Russian citizens went so far as to publicly destroy food themselves in support of the government's decision. (Of course, Russia's economy was much healthier then than it is now.) 

A History of Food Insecurity

In Russia, millions perished between the 1920 and 1940s from hunger. In 1921, 6 million died when drought and food confiscations during World War I and the Russian Revolution led to a famine across the Volga and Ural regions. Then, as many as 7 million more died between 1932 and 1933, when the Soviet Union's forced collectivization policies saddled Kazakhstan, Ukraine and the Northern Caucasus, the Volga region, the southern Urals and western Siberia with major food shortages. And the country's final major famine of 1947 and 1948, brought about by more droughts and the devastation of World War II, killed an estimated 1.5 million more Russians.

The relative prosperity that followed the collapse of the Soviet Union saw Western foods flood the Russian market. When Putin first took power, he gained legitimacy among his people in part by ensuring reliable food sources and by upgrading and expanding the types of food available.

But now, Russia's standard of living is being tested by Moscow's attempt to prove a point to the West. Despite the rampant criticism, the Russian government is standing behind its move to limit illegal food imports. Putin spokesman Dmitri Peskov repeated Aug. 10 that the situation should not be blown out of proportion. But the controversy may aggravate existing social unrest over economic malaise, and the Kremlin is worried that that unrest could lead to more protests. For that reason, Moscow may moderate its response to countersanctions violations by opting for forceful but sporadic crackdowns rather than systematic crackdowns.

"Russia Is Destroying Its Food is republished with permission of Stratfor."

This analysis was just a fraction of what our Members enjoy, Click Here to start your Free Membership Trial Today! "This report is republished with permission of STRATFOR"

© Copyright 2015 Stratfor. All rights reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis.

STRATFOR Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in