COLUMBUS – A ban announced by Vladimir Putin on American food exported to Russia will have far less economic impact on our nation’s farmers than it will on the consumers in Russia itself, according to an international trade expert at The Ohio State University.
“Was I surprised by the announcement? Nothing he (Putin) does surprises me,” Dr. Ian Sheldon said Thursday, Aug. 7, just hours after the announcement was made in Russia.
Sheldon is the Andersons professor of International Trade at the OSU Department of Agricultural, Environmental and Developmental Economics for the last 24 years.
The ban, announced by Prime Minister Dmitry Medvedev at a televised Cabinet meeting, covers all imports of meat, fish, fruit, vegetables, milk and milk products from the U.S., the European Union, Australia, Canada and Norway. It will last for one year. The ban is in retaliation for U.S. and European sanctions over the Ukraine.
After the announcement was made, one news report said the ban “could cost farmers in the West billions of dollars.” But Sheldon sees this as an exaggeration.
“I think there will be a far greater impact on the consumers in Russia than there will be on the farmers in America,” he said.
Is there a way of knowing if there will be an impact on Ohio specifically? That’s hard to say, according to Sheldon.
While Ohio farmers export tons of soybeans and corn overseas every year, it has always been difficult to measure exactly what percentage of the country’s exports come from Ohio, Sheldon said. He said the U.S. Department of Agriculture measures exports at the point of departure based on where it is going, and where it came from is seldom broken down state by state.
But Ohio farmers have little to worry about with the ban from Russia, he said. “I don’t think any U.S. grain farmers will be that bothered by this. Maybe U.S. chicken producers will be hurt a little bit.”
Sheldon said that “most of our agriculture exports go to Canada and Mexico,” adding that in the United States, Russia does not show up in the top ten of any American agriculture exports, including Ohio’s main crops of corn and soybeans.
“My sense is that it is those former Eastern Bloc countries such as Poland that will have the greatest problems from this ban,” he said.
Russia depends heavily on imported foodstuffs, most of it from Europe, particularly in Moscow and other large, prosperous cities. In 2013, the European Union exported 11.8 billion euros ($15.8 billion) in agricultural goods to Russia, while the U.S. sent $1.3 billion in food and agricultural goods.
But can the Russian people hold out for a year without the Western food they have become accustomed to seeing on their grocery shelves in recent years?
Dr. Don Chafin, Agriculture Economist at Wilmington College in Clinton County, believes the answer to that question may be: “Time will tell.”
Chafin, who has taught in the college’s agriculture program for more than 39 years, says Thursday’s ban is “mostly show. It’s a political show between us and Russia.”
Chafin cautioned that any ban on American agriculture hurts farmers. “But luckily, the Russian market is a small market for us,” he said.
“What I can’t imagine is the Russian people being happy with reducing their consumption, also. In the past, they’ve not been willing to reduce their food consumption,” he said.
Chafin wondered how long the Russian people will be willing to sacrifice for Putin. “You have to wonder when they will say enough is enough, and it isn’t worth the effort. He believes, however, that a one-year ban is likely to hold up.”
Chafin said, “They have produce in stock and in reserve, so they will not run out right away.” But after those reserves run out, all bets are off.