Montenegro, Albania, Iceland, Norway, Liechtenstein, Lithuania, Ukraine and Georgia have confirmed to the EU Council their decision to extend their compliance with the EU sanctions against Crimea and Sevastopol till June 23, 2016. The economic sanctions against Russia were imposed by the EU a year ago, on August 1st 2014. They include, in particular, restrictions on lending to key Russian state-owned banks, defense enterprises and the oil industry. A week later, on August 7th, Russia introduced a package of sanctions in response to the EU, the United States, Australia, Canada and Norway. Countersanctions were a ban on imports from these countries of fruits, vegetables, dairy and meat products for one year. The Russian authorities have announced a policy of import substitution, trying to extricate the economy from dependence on foreign suppliers. Plans to promote import substitution have been formed in the North Caucasus republics. There are almost forty anchor investment projects in the agricultural sector.
There is a separate specialization for each subject of the NCFC, such as grain for Stavropol Territory and meat for Dagestan, Ingushetia, Chechnya and Karachayevo-Cherkessia.
In late April the Federal Ministry of Agriculture was headed by the ex-governor of Krasnodar Territory, Alexander Tkachev, who formed a vision of how to develop the Russian agro-industrial complex in the framework of the policy of import substitution during three months of work for the ministerial post.
Agriculture, he said, is the basis of the economy, with huge reserves, primarily in the development of animal husbandry.
Today, however, despite the presence of a sufficient number of pastures, historic specialization, the dynamics of beef herds in the North Caucasus Federal District lag behind the average for Russia. If in the last five years in Russia the specialized beef herd has nearly doubled, in the North Caucasus Federal District this figure has only risen 10%.
As another challenge Tkachev considered the fact that the distribution of products in the country is not organized at the proper level: ‘’The resellers, delivering the goods to the shelves in the Moscow region and other large customers, usually get all the profit. Added value is not formed in the districts, because there is no high-quality, modern processing. "
We are now talking about the need for major meat processing facilities. The 'Caucasian Beef' brand, 'Caucasian Lamb' is really in demand today, it is well-known and waited for. But this requires logistics centers, cold storages and, of course, high-tech processing. Without it, all this will be made in the artisanal way, products will be sold at a low price, which means that the manufacturer will not, of course, receive sufficient profit," Tkachev said. Although during the last seven years the production of mutton has doubled, in the North Caucasus today, there are 8 million head in total, with half of them in Dagestan. In Soviet times, the figure was 20 million.
At the same time a stake will be made on the production of elite seeds, fruit and vegetables, as well as the development of viticulture in the country, so the Caucasus will deliver not only grapes to the shelves, but wine and brandy as well.
The government wants to build wholesale and distribution centers in the North Caucasus Federal District, which will be a key element of promoting products from the North Caucasus to the big city and will accumulate the storage, the processing and the marketing of products in the area, as well as the promotion of these products to the major retail chains.
"Without a good high-tech processing in the Caucasus (this will be enough, perhaps, for Dagestan) we will have no basis for growth, because there will be no incentive. And such processing centers are purchasing and providing stable prices, and this is quite a transparent mechanism of work. Due to large refining, logistics centers, large retail chains, these products will be bought in the country. Of course, there will be a great number of opportunities for the production of mutton, of it doubling or tripling," Tkachev said.
Meanwhile, according to the head of Dagestan, Ramazan Abdulatipov, there is no problem with the production of mutton in the country, but there is a problem of processing and delivering it to the buyer. "Here the whole chain breaks down, because the old system does not exist anymore, and a new one has not been created yet. My attempts to establish a cooperation that would procure the goods on time has not resulted in anything, because there are no necessary means."
Abdullatipov shared his personal observations of the import process: "The other day I was in the big settlement of Kazanishche, where 17 thousand people live, this is one of the largest settlements in Dagestan. I went to the store. There were 5% of Russian goods, but 95% were of unknown origin, half of which were toxic. Among the Dagestani goods (this is also my fault) there was one jar of urbech [a paste of pounded walnuts and hemp seeds – editor’s note]. We are talking a lot, but there is no clear regulation of the agricultural market here."
Nevertheless, Russian Prime Minister Dmitry Medvedev considers restrictions on the import of foodstuffs to be good support for Russian farmers. The total amount of the federal budget allocated in the past year to support agriculture in the North Caucasus, has exceeded 11 billion rubles. This year, 12 billion rubles will be used for agricultural purposes in the North Caucasus.
The pace of development of agriculture in the North Caucasus was above the national average in the last year, growth was 5.3%, including crop production rising 7%. Another thing is that there is a need to deliver all of these products to the consumer, and this requires storage and processing infrastructure.
