Edison Chen
SENIOR MEMBER
- Aug 21, 2013
- 2,933
- 11
- Country
- Location
Russia’s ban on food imports from the European Union and several other Western countries is a small yet bothersome complication for Central Europe’s food producers.
Poland, the Czech Republic and Hungary all export food to Russia, mainly dairy, fruits, and livestock.
Even though the total share of exports going to Russia is small in the three countries – at 6.3%, 3% and 3%, respectively – the ban may reduce their output.
The countries export the lion’s share of their goods to the European Union, as much as 80% as in the Czech case.
Russia’s latest move is particularly painful for Hungary. Prime Minister Viktor Orban and his government, which in April secured its second consecutive term with a majority in parliament, set a goal of widening trade ties with eastern countries such as Russia.
“Hungary’s strengthening ties with Russia are of key importance to the success of Hungary’s policy of opening toward the East,” Peter Szijjarto, deputy foreign trade and foreign affairs minister, said earlier this year.
Mr. Szijjarto also signaled earlier that food and agriculture would be the areas where Hungary wants to boost export growth to Russia.
Analysts are unfazed by the possible effects the ban could have on Hungary’s overall gross domestic product growth. They have estimated the ban would only cause a 0.1-0.2 percentage point drop in this year’s GDP.
“The effect [on GDP] could be even smaller as Hungary has chance to sell these products elsewhere outside Hungary or even locally,” said David Nemeth, economist at K&H Bank.
The case is similar in the Czech Republic where the media called for the government to find new export markets for food stuffs in short order to protect the economy. One area of risk is dairy products: a Czech truck bringing dairy products to Russia had to turn back Thursday.
Yet Czech dairy farmers have been criticized in recent years for favoring exports to Germany, where they fetch a higher price for their goods, and ignoring the domestic market.
Jaroslav Hanak, head of a lobby group representing industry and transport, took the middle road on Friday. He said EU sanctions against Russia and the Russian ban on food imports are troubling for the Visegrad Four countries, but his greatest fear is Moscow continuing in its efforts to build a Great Russia.
Mr. Hanak said Russian President Vladimir Putin scores political points at home from the standoff with the West, which is troubling for countries on the EU’s east.
What’s calming however is the fact that Czech beer exports, the country’s premier food product are safe, since the banned products subject to embargo don’t include alcohol.
The Polish economy is integrated with that of the euro zone and Germany is its most important trading partner, buying a quarter of Poland’s exports.
But the latest Russian move banning food products from the EU nevertheless proved a big headache.
“We initially estimated that we’ll be able to sell in the European market about a third of the fruits and vegetables exported so far to the Russian market,” said Agriculture Minister Marek Sawicki.
“After President Putin’s decision that’s not going to be possible because the problem will hit also producers of fruits and vegetables from all of the EU.”
The ministry says Poland will be able to sell within the EU 5%-10% of the products normally sold to Russia, and some fast-moving products will have to be destroyed.
Poland, the Czech Republic and Hungary all export food to Russia, mainly dairy, fruits, and livestock.
Even though the total share of exports going to Russia is small in the three countries – at 6.3%, 3% and 3%, respectively – the ban may reduce their output.
The countries export the lion’s share of their goods to the European Union, as much as 80% as in the Czech case.
Russia’s latest move is particularly painful for Hungary. Prime Minister Viktor Orban and his government, which in April secured its second consecutive term with a majority in parliament, set a goal of widening trade ties with eastern countries such as Russia.
“Hungary’s strengthening ties with Russia are of key importance to the success of Hungary’s policy of opening toward the East,” Peter Szijjarto, deputy foreign trade and foreign affairs minister, said earlier this year.
Mr. Szijjarto also signaled earlier that food and agriculture would be the areas where Hungary wants to boost export growth to Russia.
Analysts are unfazed by the possible effects the ban could have on Hungary’s overall gross domestic product growth. They have estimated the ban would only cause a 0.1-0.2 percentage point drop in this year’s GDP.
“The effect [on GDP] could be even smaller as Hungary has chance to sell these products elsewhere outside Hungary or even locally,” said David Nemeth, economist at K&H Bank.
The case is similar in the Czech Republic where the media called for the government to find new export markets for food stuffs in short order to protect the economy. One area of risk is dairy products: a Czech truck bringing dairy products to Russia had to turn back Thursday.
Yet Czech dairy farmers have been criticized in recent years for favoring exports to Germany, where they fetch a higher price for their goods, and ignoring the domestic market.
Jaroslav Hanak, head of a lobby group representing industry and transport, took the middle road on Friday. He said EU sanctions against Russia and the Russian ban on food imports are troubling for the Visegrad Four countries, but his greatest fear is Moscow continuing in its efforts to build a Great Russia.
Mr. Hanak said Russian President Vladimir Putin scores political points at home from the standoff with the West, which is troubling for countries on the EU’s east.
What’s calming however is the fact that Czech beer exports, the country’s premier food product are safe, since the banned products subject to embargo don’t include alcohol.
The Polish economy is integrated with that of the euro zone and Germany is its most important trading partner, buying a quarter of Poland’s exports.
But the latest Russian move banning food products from the EU nevertheless proved a big headache.
“We initially estimated that we’ll be able to sell in the European market about a third of the fruits and vegetables exported so far to the Russian market,” said Agriculture Minister Marek Sawicki.
“After President Putin’s decision that’s not going to be possible because the problem will hit also producers of fruits and vegetables from all of the EU.”
The ministry says Poland will be able to sell within the EU 5%-10% of the products normally sold to Russia, and some fast-moving products will have to be destroyed.
