A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

The embargo, a blessing in disguise for Russian agriculture?

November 17, 2014


While Brussels is trying to implement measures to deal with the consequences of the Russian embargo, and still not attracting any enthusiasm from European farmers, Russian agriculture seems to benefit from the situation, at least for the time being. If Moscow is officially pledging loads of subsidies to Russian farmers, and the Kremlin speaks about the revival of Russian agriculture, which is still suffering from structural malfunctions. It is unclear whether the political power will seize the “opportunity” of the embargo to extensively reform Russian agriculture. In the meantime, Moscow is clearly betting on the weapon of food as the key to its independence, but at what price? And does it have the power to do so?

Since the onset of the embargo, there has been an increase in agricultural measures by the Kremlin to overcome the drop in imports from the nations subjected to the embargo:
    - The Russian government recently announced the implementation of a new budget package of about €924 million for Russian agriculture in 2015. By 2020, €13 billion will also be released.

    - In addition, Russia has increased trade agreements, especially with Latin American nations, in order to find substitution markets. Another significant impact is the surge of Chinese investments in Russian agriculture.
Some Russian agricultural activities are particularly playing their cards well:
    - The pork industry reports rising profits and investments in order to develop production capacity.

    - In addition, the nation profits from a record wheat output with over 100 million tons––against 92.4 million tons in 2013––a forecast that includes the newly reattached Crimea. Moscow is consequently focusing on rising exports, taking advantage of the weak ruble (a 10 percent decline) and on increasing global prices.
The Russian agricultural market has the wind in its sails, but for how long? The SovEcon analysis group is already forecasting a grain production to decline by 15 percent in 2015, while in the short term, the national production will be unable to compensate for the fall of imports. Increasing the output requires sizeable investments––especially public investments––and will take at least five years. Yet Russia is currently on the brink of recession and its population is strained by rising inflation.

Finally, if the embargo brings immediate benefits to some sectors, the structural deficiencies––lack of infrastructures and run-down conditions due to under-investment for two decades––will not permit a fast take off, and will further benefit the new competitors in the Russian agricultural market, that is to say Latin America and China.

Yet we see that the Russians, unlike the Europeans, have taken full stock of the power of the food weapon, but the threat of reverting to protectionism is real and will not in any way improve the fate of its agricultural activities. On the western side, the short-term rationale underlying the economic sanctions is unable to measure the seriousness of the situation, and its highly destabilizing nature on already structurally failing markets. As stated by two veterans of the Cold War––Mikaïl Gorbatchev and Henry Kissinger––on the occasion of the 25th anniversary of the fall of the Berlin Wall, the world could be on the verge of a new standoff, and the situation now demands a strategic vision to defend the critical interests of Europe in a context of renewed international cooperation.


Page Header
Paris, 20 September 2018