Thursday, August 7, 2014

The Russia Ban?

As part of the Ukraine and Russia epic soap opera.....Russia has finally reacted to the economic limitations that the US and Europe put banning for a year a number of food imports. The hit?'s hard to say for sure.  The German news folks tend to say that Russia imports thirty percent of it's food (fruit/vegetables), although I'm not sure how they get to this number and if it's even accurate.  Meat?  The same journalists said that roughly fifty percent of Russia meat requirements are imported.

One might sit there and ask for 2013 (a year without the conflict).....if Russia was importing a significant amount of fruit, vegetables and meat from Ukraine (something it probably isn't doing today because of the civil war).

With so much would think that Russia ought to have the ability to grow all of it's needs.  I suspect up to the 1990s....that probably was true.  People have gotten this odd attitude about desiring grapes, apples, strawberries, and non-season periods.  It's possible now with the type of logistical arm that's been built in the grow various crops in South America or Africa, and push them rapidly to customers wanting fresh fruit all year round.

The meat angle to the story?  Russia just isn't known for beef herds or massive hog farms.

The Germans even admitted that this ban might hurt Germany in odd ways......roughly 130-million Euro of chocolate-related items are usually imported into Russia.  That market, based on the ban, means that the chocolate manufacturers are in for a tough period.

Where does this all lead?  I noticed from the statement that various countries are China, Turkey and all of Africa.  I kinda doubt that China might suddenly develop beef or pork exports....but fruit and vegetables might occur.  Turkey's place in this mess?  They might be able to pick up a huge amount of trade in a short period.  Brazil or Columbia?  Same story.

Who bought all of these European and US imports in Russia?  That's another part of this story.  It's the Russian middle-class or upper-class that really participated in this type of market.  Walking into their upper-scale market in the next month.....some will come to find shelves with Turkish chocolate....which they will say it doesn't measure up.  Chinese fruit?  It might be there....but will it be the same quality?  And if they don't buy these....will they find some black market operation going on (like it was in the 1960s and 1970s in Russia)?

My general belief is that Russia will find this was an easy ban to force, and they will hook up with Turkey in major ways to make up for the losses.  I also think the Russian mafia will quickly find ways to get German products into Bulgaria or Turkey....then reroute them into Russia.  I'd also suspect that Russia might finally find some way of encouraging cattle ranching within it's border.  It'll be a tough year, but the Russians are hearty people and they will survive.  It's not like all of their vodka was produced by the EU or such.

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