Both sides claimed the sanctions would not bring any negative effects to their domestic producers, due to the fact that the actual volume of meat supplies over the last two years has remained quite low.
“The main export items [from Russia to Ukraine] in the meat sector are pork, with supplies of 1,400 tonnes (t) during the period from January-November 2015, and poultry with 10,300t during the same timeframe,” said a spokesperson from Russia’s Ministry of Agriculture. “However, despite Ukraine accounting for a large percentage of our exports – at 51.4% for pork and 22.7% for poultry – the physical volumes are insignificant.”
Bigger hit on Ukraine
Meanwhile, despite political problems, exports of meat from Ukraine to Russia rose nearly twofold in the first half of 2015, from US$25.6 million to US$59.2m, according to data from Ukraine’s Agriculture Ministry.
In particular, Russia has been purchasing almost all of Ukraine’s pork exports, with volumes amounting to 2,000t per month. Market analysts in general agree that the Russian embargo will have a more severe impact on Ukraine’s meat sector than Ukraine’s sanctions against Russia.
“It is unlikely that Ukraine’s move will affect Russia’s macroeconomic indicators,” commented Dmitry Lukashov, an analyst at IFC Markets. “But the Russian embargo may be much more sensitive, depending on the parameters of bilateral trade relations.”
Russian agricultural analyst Eugene Gerden added: “Ukrainian meat producers and, in particular, poultry producers are more focused on exports than Russian companies. The [Russian] embargo will be most keenly felt by Ukraine’s pork producers as, unlike poultry manufacturers, they do not have alternative export markets.”
Russia could also cause major problems for Ukraine meat producers by restricting transit supplies, as Ukraine traditionally sells a lot of poultry in the post-Soviet Union countries of Asia.
Ukraine’s Ministry of Economic Development has claimed that Russia has completely stopped any transit of goods from Ukraine to Kazakhstan through its territory. Earlier, Moscow had allowed transit of sealed Ukrainian goods, but only from Belarus.
“The Russian Federation’s ban is non-transparent, unjustified and discriminatory in its nature,” said a statement from the ministry. “Russia has violated its obligations, particularly in terms of the framework of the World Trade Organization.”
Representatives of the ministry also explained they were working on alternative transit routes. However, they said this would probably affect the logistics costs of delivering Ukrainian meat to a number of countries, including Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan and China, among others.