Thursday, August 21, 2014

WIll Russia benefit from sanctions?

Interesting article on Russian agricultural in yesterday's FT. Russia exports energy and imports food and manufactured products. It's exports have not been affected by sanctions, therefore. In response to western sanctions, Russia has banned the import of many foodstuffs.

Russia has 0.8 hectares of arable land/capita, about the same as Argentina and Ukraine but still imports 40% of its food. With bans on imports from Europe and a weaker ruble, Russian agriculture may grow. Since the collapse of the Soviet Union, land under cultivation dropped from 90 mn hectares to 73 mn. The poor logistics infrastructure is a barrier. Nonetheless, poultry production is up 60% since 2008 and pork 36%. Will Russia become self-sufficient in and then an exporter of food? Russia already generates excess cash flow; this would increase greatly without food imports.

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