Russian Agriculture Thrives as Sanctions Close off Imports

Farms and other suppliers flourish as consumers turn to homegrown products in Russia. 

If western sanctions aimed to cripple Russian business, nobody told the country’s fish farmers. In the cold waters of the Barents Sea, Russian Aquaculture, the country’s largest salmon producer has increased production more than six-fold so far this year, as part of a boom in the country’s food and agriculture industry caused by restrictions on western imports.

Around Russia, farms, fields, greenhouses and fertiliser factories are thriving as consumers turn to domestically-produced food, helped by the worst relations between Moscow and the west for a generation.

After the EU and US imposed sanctions on some Russian businesses following the country’s invasion of Ukraine and annexation of Crimea in 2014, Moscow hit back with sweeping bans on western food imports.

Overnight, about 60 per cent of the country’s total meat and fish imports were banned, and 50 per cent of dairy, vegetable and fruit imports — creating a huge opportunity for domestic producers. Total food imports from the EU fell 40 per cent between 2013 and 2016.


Russian Aquaculture produced 664 per cent more fish in the first half of 2017 compared with last year, and recently opened a new 1,500 tonne fish farm, as part of plans to double its fish stocks over the next year. Business is so good it is preparing for a secondary share listing “in the near future”.

Nikolay Kovalev, a research analyst at VTB Capital, said that food and agriculture companies in Russia spent $5bn in capital expenditure in 2016 and that in the past few years, local producers have had chances to win market shares, “particularity in fruit, vegetables, cheese, milk, and meat categories”


Russia is forecast to produce more than 130m tonnes of grain this year, according to Moscow-based agriculture consultancy ProZerno, surpassing the record achieved by the Soviet Union in 1978, during a period of heavy investment in state-run collective farms.

New sanctions imposed by Washington in recent weeks suggest relations are unlikely to improve soon, meaning agricultural producers are investing for the long run.

The sanctions gave us a head start. And I believe the anti-food sanctions will be the last ones to be lifted,” Mr Guryev told the FT.

The west is shooting itself in the foot. Sanctions were meant to hurt Russia, but Russian agriculture has benefited,” said Jim Rogers, a US investor who has shares in PhosAgro and sits on its board.

Money is coming in, and expertise is coming in,” said Mr Rogers, who last month joined the board of AgroGard, a Russian crop and livestock producer. “Five years from now, it will be fully embedded and fully capable. Someone should tell the Americans to lift the sanctions now, before there’s a gigantic, efficient, well-funded industry here.”

While 145m Russians provide a good-sized domestic market, many Russian agriculture companies see their long-term growth in exports.

“Russia will feed the world. No doubt. We have arable land, water, technology and infrastructure already in place,” said Mr Guryev. “It is quite simple. Countries will simply be faced with a scarcity of food. So they will look at Russia, and invest in Russia, to protect themselves.”

Source: Financial Times

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