José Pestana

The Russian embargo imposed on the European Union as a cause of the Ukrainian Crisis has been a hot topic in recent years. The ban on food imports from the EU is claimed to cause nearly 100 billion euros loss to the EU countries.[1] The Russian government undertook radical measures to make it clear that European products are unwelcome on their market, even including the ostentatious destruction of the food that reached Russian borders, which was condemned strongly by the public opinion. Many were afraid of the possible restrictions’ results, at the helm with the Hungarian Prime Minister Viktor Orbàn stating that Europe “shot itself in the foot”.[2]

During that time many more abstract ideas for restrictions were mentioned by Russian politicians in their constant race towards autarky, not only in the food sector. One of the most ridiculous was a ban on foreign condoms import, which was claimed to not only induce the native production, but also to encourage conscious family planning. Implemented for a short period of time was a ban for Dutch flowers, claiming the producers to use harmful chemicals in the growing process and at the same time harming the Russian native growers’ profits. The losses are indisputable, for both Russia and the EU. Even so, Russian politicians are constantly boasting the advantage that the restrictions have provided to the Russian economic development, especially in the food sector.

However ridiculous it may sound, there could be a kernel of truth in the mad man’s talking, especially if we consider the analogical situation in the cooperating European markets, which are much more developed and diversified than the Russian one. I believe that our experience constitutes our most valuable legacy, so as professionally involved into the Eastern European arboriculture I would like to exemplify the situation of the embargo-influenced sectors of the industry.

Poland is one of the biggest apple producers in the world. Previously, the USSR and currently Russia constituted the biggest[3] and most attractive export market for our product, as the quality expectations there are much lower than in other European markets. At the same time, Russia is highly dependent on the Polish product. In this sense, Russia certainly does not possess sufficient resources to self-sustain and is obliged to import over 1 million tons of apples every year. Among neighbouring countries, Poland is the only one able to supply efficient amount at an acceptable rate.

“Russia is for us a major partner, who needs to be respected. Therefore a very important task for our government is to preserve good economic and political relations with the Russians”, wrote Polish arboriculture market specialist, Professor Eberhard Makosz. No wonder that the embargo introduction during one of the most abundant harvests in many years caused panic in the sector. The situation was handled by introduction of governmental marketing programs encouraging consumption in the country itself, free distribution of the product among institutions like Caritas (financed by EU funds) and increased level of alcohol and biological fuel production.

In the end, the exports to Russian markets were restarted through unofficial channels – like intermediary countries – and still cover a huge percentage of the sector’s target. However, the threat induced positive changes in the industry. New markets were targeted, like South Africa and the Far East, but also USA and Canada. The quality of the produce was improved, the quantity of production was revised and slightly decreased and general development of the growing technology was enhanced. As a result of the pressure on the increase of products quality, Western European countries like Germany, France and England could become a target along with increase in the consumption in Poland itself.

Development and retargeting was induced in many other sectors as well – e.g. leather and meat production. Despite the temporary loss, the incentives to develop in order to serve more demanding markets in the long run could be highly beneficial for the EU countries. The focus on effectiveness and quality enhancement will in the end decrease the dependence on the Russian market and increase the profits. Additionally, even if a huge shock and losses are needed to realise it, high dependence only on one market, especially as politically unstable right now as the Russian one, is unhealthy for the economy. Therefore any reforms and changes able to change that situation are fully welcome.

 

This text is partly based on the opinions and information published by Prof. dr. hab. Eberhard Makosz from The Society for Promotion of Dwarf Fruit Orchards.

[1] Russian sanctions to ‘cost Europe €100bn’. Newsweek. (2015).

[2] Retrieved from: http://www.reuters.com/article/2014/08/15/us-ukraine-crisis-sanctions-hungary-idUSKBN0GF0ES20140815.

[3] From 60% to 65% of the whole production.