My View From The Country

Russia Fires Back; Bans More Ag Imports

Russia has upped the ante in its worldwide game of chicken.

Russia is back to playing chicken, both literally and figuratively.

Russia recently announced it will ban agricultural imports from the U.S, the European Union, Australia, Canada and Norway including meat, fish, fruit, vegetables milk and milk products. The ban is supposed to last for one year. Russia several years ago banned imports of U.S. beef. While the current ban affects U.S. pork and poultry, it will increase the supply of those products domestically thus impacting beef as well. 

Let’s look at the ban from a larger picture. Remember all the uproar when Russia invaded the Ukraine? It’s pretty easy to understand Russia’s incentive to annex part of the Ukraine and work to destabilize the rest of the country. Russia is making strategic moves to expand its ring of influence, and the recent ban on ag imports are just a part of that larger plan.

When he invaded the Ukraine, Putin knew that while the U.S., Europe, and the rest of the world would condemn Russia for its ambitions, they would not act to stop them. The rest of the world did place sanctions on Russia, but those were largely symbolic. The sanctions have harmed Russia’s economy but it was a slap on the wrist that was supposed to make them think twice before officially or unofficially attempting the same thing in other parts of the former Soviet Union. 

Putin sent a very strong message with the announcement that Russia would ban most food imports from the West. It was a bit of a surprise, but Russia made it clear it will retaliate for the Ukraine sanctions. 

Perhaps the most surprising thing about the import ban is that it will cost Russian consumers so deeply. Russia has tremendous production capability and has, for example, been rebuilding its cattle industry. But they still import a lot of food products from Europe, North America and Asia at this point. 

 

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The fact that Putin is willing to put his own citizens through more pain sends a loud and clear message to the world—not only is Russia willing to send in troops to expand its territory, but is also willing to engage in an economic war as well. Strangely, it is a war that Russia probably can’t win, but obviously Putin believes the world’s resolve is far less than his own. If he is right, Russia will likely reacquire those countries that were set free when the former Soviet Union collapsed. 

Now the world waits to see who blinks first. Putin has proven already that he is willing to bear risk and pain for his expansion aspirations. The West was only able to gather support for more severe restrictions after it became known that Russia played a role in shooting down the passenger airliner over the Ukraine. 

Russia’s economy is weak and the outlook grim with the sanctions, but they fired a big shot across Europe’s bow, given that a tenth of Europe’s agricultural production was exported to Russia. And Russia has one more card to play—it could shut down the flow of energy to Europe, but that is akin to the Cold War nuclear option in that it could destroy both economies. It is hard to believe that it would ever get that far, but then again, few expected Russia to retaliate in such an aggressive manner.  Russia has signaled that it is willing to engage on all fronts and now it will be up to the West to push the next pawn. 

What that pawn will be remains a question. Long-term economic sanctions, while painful to Russian citizens in the short-term, probably would help the Russian agricultural sector rebound and increase efficiency to become more competitive in the global market.  Much like other economic bans, it could lose its impact as Russia finds ways to buy product from other sources. 

Historically though, a government takes a great risk when it takes measures that causes excessive inflation and food shortages. Russia is banking on the fact that it will have more stamina than the rest of the world.

My guess is that Russia has once again called the West’s bluff and once again we will fold, but time will tell. It was extremely difficult to get consensus on the more severe sanctions that occurred in the wake of the airline disaster. Russia’s ban on ag imports is geared to punish the countries that led that charge, which likely ensures that any further sanctions will be difficult to pass. Russia appears to be paying chess while the rest of the world is playing checkers. In this game of chicken, Russia believes the rest of the world will opt to ultimately cave to its wishes.

The opinions of Troy Marshall are not necessarily those of Beefmagazine.com or the Penton Farm Progress Group.

 

 

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Discuss this Blog Entry 7

John R. Dykers, Jr (not verified)
on Aug 8, 2014

This is too reminiscent of how we sidled into WW II in the Pacific with Japan. Scrap metal supplies for Japanese industry were the straw that tipped us into war, caused the hawks in Japan to gain enough ascendency to launch the attack on Pearl Harbor, the Phillipines, and the rest of SE Asia. (already at war with China).
If Russia's economy becomes destabilized and the people hungry and restive, Putin will resort to war to 'rally the troops' in nationalistic fervor to put up with the deprivations.
Remember how well WE in the US accepted 'ration cards' and shortages for 'the war effort'.
johndykersmd@dykers.com

John R. Dykers, Jr (not verified)
on Aug 8, 2014

WW II surely generated a lot of scrap metal! Dumb to pay for it with sooooo much blood and bodies.

Fritz Groszkruger (not verified)
on Aug 8, 2014

There is no proof Russia had anything to do with the downing of the Malaysian jet. All we have are headlines about how Mr. Tough Guy, Barack Obama, claims Russia did it. There are even bullet holes in the fuselage.
Ukraine had an election. A pro-Russian won and soon after, the west, as admitted by Susan Nuland, enabled a coup by pro-western politicians.
While there is no proof of Russian aggression, there is proof of sanctions, which if done against us, should be considered an act of war.
If central governments were content with open trade and didn't seek unfair advantage by preventing secession, a lot of bloodshed could be avoided.
Nostalgia for the Cold War is no reason for a new one.

Anonymous Farmer (not verified)
on Aug 12, 2014

"no proof of Russian aggression".....WHAT???? what Kool-aid are you drinking?

Fritz Groszkruger (not verified)
on Aug 12, 2014

If we, meaning the U.S. government (since its people have better things to do), want to interfere with the economy of a foreign country then we better have proof. Besides headlines of government officials' accusations, where is the proof?

I have no love for Putin, but I do love my country for the opportunity to live a life of luxury in a world where it is becoming increasingly rare. The U.S. Constitution does not authorize our so-called leaders to intrude in the affairs of other nations. No matter what the "proof" of Russian aggression you might believe on our puppet government in Ukraine might be, it is not within our government's jurisdiction. Precedent does not justify doing the wrong thing over and over. This has become a bad habit that will eventually let us find the end of the wealth created in a time when our government had limits.
No Kool-aid for me, thanks

John R. Dykers, Jr (not verified)
on Aug 10, 2014

For those who don't feel the repercussion of what is going on between Russia and Ukraine, a little local history from Siler City, N.C.
Our biggest employer, a national chicken processing plant, closed. Zap all the 'chicken farmers' too with big investments in their chicken houses and big mortgages too.
A UKRANIAN business man put together a business model that included importing corn from Ukraine to feed the chickens and process them in the plant here which he spent $13 million remodeling and refurbishing. The Ukranian government headed by ?Natashenko (sp?) slapped on a 12% export tax on corn, devastated the business model, and the plant here sits idle and the chicken houses are deteriorating toward unredeemable and the 'chicken farmers' and plant employees are unemployed or leaning something new or leaving. Soon the entire infrastructure will be lost. And Siler City is the birthplace of the vertically integrated chicken production that you depend on for your chicken sandwich, salad, et al.

beef farmer (not verified)
on Aug 12, 2014

um...we quit eating chicken and pork years ago when vertical integration became popular....one must stay diversified...personally I am willing to lose one-half of one percent of US exports that go to Russia in order to affect Putin.

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What's My View From The Country?

As a fulltime rancher, opinion contributor Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

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Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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