Baltics struggle to recover from Russian trade ban

By Vladislav Vorotnikov

- Last updated on GMT

Some embargoed products are being supplied via Belarus
Some embargoed products are being supplied via Belarus

Related tags Estonia Latvia

The Russian trade embargo continues to hit Baltic food producers, although the worst forecasts of the impact on the region's meat industry have not come true.

Pessimistic predictions that the meat industry in the Baltic states would face a wave of bankruptcies, have not materialised. However, particular producers still face difficulties due to a decrease in market prices and a lack of markets for their products, according to a recent report from Swedbank and market analysts in the region.

During the first four months of 2015, exports from Latvia to Russia fell by -23.9%, Lithuania by -33.4% and Estonia by -45.9%, said the Swedbank report. At the same time, the total volume of exports from Lithuania fell by only -4.6%, Estonia -0.4%, while Latvia even managed to increase its export figure by 2.5% compared to the same period last year.

“In general, the decline ​[in exports to Russia] was partly compensated by a growth in exports to other regions, especially in the EU,”​ said the report. Meanwhile, Swedbank analysts believe that 75% of all exports to Russia are now destined for re-export, with the situation in Latvia pretty much the same.

“EU recovery and bypassing the Russian embargo are softening the negative impact of the crisis,”​ said the report. “As a result, there is no massive bankruptcy among companies in the Baltic countries.”​ Also, according to the bank’s analysts, some products are being supplied via Belarus, while others are supplied under faked labels of countries approved to supply meat to Russia.

Problems still observed

According to Latvia’s prime minister Laimdota Straujuma, Russia’s food embargo will cost the country €55 million in losses. The ban has affected the food logistics industry, in particular, as according to the State Revenue Service, 31 Latvian businesses, including livestock producers and companies engaged in cargo transportation, have requested tax breaks connected to the ban.

Also, according to the Latvian agriculture minister Jānis Dūklavs, the biggest problem faced by the region’s agricultural industry is attributable to a decrease in purchasing prices for products, due to an ongoing oversupply crisis.

“I cannot say that no one is threatened by financial problems,”​ he added, referring to meat producers. “But we do not expect any massive bankruptcies in the industry.”

Despite this, there have been numerous reports that meat farmers several Latvian regions have sold their livestock and turned to alternative types of business. “In my opinion, if, due to certain circumstances or because of the Russian embargo, farmers decide to no longer be engaged in the livestock industry and sell their property, along with animals, then it should not be called bankruptcy,​added Dūklavs. ​This is simply the farmer’s decision.”

Related topics Meat

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