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May 7, 2022
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How a Special Military Operation Can Strengthen EAEU Food Security

The level of self-sufficiency of Russia in wheat is 150%

The sanctions pressure on Russia in the food sector, which the united West is trying to exert in connection with the conduct of a special military operation (SVO) of the RF Armed Forces in Ukraine, does not bring the desired results.

The stable socio-political situation in Russia, despite the attempts of the West to split society, makes it possible to develop the country’s economic potential even under sanctions. Russia occupies a leading position in the world in the production of a number of types of agricultural products. At the same time, specifically from grain, Russia exports about 10% of the world’s wheat and about 25% of sunflower. In addition, Russia accounts for 15% of the world’s production of sugar beet and about 10% of mineral fertilizers. According to the Minister of Agriculture of Russia D. Patrushev, the country is fully self-sufficient in all main types of products, which is facilitated by various measures taken, including a temporary ban on export of grain and sugar. The Belarusian authorities also banned the export of a number of grains, as well as wheat flour and buckwheat. Similar decisions to restrict food exports are being made by other member countries of the Eurasian Economic Union. The withdrawal of some Western companies from the Russian market and the focus on import substitution open up new opportunities for the EAEU countries. What are the ways to strengthen the food security of the EAEU in the new conditions?

First of all, we can talk about the “grain problem” – one of the indicators of food security both in the Eurasian Economic Union as a whole and in each individual country. The overall level of self-sufficiency in the EAEU has reached 93%, its increase is one of the goals of a coordinated agro-industrial policy and regulation of the Union’s common agricultural market. Here an important role is played by the product specialization of each of the countries of the Union, taking into account their historical traditions and climatic conditions, which allows the EAEU member states to compete and successfully export both raw materials and products of deep processing. So, for example, Belarus is a longtime supplier of milk and dairy products, Armenia provides the population with fresh fruits. Russia produces grain and products of its processing, meat and fish products, sugar and vegetable oil.

The food market in a crisis situation requires special regulatory measures. That is why Russia in March 2022 introduced restrictions until August 31 on supplies to the countries of the Eurasian Economic Union of wheat, rye, meslin (a mixture of wheat and rye), barley and corn. In addition, a ban on the export of sugar has been introduced (with the exception of supplies with the permission of the Ministry of Agriculture) and duties on the import of open-ground vegetables and ingredients for the production of products have been zeroed. Until that time, the export of grain outside the EAEU was limited by a quota of 11 million tons, and floating duties were applied to the supply of wheat, rye, barley and corn until June 30. The restrictive measures taken by Russia in March are not related to the need to feed the country – the level of its self-sufficiency in wheat today is 150%. Rather, this will allow the formation of a strategic reserve of “grain” strength. Kazakhstan is also a grain exporter – in 2021 it sold 5.8 million tons of wheat abroad, which is 10.3% more than in 2020.

The second problem is the insufficient level of self-sufficiency in a number of products. For example, fruits and berries. The EEC is developing proposals for state support measures that will help increase the production of fruits and berries in the EAEU countries. The level of self-sufficiency in material, technical and production resources is also important – the EAEU actively imports genetics, planting material and seeds. To increase local production, the Eurasian Economic Commission is working on measures to support seed production.

The restriction on the export of goods is one of the most common “quick” measures aimed at regulating the market in the current situation and ensuring collective food security, including within the borders of the EAEU. Another measure is the zeroing of duties on imports of a number of categories of products and food ingredients. This will help contain a possible increase in prices, in this case, for open-ground vegetables, and prevent their further increase. The EEC decided to zero import duties on potatoes, onions, garlic, cabbage, carrots, raw milk, cocoa products, bases for the production of breast milk substitutes and other products for six months.

New solutions are aimed at ensuring the country’s food security and will help support the market in the current situation. According to the Russian Ministry of Agriculture, “these government measures will rule out the possibility of a shortage and an abrupt increase in the cost of raw materials and socially significant products.” According to preliminary data from Rosstat, in 2021, the grain harvest in Russia amounted to 120.7 million tons, including 75.9 million tons of wheat. According to the results of 11 months of 2021, the country exported 29.9 million tons of wheat and meslin. These figures are slightly below 2020 levels, but Russia remains the world’s largest grain exporter. Russia has been holding the palm for several years, which is possible due to the increase in production volumes and high yields. Among the main external buyers of Russian grain are Turkey, Egypt and Saudi Arabia, and among the partners in the EAEU – Kazakhstan.

An important role in ensuring the food security of the EAEU is played by the development of industrial cooperation. For example, Belarus produces twice as much sugar as it consumes, and exports the rest to the EAEU countries. At the same time, it is impossible to produce high-yielding sugar beet seeds in Belarus because of the unsuitable climate. At the same time, according to the EEC, Armenia and Kyrgyzstan can produce these seeds, providing real cooperation with a pronounced synergistic effect. The member states of the EAEU will then cease to depend on third countries in terms of supplies of sugar beet seeds and sugar imports.

In the context of large-scale and tough sanctions against Russia and Belarus, the issue of deepening integration has become more acute for the Eurasian Economic Union. The EAEU has already adopted a number of customs measures that should ensure the uninterrupted import of critical goods. The use of national currencies is being strengthened. The issue of import substitution received a new impetus. In particular, in Armenia there is a high potential for import substitution in the production of food products due to cooperative supplies from the EAEU countries, which is estimated at 110.5 million US dollars, and in Russia, the substitution of this import may be more than 112 million US dollars.

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