Australia, one of the countries to suffer grave losses with the downing of Malaysia Airlines flight MH17, has stressed that Russia’s retaliatory embargo on the import of agricultural products will have a limited effect on its economy.
Over the weekend, Australia’s government voiced its “disappointment” at the Putin administration’s decision to ban imports of agricultural products, raw materials and foodstuffs from countries that have imposed sanctions in relation to Russia in response to events in Ukraine.
Agriculture Minister Barnaby Joyce and Andrew Robb, the minister for trade and investment, said in a statement that the government was in the process of working to assess the full impact of the ban.
“Our priority is to ensure the ongoing success of Australian agricultural producers and exporters. The government is already working to ensure Australian producers have access to a wide range of alternative markets.
“The loss of any market is always of concern, and we will work closely with affected producers to minimise the impact on their business.
Australia’s total trade with Russia represents just 0.4 per cent of Australia’s trade overall and 1% of agricultural exports, which were valued at around A$405m (US$375m). Russia ranks number 28 on its list of export destinations so we are certainly not heavily reliant on it as a trading partner.
“Our immediate focus is to manage those exports that are currently at sea or in transit to Russian markets and to assist exporters in redirecting them, wherever possible, to alternative destinations,” the ministers added.
“Free trade agreements with major markets such as Japan and Korea and, we hope soon to be China, open up more opportunities and help further diversify our trade.”
There are concerns in Canberra that Russia’s ban may not comply with World Trade Organisation rules, and the government there said it was considering all options in relation to the new restrictions, and will be consulting with other affected trading partners.
However, food companies and lobbyists are not as confident about the impact of the Russian embargo as the government’s macroeconomic shrug-off.
“Producers are concerned and disappointed, particularly in Queensland, where we are experiencing such difficult drought conditions,” Charles Burke, chief executive of Queensland agricultural group AgForce, told Australian media.
“Russia is not a huge market, but yes, it will have an impact. When you've got a big jigsaw puzzle like agricultural exports, to lose even a little piece will have an impact.”
Dairy major Murray Goldbourn’s chief executive, Gary Helou, emphasised the importance of the Russian market, saying it was just as important to the company’s business as China.
“Russia is a very important dairy market for us… so this is going to take a little while for us to get our heads around its impact,” Helou said to The Australian.
Helou also voiced concerns that with Australian dairy products banned from Russia, it would be harder for local producers to withstand competition from rivals in other countries, including those from neighbouring New Zealand.