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Playing Russian roulette with food

The urge to teach someone a lesson seldom inspires sound policy

Vladimir Putin has announced that Russia is banning imports of a wide variety of agricultural products from Canada, Europe and the United States. The effects of this decision on Canada will likely be felt in the pork industry as we export to Russia well over $300 million worth of pork products each year.

Putin’s move has raised the stakes on the confrontation over the Ukraine situation which has been simmering for weeks now. With these measures though, it seems likely that Russia’s decision to stop importing some agricultural commodities will likely impact Russian consumers more so than our own agricultural economy.

The current food inflation rate is at 7.9 per cent in Russia. Compared to Canada’s 2.9 per cent, Russia’s current rate is considered dangerously high. With less access to affordable foods and animal protein, Russian consumers will likely see prices go even higher. And with a sluggish economy and decreasing population, this is certainly not going to help anyone’s pocketbook.

By blocking Canadian pork, one of the cheapest animal proteins around, from entering Russia, Putin will likely negatively impact poor consumers who don’t really have many protein source options.

Time and time again, international conflicts amongst nations compel governments to use food as a weapon of sort. Some nations may be led to believe that food and agriculture constitute power, and for centuries, the human race has used the food industry to serve political and economic intentions.

But more often than not, governments using such tactics have been proven wrong. Manipulating the food industry often guarantees an untenable form of influence and authority.

These unfortunate decisions are not only made by emerging economies or totalitarian regimes. We have seen these tactics used in the western world as well. The Jimmy Carter administration in the U.S. during the infamous grain embargo of the 1970s is just one example. U.S. producers suffered when Carter decided to cut off grain shipments to the then Soviet Union in response to its invasion of Afghanistan. As a result, grain prices fell, penalizing U.S. farmers, while leaving the Soviet economy largely the way it was.

The American population found a way to punish Carter: his electoral defeat. However, it is unclear how Russian consumers can stop Putin from playing a perilous game of chance with their future.

In this latest round of tit-for-tat between Russia and Canada, it is very likely both economies will be affected. But Mr. Putin and his supporters have more to lose, since it is more challenging for them to find new supply sources than it is for Canada to find new markets to offset the negative effects of this latest embargo. Some believe Russia has chosen this latest tactic to support its own hog industry. However, building domestic capacity in hog production requires more infrastructure, resources and, most importantly, time. It just cannot happen overnight.

Worse, what’s at stake for Russia is indeed the well-being and quality of life of its own people. Sanctions on food imports will likely compromise Russia’s already fragile state of food security. Playing Russian roulette with people’s lives is not a desirable option, even if most support their government’s stance against the western world.

Regrettably, Mr. Putin will likely learn, at the expense of the Russian people, that the urge to teach someone a lesson seldom inspires sound policy. Let’s hope the current situation will not last.

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