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The government is discussing the renewal of the food embargo, though, according to Rosstat, it has not helped domestic producers
Prime Minister Dmitry Medvedev said about the possible extension of the food counter-sanctions until the end of 2017. It’s time to look at how the impact of these measures on the economy.
Any self-respecting Russian official, from the President and further down the list, considers it his duty to report on the fantastic success of the Russian economy in the case of import substitution. Very few of them in support of its position cites statistics, more pushing on the emotions.
To their misfortune the Rosstat began to publish on its website a set of materials entitled “Indicators of import substitution in Russia”. Data, I should say, published a little, and they all consolidated into two groups: agriculture and trade. And from this we can draw the first conclusion: in other sectors, apparently to demonstrate absolutely nothing. And no wonder — try for two years that Russia is under sanctions, you can run the production of electronic components?! That has officials “proud” of the successes of agriculture and the food industry. Whether only there is something to be proud of?
Let’s start with the overall index — volume index of agricultural production, which is represented by the following graph.
A quick glance is enough to say: Yes, in Russian agriculture has seen a steady growth; but he observed since 1999 (that is, began long before the agenda was put forward by import substitution) with two exceptions (2010 and 2012) associated with severe crop failures. The average annual growth rate of agriculture during this period (1999-2015) is for 3.28%, and, therefore, the year 2015 with its 3% growth is not exactly outstanding.
If you go back and start looking at the individual products, of course, the first thing that catches the eye is the rapid growth in the production of pork and poultry meat. But again it started in 2000 and 1999, respectively. And one cannot say that in 2015 there has been a marked acceleration: see next chart (unfortunately, the data given here only since 2010 because the earlier Rosstat data in this table does not publish).
On the background of the undoubted success of these two sectors the success in the production of beef, as if it mildly, not very obvious. Or rather, not obvious. The slowness of government decision-making to support this sector after a terrible drought in 2010 led to a sharp reduction of livestock numbers and, as a result, the production of meat, which has not recovered to date. You can, of course, authoritative to poke a finger and say: but, see, in 2015 the growth was! — what is the truth, but to understand how sustainable it will be and will last at least five years, it is not yet possible. And the growth was very mild, barely up to the level of 2013 reached.
There is nothing surprising in the fact that milk production has almost stopped growing, the same segment that and beef production, long production cycle, adverse climatic conditions: in a word, success can not see, and in 2015-m, all was stagnation.
At first glance, surprising fact that is not growing, or rather has been steadily declining since 2013, production of sausages. Seemingly, this is food industry, for the climate is to blame is not necessary, but… there are other misfortunes. Namely, first, stagnation and then decline in the real incomes of the population, which is starting to seriously save. That was sausage under the knife of sequestration of family budgets.
The most striking and obvious success of the policy of counter-sanctions and import substitution was a sharp jump in the production of butter and cheese, cheese product, and with some lag in the pace of cheese. Leap and this clearly dates back to the year 2014, and therefore, we can confidently talk about the presence of causal relationships. The problem is only one — instead of cheese, the Russian population received a “cheese product”, created by local craftsmen on the basis of palm oil. For butter and cheese of such terms was not found, but numerous publications in Central and regional media say that on the classic butter and cheese produced in the framework of import substitution products a little similar.
The most “striking example” of import substitution in Russian is the situation with the production of a live (and chilled) fish. In 2011-2013, this segment is steadily growing and, it seemed, was preparing to repeat the success of pig and poultry. Prevented the Russian counter-sanctions, it turned out that we are talking about high-tech manufacturing, which the relatives of friends of the Russian President and the Moscow region Governor just couldn’t adjust. Against this background, the production of frozen fish continues to grow.
What are the successes of the Russian economy in import substitution, sanctions fruits and vegetables Rosstat decided just not to tell, and the Ministry of economic development, in its review simple said that “the main factors slowing down the process of import substitution of vegetable crops, the low level of marketability of vegetable products (about 37%), high share of production in farms of the population (67.2 per cent), and insufficient number of greenhouses to ensure the needs of the population with greenhouse vegetables in off-season period.” Why Russian businessmen do not build greenhouses, the Ministry experts decided not to speak.
Summarizing, we can say again that the Russian agriculture remains one of the most steadily growing sector of the Russian economy, but contractee and the policy of import substitution has not yet led to statistically significant results, which could testify to their success.
Finally, especially for the Kremlin visionaries, who believe that growth in agriculture will become the engine that will pull up the entire Russian economy. In 2002, when oil prices haven’t started its phenomenal growth, when the mortgage only talked about as a pipe dream, the share of agriculture in Russian GDP was 5.3%. By the end of 2015, it was a little more than 3.9 percent. If agriculture will be in the next twenty years to grow with the same average speed, how it has grown since 1999, and the rest of the economy will grow at a rate of 1% per year, by the end of this period the share of agriculture in GDP will rise to… of the same 5.3 percent, which were 14 years ago. If we assume that in the next twenty years, the Russian agriculture will grow half as fast (5% per year), and the rest of the economy will grow annually by the same 1%, then the average growth rate of the economy will increase from 1.1 to 1.2%, while the share of agriculture will increase by the end of the period to 7.3%.
Weak motor, it turns out. I would it did not expect…
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