Agriculture hasn’t bounced back from Russian sanctions

CEO of Tere dairy at the time Oliver Kruuda reported in April of 2015 that he has exported a hundred tons of milk powder to Japan in what was a media field day. Six months prior, Russia had countered EU sanctions with a set of its own, aimed chiefly at primary agricultural products, which had caused European countries, Estonia among them, to seek alternative markets.

Unfortunately the venture has found little success. Even Kruuda’s hundred tons of powdered milk were not made from Estonian milk, but came from Germany instead.

“Asian markets are attractive due to growing demand; however, as many food sector companies have found, they can be difficult to penetrate,” said chief specialist of the Ministry of Rural Affairs’ processing industry department Marie Allikmaa. “Securing sales contracts takes dedication and in most cases years of work.”

Slump not only in case of Russia

Data from the European Commission suggests export of Estonian agricultural products to so-called third countries, or outside the EU fell by 28 percent to €237 million in 2013-2016, meaning exporters’ proceeds fell nearly €100 million short of the 2013 result. Export to Russia fell by 58 percent, or €134 million to €96 million in the same period. Export volumes continued to fall last year, coming to 10 percent and €10 million year-over-year.

This means that while export outside the EU has improved somewhat, growth has been modest.

In addition to a drastic slump in exports to Russia, export of primary agricultural products to the EU has also fallen. If in 2013, €636 million worth of agricultural products were exported to the union, export had fallen by 3 percent, or €3 million last year.

USA and the European Union introduced sanctions against Russia after the latter annexed Crimea and launched hostilities in Ukraine. The sanctions first and foremost concerned financing of the Russian state and national banks, export of defense and dual-purpose products, and exploration devices and services.

To counter, or rather to get even, Russia laid down an import ban on EU agricultural products.

The result was a 53 percent decrease in export of European agriculture products to Russia in 2013-2016. The blow landed the hardest in the dairy sector in which export to Russia has all but disappeared by today, while export of fruits and vegetables fell by 94 percent and that of meat and livestock by 91 percent.

Russia’s closest neighbors were most affected: the Baltic countries, Poland, Finland. Export of agricultural products to Russia fell by 38 percent in Latvia, 58 percent in Estonia, 69 percent in Lithuania, and 72 percent in Finland. Agricultural exports relied most heavily on Russia in all of the said countries.

“It is true that export of Estonian agricultural and food products outside the EU was 17 percent lower in 2016 than it was in pre-sanction 2013. One way to assess the food sector’s ability to adapt is to look at whether companies have managed to restore pre-sanctions sales revenue in third countries, or compensate for the disappearance of the Russian market on others. The other way we can evaluate the sector’s success in coping is to look at export to third countries without Russia in the reference base,” Marie Allikmaa explained.

Success in every sector

If we separate goods moving to Russia from the export turnover of agricultural and food products, it turns out Estonian companies sold 36 percent, or €40.4 million worth more goods to third countries compared to 2013.

“Whereas growth has not come exclusively from sale of cereals that has been breaking records for the past few years. Even though the total export of dairy, meat, and fish sectors that were hit the hardest has not bounced back in full compared to 2013, all main production sectors have managed to boost sales to other third countries (except Russia). In other words, Estonian exporters have managed, despite sanctions - or perhaps because of them, to broaden export opportunities outside the EU after the disappearance of the Russian market,” she added.

Baltic and several other Eastern European countries have, however, been less successful at finding new markets than the West. For example, Ireland, the Russia exports of which fell by 68 percent after 2013, has managed to boost its export outside the EU by 35 percent. Ireland has also managed to boost its Russia export by 12 percent compared to 2015. Estonia’s agricultural products export fell by 10 percent in 2016 year-over-year.

Read more news of the city site of Tallinn.
If you notice an error, highlight the text you want and press Ctrl + Enter to report it to the editor
No rates yet
I recommend
No recommendations yet


Post your comment to communicate and discuss this article.

Chairman of the Estonian Chamber of Commerce and Industry and one of the owners of construction group Nordecon, Toomas Luman, finds that a prime ministerial candidate should first and foremost be able to answer the question of what will become of the demographic crisis in Estonia. The businessman sees controlled introduction of foreign labor as the solution. A digital construction cluster was created in Estonia a few years back to bring innovation to the s...
Last year saw 27,125 registered offenses, up 0.5 percent from the year before. Violent crime was up by 12 percent to 8,249 offenses. PHOTO: Dominic Lipinski / PA Wire / Press Association Images / Scanpix Growth was biggest for domestic violence – the police launched criminal proceedings in 3,607 cases that constitutes an increase of more than one-third – annual growth of 37 percent from 2,632 cases in 2017. At the same time, reports of domestic violence we...
TALLINN - Ahead of the withdrawal of the United Kingdom from the European Union, tens of thousands of British citizens have chosen the citizenship of some other country, but only one Brit has recently chosen an Estonian citizenship. Spokespeople for the Ministry of the Interior told BNS that only one British citizen submitted an application for Estonian citizenship last year and the applicant was also granted the citizenship. Before that, no Brits had soug...
TALLINN - Experts from Finland, Denmark, Norway and the Netherlands highlighted the importance of decentralization and granting local governments greater decision-making powers at a conference titled "Strong local government -- strong state?" in Tallinn on Wednesday.  All Nordic countries have chosen a model granting local governments significant decision-making powers, thus the central government does not prescribe how local governments are to fulfill the...
The language learning application Drops by game developer Planb Labs, established in Estonia by Hungarian founders, was named Google Play's best app of 2018. With the number of downloads surpassing 10 million, Drops was named Google's app of the year as the revenue of Planb Labs, a company registered in Estonia, increased fivefold, CNBC said. The developer's revenue grew from €335,000 in 2017 to €1.7 million in 2018. The company's shareholders include Hung...
TALLINN - The Estonian Health Board has banned the distribution of chlorine dioxide, also marketed as the Miracle Mineral Supplement (MMS), the A-component of an unused product, meaning the sodium chlorite solution, must be taken to a hazardous waste collection facility. Ester Opik, head of the Health Board's North regional department, said that the banning of the distribution of the product was caused by the fact that MMS, distributed as a cosmetics produ...
Nature cannot abide a vacancy, as the saying goes. If just one year ago, Estonia was battling the sale of MMS and the practice of giving it to children, a new “miracle cure” called Advanced TRS has appeared on the market now. Even though the make-up of the substance is different, the promise to cure autism and cleanse the body of heavy metals, which kind of extreme detox is accompanied by severe side-effects, sounds all too familiar. TRS is recommended to...
Allied NATO battalions will soon mark two years serving in the Baltics. They have worked better than expected but would need prepositioned heavy weaponry and a functional contingency plan in case of a crisis, a report by the International Center for Defense and Security (ICDS) finds. “We do not know how Russia would have acted had we not welcomed allies in Estonia, Latvia, Lithuania and Poland in 2017. I’m afraid they would have tested our resolve,” one of...
The time of filing income tax returns is nearly upon us. The new income tax system, in effect since last year, will obligate many women who went on maternity leave toward the end of the year to make additional income tax payments, while those who give birth in the middle or at the beginning of the year have no such obligation. What this means is that some women will owe the state simply for giving birth “at the wrong time”. Laura Roop, who went on maternit...