Almost a year ago, the EU imposed sanctions on Russia due to Russian support to the separatists in Eastern Ukraine. In response to the sanctions, Russia closed the borders to products including fruit and veg from Europe, North America and Australia. We’re looking back on a year full of commotion for the sector.
Shortly after the boycott was announced, the EU established a compensation fund. On September 10, the European Commission had received claims for 330,000 tonnes and 37.3 million euros. Due to fraudulent claims, for instance from Poland, the plan was halted that same month.
Compensation below market price
This resulted in a new plan, using export figures over 2013 as available in the databases. A list was also made of products eligible for the compensation. Toward the end of 2014, the member stated has requested compensation for 230,000 tonnes of produce worth 52 million euros. Remarkably, the compensation for some products, including bell peppers, apples and pears, was below market prices, causing growers to decide to harvest anyway and sell the products.
New markets
From the very start, there was talk of new markets and other export destinations. From Poland in particular, there were positive signals about access to new markets in recent months. There were similar signals from the Netherlands and Belgium, with the destinations mentioned most often being the Middle East, the Far East, and North America.
Countries outside the EU saw an opportunity to gain access to a large market. Apart from countries in the southern hemisphere, Turkey, Morocco and Egypt quickly showed interest in the Russian market. Russia also strengthened its ties with former Soviet republics in Central Asia. Kazakhstan, Armenia, Uzbekistan and other countries were given more access to the Russian market. The ties with China were also strengthened. Russia announced mega investments in agriculture to help out the sector and to become self-sufficient.
Smuggling routes
Although the borders are officially closed, reports of smuggling have come in since the boycott started, with Belarus playing a pivotal role. Russian customs regularly reported intercepting shipments of fruit and vegetables that did not meet requirements. But the labels with ‘Belarusian’ really captured the imagination. Prawns, pineapple and bananas from the European country found their way to the Russian market.
Apart from actual smuggling with falsified labels, there’s a less apparent route. Russia, Belarus and Kazakhstan are members of the Eurasian Economic Union. Because the latter two countries do not support the boycott, it’s possible to transport products between these countries through Russia. Russian customs repeatedly voiced suspicion of products disappearing on this route, something that was proven by a truck that completed this journey impossibly fast.