Ukraine bodies embark on Crimea food blockade

Since annexation in March 2014, Crimea’s dependence on meat from Ukraine has been increasing. “Since annexation, Crimea’s level of self-sufficiency in its own livestock production has declined, with the level of local dairy production decreasing from 62% to 51% of the total, meat from 81% to 67% and eggs from 81% to 73%​,” said a former member of Crimea’s government Alexander Liev. 

However, head of the Crimea government Sergei Aksyonov has sought to counter worries in the market, claiming: “In general, the share of Russian products on Crimea’s grocery shelves has reached 95%. We don’t need Ukraine [meat and food] products and can fully replace them within two weeks.​” 

Real impact remains unclear​ 

Meat trade data from Russian and Ukraine statistical services differs substantially. According to Ukraine’s state statistics service, from October 2014 to February 2015 Ukraine supplied meat products to Crimea worth a total of US$49.4 million. 

However, Russian Federal Customs Service data claims the overall import volumes of Ukrainian food to Crimea during the first half of 2015 amounted to US$23.3m. Ukraine, meanwhile, claims the figure for this period is US$40.8m, including US$16.7m for meat. The decrease in value compared to the October 2014-February 2015 period is said to be due to the devaluation of the hryvnia and the ruble against the dollar. 

As the actual volumes of meat trade are unclear, it is hard to assess how a food blockade would really affect the local Crimean market. But it is expected to hit Ukraine’s exports. During the first half of 2015, Ukraine supplied about 10,000 tonnes (t) of pork to Russia, accounting for about 91% of the country’s total pork exports. Nearly 85% of this is reported to have been directed to Crimea. 

Internal production affected​

Russian data claims that, in 2014, the Crimean peninsula produced 172,000t of meat, 4% less than a year earlier. Ukraine, on the other hand, claims that the drop in production is bigger than this. 

What is known is that the meat industry in the peninsula suffered heavy losses due to a stoppage in water supplies from the North Crimean Water Channel. As a result, the region faced difficulties with water supply for irrigation systems and a lack of feed crops. 

Several months ago, Sergei Zaitsev, head of the livestock department of the regional Ministry of Agriculture, said: “Due to the lack of irrigation, production of corn and soybeans - the main components of animal feed - fell by 90%. This, in turn, threatens a shortage of protein. We should take urgent measures to solve this problem​.” 

Crimea is reported to have covered the deficit with imports from Ukraine, and it is expected that any food blockade would also affect the peninsula’s feed industry. The region could not solve the problem with increased supplies of feed and meat from Russia as, due to high logistics costs, these products would be 30-40% more expensive than supplies from Ukraine. 

Prices will rise further​ 

Even without a food blockade, the prices for food production in the peninsula have been rising. Alexander Liev believes that, on average, prices for pork and beef in the region are nearly two times higher than in the rest of Ukraine. 

Official statistics services have indicated that prices have increased by up to 50% since the beginning of the year. In the first half of 2015, the consumer price index on the peninsula was 121.7%, compare to 111% on average for Russia. 

Aksyonov admitted that the increase in the prices of meat products had become an “important social problem​”. According to him, the region’s government has tried to strike an agreement with retailers to limit their margin on food products to 10%, but less than third of all market participants have agreed to these terms. 

As a result, industry experts have suggested that meat prices will continue to rise over the coming months. Meanwhile, the situation on the food market and in general in Crimea may be further aggravated by the imminent threat of an ‘energy blockade’ to stop any supplies of electricity to the peninsula.