Russia’s ban on imported food will hit Canada’s pork industry hard, closing a market worth more than $500 million to farmers and processors this year, and potentially stranding hundreds of containers of meat already on the high seas.
Industry members said they would work with Canadian officials to find alternate markets for their products, while also condemning Russia’s response to sanctions over the conflict in Ukraine.
“Canadian pork producers understand this is not simply a trade dispute and are disappointed by the Russian action,” the Canadian Pork Council said in a statement. “This is an unwelcome market disruption in one of our more than 100 country markets around the world.”
Russia announced the restrictions Thursday on foods imported from the U.S., Europe, Canada and other countries that have imposed sanctions against it, and also threatened to target the automotive, shipping and aerospace industries in the future.
Canada exported $1.7 billion worth of goods to Russia in 2012, led by food, including pork and crustaceans, according to a government of Canada report.
“It’s not good for agriculture in general. And it’s definitely not good for the pork industry,” said David Sparling, an agri-food professor at Western University’s Ivey Business School.
“The (Canadian) pork industry isn’t that big. The loss of a half-billion-dollar market is going to hurt,” Sparling said. “And once Russia finds someone else to supply it, it’s a whole lot harder to get into a market than to keep it.”
The ban, which is effective immediately and lasts for up to 12 months, was announced Thursday in Moscow.
“Russia has completely banned the importation of beef, pork, fruits and vegetables, poultry, fish, cheese, milk and dairy products from the European Union, the United States, Australia, Canada and the Kingdom of Norway” according to a statement issued by Prime Minister Dmitry Medvedev on the Government of Russia’s website.
Russia was Canada’s third largest market for pork exports, which total $3.2 billion last year, according to Canadian Pork International, a marketing group for producers and processors.
“Russia was a significant market for us,” said Jacques Pomerleau, president of Canadian Pork International. “It’s very frustrating.”
Pomerleau said Russian meat processors will also be hit hard as most of the pork shipped from Canada goes to sausage factories for further processing. The ban will leave those plants without supplies, he said.
An immediate concern is the fate of an estimated 500 containers of Canadian pork already on its way to Russia, said Jim Laws, executive director of the Canadian Meat Council, which represents pork processors and packagers.
Law said an estimated 10,000 to 12,000 tonnes of frozen pork worth up to $25 million is in ships destined for Russia.
If Russia refuses the shipments, Laws said, he hopes the pork can be redirected to other markets, or more likely be readmitted to Canada for use here.
“Given that it’s frozen, it could be processed into other products in Canada,” Laws said.
Some shipments may have been pre-paid while others may be covered by insurance, Laws said.
Five companies ship pork to Russia, including Canada’s largest food processor, Maple Leaf Foods Ltd. The Toronto-based firm said the ban “would have no material impact” on its business.
The company ships “a small amount” of pork to Russia from its plant in Lethbridge, Alta., spokesperson Peter Block said. “It won’t even affect the number of shifts at the plant. And we’ll find other customers.”
The ban comes at a time when global supplies of pork are tight, which means farmers have been getting good prices and can better withstand a disruption in the market, industry members said.
For Canadian consumers, the Russian import ban could mean prices of pork, and to a lesser extent beef, will fall from their recent highs if it leads to increased domestic supplies, Western’s Sparling said. Beef prices tend to rise and fall in tandem with pork as consumers view one as a substitute for the other.
Most pork exported to Russia comes from Quebec and Manitoba. Ontario farmers shipped $18 million worth of pork to Russia last year, just 7 per cent of all Canadian pork shipments to that country, according to provincial data.
Ontario officials condemned Russia’s actions and offered support to the province’s agriculture community.
“It is disappointing that instead of doing the right thing and ending their occupation of Crimea and their financial and military support for armed rebel groups in Eastern Ukraine, Russia has closed its borders to agricultural products from dozens of countries,” Agriculture Minister Jeff Leal and International Trade Minister Michael Chan said in a joint statement.
The ministers said they would be reaching out to pork producers to better understand the impact on their business.
The import ban comes as the West tightens the noose around Russia’s economy.
Earlier this week, Canada took aim at 19 additional individuals and 22 groups, following similar moves by Europe and the U.S.
- With files from Toronto Star wire services