Thursday October 30, 2014




International strife impacts ag

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The continuing tension between Russia and Ukraine is concerning since it appears a tinderbox needing only a spark to escalate into a war which could too easily escalate into a conflict which includes NATO, and potentially a larger battle zone.

The situation is also yet another example of how politics can dramatically influence agriculture markets.

Recently, Moscow banned imports of most food from the West in retaliation against sanctions over Ukraine. The one year ban is on all meat, fish, dairy, fruit and vegetables from the United States, the 28 European Union countries, Canada, Australia and non-EU member Norway.

Russia spent $25.5 billion last year on imports in the affected categories, $9.2 billion of it from the countries hit by the ban.

The ban has had an immediate effect according to stories in the press, including in Russia itself where stock prices took a dip in response to some of the toughest measures since the height of Soviet Russia.

Beyond anything else, the decision by the government of Russia is going to hit that country’s people in terms of what food they will have access to.

Inflation is already high in Russia, and the Russian ban on food imports coupled with previous western sanctions on Russia’s defence, oil and financial sectors over its support for rebels waging an insurrection in east Ukraine, will only fuel the increases.

The ruble is also taking a kicking on international money markets in response to the unsettled situation.

In terms of farm commodity prices, the move will have an unsettling effect on markets.

Russia is the biggest consumer of EU fruit and vegetables, the second biggest buyer of U.S. poultry and a major global consumer of fish, meat and dairy products.

Closer to home, Russia is Canada’ third largest export market for pork, a sector which has went through much turmoil in recent years, and this will only add to the hurt the producers which remain must endure.

In terms of world agriculture the Ukraine/Russia tensions will only add to the uncertainty of prices moving forward.

Look to the Middle East situation where Palestinians and Israel are still firing rockets at each other a month into open warfare, and the spectre of larger scale conflict lies heavy over markets.

After a three-day lull in fighting between Israel and Hamas ended rockets again began to blaze. Since July 8, at least 1,898 Palestinians and 67 people on the Israeli side have been killed according to some reports.

It is such situations which, while seeming so distant to a farmer on the Canadian Prairies, can ultimately impact what their wheat and canola will be worth once harvested this fall.

Calvin Daniels is Assistant Editor with Yorkton This Week.


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