The European Commission has recently granted 125 million euros of compensation for European manufacturers hit by Russian food sanctions. The compensation will be paid from a fund worth 420 million euros created for emergency help for farmers within the framework of the Common Agricultural Policy of the European Union.
Russian manufacturers see opportunities to boost national production in light of the embargo. Concerning risks of product variety, many are confident that the situation would not have a big impact on consumers.
Andrey Danilenko, the chairman of the board of the National Milk-Makers’ Union, said that total imports in Russia before the sanctions amounted to 20%, converting it to the volume on shop shelves, it amounted to less than 10% of the volume on shop shelves. According to Danilenko, only 3% of the population consumed rare cheeses, such as parmesan, camembert and others.
In Danilenko’s words, the reduction of food imports is equivalent to the volume that “Russian manufacturers reduced in the past two years due to joining the WTO and the dramatic increase in imports on the territory of the Russian Federation.” The cause of falling production of Russian manufacturers is lack of competitiveness of national products. “The volume of state support of importing states was much greater than ours. Consequently, our prime cost could not compete, so we could not handle it,” says Danilenko.
In his opinion, the key issue is how to boost production without raising prices for products. “In this period of time, I cannot say that we were ready for the embargo or knew what it would happen, but we have spent the last half a year on detailed research of the sector and preparation of a program for full import displacement in the sector. We have certain evaluations for the level of state support needed for import displacement. We, as part of the sector, are happy that the government drew its attention to us. We are very happy that the import displacement issue was raised,” says the chairman of the board of the National Milk-Makers’ Union.
Andrey Danilenko admits that it would be impossible to fully displace the volume throughout the year but he is confident that it is possible in a few years. Moreover, there are enough states that have the right to sell products in Russia. He emphasized that consumers should not worry about the volume of imports, because Switzerland and Serbia had access.
The expert believes that the main task is to use new opportunities, develop national production, instead of replacing one importer with another. “There is an outstanding problem, we will displace with our own production, we will create more jobs in Russia, make additional contributions to the economy, provide more additional income to our country, preserve price-formation and quality, or we will replace one importer with another, and things will stay the way they were, in terms of our dependence. So I see no risks for consumers. I see risks that we would not make use of the situation to give an additional impulse to our own economy. This is where the key issue lies for us, for parts of the sector, to prove to the government that import displacement is not a matter of patriotism, national pride or security. In reality, it is jobs, the economy of the country, the working assets in the country’s economy, the income of the state budget, and it is indeed economically beneficial for the state economy,” Danilenko speculates.
It is workplaces, working assets in the economy, profit of budgetThe European Commission has recently granted 125 million euros of compensation for European manufacturers hit by Russian food sanctions. The compensation will be paid from a fund worth 420 million euros created for emergency help for farmers within the framework of the Common Agricultural Policy of the European Union.Russian manufacturers see opportunities to boost national production in light of the embargo. Concerning risks of product variety, many are confident that the situation would not have a big impact on consumers.Andrey Danilenko, the chairman of the board of the National Milk-Makers’ Union, said that total imports in Russia before the sanctions amounted to 20%, converting it to the volume on shop shelves, it amounted to less than 10% of the volume on shop shelves. According to Danilenko, only 3% of the population consumed rare cheeses, such as parmesan, camembert and others.In Danilenko’s words, the reduction of food imports is equivalent to the volume that “Russian manufacturers reduced in the past two years due to joining the WTO and the dramatic increase in imports on the territory of the Russian Federation.” The cause of falling production of Russian manufacturers is lack of competitiveness of national products. “The volume of state support of importing states was much greater than ours. Consequently, our prime cost could not compete, so we could not handle it,” says Danilenko.In his opinion, the key issue is how to boost production without raising prices for products. “In this period of time, I cannot say that we were ready for the embargo or knew what it would happen, but we have spent the last half a year on detailed research of the sector and preparation of a program for full import displacement in the sector. We have certain evaluations for the level of state support needed for import displacement. We, as part of the sector, are happy that the government drew its attention to us. We are very happy that the import displacement issue was raised,” says the chairman of the board of the National Milk-Makers’ Union.Andrey Danilenko admits that it would be impossible to fully displace the volume throughout the year but he is confident that it is possible in a few years. Moreover, there are enough states that have the right to sell products in Russia. He emphasized that consumers should not worry about the volume of imports, because Switzerland and Serbia had access.The expert believes that the main task is to use new opportunities, develop national production, instead of replacing one importer with another. “There is an outstanding problem, we will displace with our own production, we will create more jobs in Russia, make additional contributions to the economy, provide more additional income to our country, preserve price-formation and quality, or we will replace one importer with another, and things will stay the way they were, in terms of our dependence. So I see no risks for consumers. I see risks that we would not make use of the situation to give an additional impulse to our own economy. This is where the key issue lies for us, for parts of the sector, to prove to the government that import displacement is not a matter of patriotism, national pride or security. In reality, it is jobs, the economy of the country, the working assets in the country’s economy, the income of the state budget, and it is indeed economically beneficial for the state economy,” Danilenko speculat
