Since the beginning of 2015, the growth of domestic production in Russia has not covered the reduction in imports. The reason of decline in imports is not import substitution policy, but reduction of domestic demand. Out of the 100 companies, that reduced import or stopped importing at all in the first quarter of 2015, only 17% increased the purchase of Russian products, according to the June research of Russian Presidential Academy, International Institute of Economics and Law and All-Russian Academy of Foreign Trade. If consumer pent-up demand will be fulfilled in the second half in 2015, import substitution policy may turn into prices growth for domestic and imported goods.
Author Archives: CrispConsulting
Russian Government Standard for organic products to be discusses this autumn
In the autumn session, the Russian State Duma will discuss a bill on the production of organic products as it was reported by Shkolkina Nadezhda, deputy chairman of the Duma Committee on Agriculture, commenting on the approval of the Federal Agency for Technical Regulation and Metrology of the Government Standard (or National Standard) R56508-2015 “Organic production. Rules of production, storage, transport. ”
“One of the main tasks of the Government Standard is the establishment of common rules for the production and turnover of organic products throughout the Russian Federation. Correspondence of Russian production and certification of organic products to the international practice will create conditions for fair competition of domestic organic products with imported products, as well as the access of Russian organic products to foreign markets “, – said Shkolkina.
The Government Standard defines terms: “labeling”, “organic”, “organic production”, “processing”, “products produced from GMOs”, etc. The Standard will become effective from January 1, 2016.
Ukraine became one of the main channels of re-export of Moldovan apples to Russia
According to official data for the season 2014/2015, Moldova significantly increased its apple export to Ukraine. International trade statistics recorded a record volume of apple import from Moldova to Ukraine, it is about 6,500 tons. For the last 4 seasons Moldova did not export apples to Ukraine, and in the 2010/2011, the volume of imports did not exceed 29 tons.
According to experts, the only explanation for the sharp increase of Moldovan apple import to Ukraine is re-export to Russia. After the Russian food ban, Moldovan farmers were forced to seek alternative ways of entering the Russian market, where they usually sell most of their crop. Ukrainian products were banned in late October 2014, so from August to October, import thought Ukraine remained the most convenient way of apples re-export from Moldova.
At the same time, experts point out that the consumption of imported apples in Ukraine decrease almost by 3 times due to a sharp price rise.
Import of apples to Russia fell by more than 50%
Import of apples to Russia decreased since August 2014, after the introduction of Russian food ban. The overall decrease was so considerable due to restrictions on imports of apples from Poland.
The biggest volumes of apples were imported to Russia in 2013, when 1,402,000 tons of apples were imported at a total value of 812.9 million USD. Poland accounted for 50.3% of the total volume. For 10 years, compared to 2003, the import of apples to Russia increased by 2.3 times, deliveries from Poland increased by 5.1 times during the same period.
During January-April 2015, the supply of apples to Russia fell by 51.5% (249,300 tons to 234,800 tons) compared to the same period of 2014. Beside the Russian food ban, weakening of the ruble also influenced the situation.
Import from Syria
In 2014, Russia’s supplies to Syria accounted for 8.4 percent of the Middle East country’s imports. Other exporting countries to this market were: Saudi Arabia with a share of 24.5 percent, United Arab Emirates with a share of 12.1 percent and Iran with an 8.9 percent share.
The monetary value of the total Russian-Syrian trade turnover reached $589.5 million, a 56.6 percent increase over $376.4 million reached in 2013. The share of exports from Russia had a monetary value of $582 million, a 61.7 percent on the year increase.
Among the supplies from Syria, 71.4 percent was fruit and nuts, grown in the near eastern country, amounting to a total sum of $5.064 million (a 43 percent drop compared to 2013).
Russia extends Russian food-import counter-sanctions for one year
Russia extended its ban on certain food imports from the U.S., the European Union and other countries for one year in retaliation for the EU’s decision to prolong penalties imposed over the conflict in Ukraine.
Russian President Vladimir Putin said he signed a decree extending the counter-sanctions following a request submitted by Prime Minister Dmitry Medvedev. The sanctions introduced last August banned a range of food products, including cheese, fish, beef, pork, fruit, vegetables and dairy products, from the U.S., the EU, Canada, Norway, and Australia.
Prime Minister Dmitry Medvedev told that “in the list there are the same products, including cattle meat, pork, by-products, fish and shellfish, milk and dairy products, vegetables, sausages and so on”.
European leaders on Monday approved the extension of trade and investment sanctions against Russia until the end of 2015 over its alleged role in the conflict in eastern Ukraine. The penalties will continue “against Russia until it meets its Minsk obligations,” U.K. Foreign Secretary Philip Hammond said, in reference to a February peace accord negotiated in Minsk, Belarus, by the leaders of Ukraine, Russia, Germany and France.
Russia threatened to “act on the principle of reciprocity” on Monday after the extension of the European restrictions, which restrict financing for major Russian banks, ban the export of sophisticated energy-exploration equipment, and prohibit the sale of weapons and some civilian goods with military uses. A separate EU blacklist, which runs to Sept. 15, imposes asset freezes and travel bans on 151 people and 37 companies and organizations accused of destabilizing Ukraine.
Russia to extend counter-sanctions against Western countries
Russia considers extending a ban on Western food imports after the European Union made a decision to extend sanctions against Moscow for six months, Izvestia newspaper reported on Tuesday. The new list will be submitted to President Putin.
On Monday, the EU foreign ministers approved amendments to the EU decision on sectoral restrictions, thereby extending economic sanctions against Russia until January 31, 2016. Prime Minister Dmitry Medvedev said he instructed the government to submit a proposal to extend Russia’s counter-sanctions to President Putin. “The list of counter-sanctions will most likely include fish preserves and cheese products made with vegetable fat. We’re also considering several other proposals,” Izvestia writes, citing a government source. The Agriculture Ministry is involved in the suggestions.
Federal Service for Veterinary and Phytosanitary Surveillance can revise the food ban
According to Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), it is possible to revise a number of banned products if the EU and other countries introduce new sanctions against Russia, said Sergei Dankvert, head of Rosselkhoznadzor.
He also mentioned the discussion of possible import restrictions on chocolate to Russia to support local chocolate production. “When I was asked if there would be more sanctions, I said that today our producers, especially regional ones, would be glad if the sanctions were imposed on confectionery, chocolate, candies, as now we produce all of these products by ourselves”- said Dankvert.
European Union prolongs Crimea sanctions
The European Union prolonged a sanctions package over Russia’s annexation of Crimea until 2016. Russia annexed Crimea in March 2014, saying the peninsula had voted overwhelming in favor of returning to its Russian homeland. 
In response, the EU imposed asset freezes and visa bans against pro-Moscow leaders and Russian figures. As the Ukraine crisis deepened, the bloc widened the sanctions list over Crimea, at the same time as imposing economic sanctions against Russia, to ban imports from and investment in the peninsula. The decision covered the sanctions agreed in June 2014 which also included bans on cruise ships using Crimean ports and restrictions on exports of telecommunications and transport equipment.
These sanctions will now run until June 2016, taking them past the economic measures targeting Russia’s banks, oil and defense sectors which the EU agreed earlier to extend for another six months to January 2016.
EU extends economic sanctions against Russia for 6 months
The European Union has extended economic sanctions against Russian for a further six months, an EU official said. This follows the EU’s decision Friday to extend sanctions against Crimea for another year.
The decision to extend the sanctions against Russia was announced by the EU Council’s press officer for foreign affairs, Susanne Kiefer. The sanctions are being maintained until January 31, 2016 to ensure the Minsk agreement is implemented.
The European Union will review the sanctions regime against Russia in six or seven months, Italian Foreign Minister Paolo Gentiloni told reporters in Luxembourg.
Russian Prime Minister Dmitry Medvedev has ordered his chief of staff to ask President Putin for an extension of Russian counter-sanctions following the EU decision. The premier has also ordered the preparation of a decree listing all categories of products and types of transactions covered by the restrictive measures.
EU sanctions against Russia include restrictions on lending to major Russian state-owned banks, as well as defense and oil companies. In addition, Brussels imposed restrictions on the supply of weapons and military equipment to Russia as well as military technology, dual-use technologies, high-tech equipment and technologies for oil production.
The EU imposed sanctions against Russia on August 1, 2014, and tightened them in September the same year. In October, a separate decision by the EU Council loosened restrictions against European subsidiaries of Russian state banks. As a countermeasure, Russia introduced a food embargo against countries that supported the sanctions.