The No Russian Agriculture Act requires the U.S. Treasury Secretary to direct U.S. senior executives of international financial institutions to support investments in projects that will reduce dependence on Russia for agricultural products. The document does not contain direct information about a possible ban on Russian food imports.
According to estimates of the Ministry of Agriculture of the Russian Federation, Russia exported agricultural products worth $ 45 billion in 2023, including grain, vegetable oils, fish and seafood. The ministry did not respond to socialbites.ca’s request. According to the newspaper “Kommersant”The Federal State Budgetary Institution Agroexport, affiliated with the ministry, has begun to evaluate the impact of the American initiative and is collecting the positions of market participants.
Oleg Nilov, First Deputy Chairman of the State Duma Committee on Agrarian Issues, told socialbites.ca that he was pleased to hear “such panicky concern from Americans, Canadians and Australians”: “Everything is lost, boss. The Russians have filled the world with cheap bread, meat and eggs. By law It should be banned.”
“This sanction is applied only to the farmers of these countries. You can also ban breathing Russian air. We have salmon and caviar. Flag in hand, more laws like this. We have a place to send leftover agricultural products. First of all, to the domestic market. We will leave everything to our people,” Nilov told socialbites.ca.
According to him, this will, among other things, reduce prices in the domestic market, which have increased due to “conspiracies” of retail chains. The grain will also be used to feed livestock, poultry and fish.
Nilov described the new US law as a signal that Russian products should not be sent to “enemy” countries.
“Most people around the world understand where this law will push them when they are banned from buying Russian products. Fun. The joke may very well be a conspiracy for the KVN team. We have friendly countries. And Central American countries (Cuba, Venezuela) would be happy to receive our products through exchange,” commented the parliamentarian.
He emphasized that Russia grows “pure products” without the pesticides found in the United States. According to parliamentarians, domestic products will be both clean and cheap for the purchasing countries.
“U.S. Unofficial Ban”
Deputy Chairman of the Russian Grain Union Alexander Korbut, in a conversation with socialbites.ca, admitted that the United States would unofficially (this will not be seen anywhere in the documents) embargo the import of Russian agricultural products and would do so. Everything to enable other countries to participate:
“The US attitude will be: “If you want to buy American products with some special conditions, reject Russian products.” “In fact, the new law, US sanctions, the desire to limit the export of Russian agricultural products, the desire to push the Russian Federation out of the global agricultural market.”
According to Korbut, the No Russian Agriculture Law concerns almost all agricultural products in Russia, not just grain.
“Americans are always promoting their products, including grain, to other countries. They have credit programs and programs for the supply of agricultural products to other countries. The United States is targeting Southern countries with its new move and this is our main market. Primarily about African states and developing countries of Asia. “The new law is an attempt by the United States to conduct unfair competition and influence geopolitics,” the vice president said.
However, according to the expert, the results of the new law should not be expected immediately.
“This does not mean that tomorrow all countries will rush to the United States and reject Russian supplies. However, there is also a risk that Russia will reduce its supply to the world market. It is possible that buyers will ask for discounts from Russian exporters. Although both this year and last year the Americans had already advised world powers not to buy Russian goods,” Korbut explained.
He added that Russia has measures against the USA and listed them. First of all, the decision of the Russian government to provide loans to foreign countries for the purchase of Russian products.
“This will be a rather serious countermeasure. There are government decisions supporting the construction of food hubs in the purchasing countries. In addition, the composition of the BRICS has also expanded. This is half of the world agricultural production, which means Russia has ample opportunities for cooperation in the agricultural sector “If our opposition is sufficient, the United States will not succeed,” said the union’s vice president.
He reminded that the Russian Federation faced similar restrictive measures several years ago and before the grain agreement in 2022. According to him, Russian exports know how to adapt to problems and will be able to neutralize the impact of the new law:
“But this is an additional expenditure of time and effort and a certain reduction in Russian budget revenues.
The question is how the whole world will perceive the new regulation and what opportunities our state will have. “If countries around the world realize that the document puts pressure not only on Russia but also on the purchasing states, the outcome may not be what the United States expects.”
Sergei Yushin, chairman of the board of directors of the National Meat Association, told socialbites.ca that the US document is largely related to grain supplies. Yushin called the process of adoption of a law in the United States aimed at reducing dependence on Russian agricultural products a “long story” and added that “it is too early to analyze this initiative.”
How will this affect Russia?
Doctor of Economic Sciences, Professor of the Department of State and Municipal Administration at the Financial University of the Government of the Russian Federation Yuri Shedko called the new action an unfair attempt to avenge the “Great Grain Robbery” of the United States. (Eng. Great grain robbery) – the name adopted in the USA for the trade agreement on the supply of grain to the USSR (9.07 million tons) in the early 1970s. American negotiators then misjudged the situation, with the USSR purchasing grain at low prices while the United States actually subsidized the purchase – through aid to farmers – and world prices (including the US) rose by more than 30%.
“The main target of the USA is Russia’s wheat and indirectly fertilizer exports” – says Evgeniy Mironyuk, stock market expert at BCS World of Investments.
According to the Ministry of Agriculture of the Russian Federation, as of December 4, 2023, grain exports from the Russian Federation amounted to 62.5 million tons; This is 1.5 times more than the figure for 2022 on the same date. The top 10 importers of Russian wheat include Egypt, Turkey, Algeria, Bangladesh, Saudi Arabia, Israel, Libya, Brazil, Iran, Azerbaijan and Yemen. Russian fertilizers are purchased mostly by Brazil, China, India and Mexico.
Candidate of Economic Sciences, Associate Professor of the Department of International Business at the Russian University of Economics. GV Plekhanova Anastasia Prikladova listed the commodities and geographical regions to which Russian exporters can be exported as part of the US initiative:
“This includes grain supplies to Latvia and the Republic of Korea, but the share of these markets does not exceed 4%, which does not pose a threat to the Russian Federation. The situation is a little different in the fertilizer market. One of the main markets is the USA, whose share in Russia’s fertilizer exports is around 10-15 percent. Russia also exports fertilizer to the Baltic countries, Finland, Poland and other unfriendly countries, which account for more than 20% of its fertilizer supply.”
Therefore, in his opinion, Russian producers need to look in advance for opportunities to redirect export flows to avoid problems – this is especially important in the fertilizer segment. In this case, there will be no loss in the Russian budget due to the lack of revenues from export taxes.
“On the contrary, under certain conditions, it is possible for prices to fall within the country if part of the export flow is redirected to the domestic market,” Prikladova said.
Shedko believes that if the Russian Federation decreases grain and fertilizer exports, the production of meat products in the country will increase. This will lead to lower prices.