There is no sign that the Russian food import embargo is about to end any time soon. Indeed, as predicted from the outset over two years ago by the Irish Farmers Journal, it is likely to continue indefinitely.
At the very least, it will continue for as long as president Putin thinks fit. There is nothing new in any of this for the Russians. They are always well-prepared for hardship and the long haul.
But as Russians like to do, they are also busy finding Russian solutions to Russian problems. Some of their solutions for farming, food production and supply are basic common sense. Some are very imaginative and innovative too.
For a start, Russians are essentially eating and drinking less. But they are paying the same money for lesser amounts of food and drink. Specifically, Russian restaurants are reducing their portions, but not their prices.
Russian dairy processors and brewing companies are also economising by making smaller milk cartons and beer bottles. These hold 0.8 to 0.9 litres of beer or milk, but they sell at the same price as 1 litre.
This idea was first introduced to Russia at the very start of the embargo over two years ago by Carlsberg. The Danish brewer seized on the well-honed Russian austerity characteristic to save its Baltika Russian beer brand.
Within a few weeks after the introduction of the embargo in the summer of 2014, Baltika saw its share of the Russian market begin to fall dramatically.
This was extremely serious because 35% of Carlsberg’s total annual profits come out of Russia. A resultant profit warning sliced nearly 6% off the group’s share price overnight.
To halt any further slides in sales and share prices, Carlsberg introduced a slightly smaller Baltika beer bottle for the Russian market and put slightly less beer into it. It sold for the same price as the older, bigger bottle of Baltika.
The tactic worked. The total volume and value of Carlsberg’s Russian sales and the group’s share price recovered as fast as they had fallen.
Frenetic
Russian milk processors are now also trying to stretch their milk products and to cut food costs for Russian consumers. Specifically, they are beginning to combine vegetable oils with skim milk powder, whey powder and casein.
Predictably, this has led to some very strident opposition from Russian dairy farmers and consumers. But they needn’t worry.
Since the early 1960s, Ireland has been a world leader with this dairy technology – and we still are. Palm oil, sunflower oil and rapeseed oil are now among the main ingredients of some of our highest-quality and most iconic dairy products, eg infant formula, dairy beverages, fat-filled milk brands, milk shakes, chocolates, ice creams and dairy spreads, such as butter spreads and processed cheeses.
Putin is now working at a frenetic pace to find other practical Russian solutions to Russian food production and supply problems.
But as he does, he still has to face one startling fact, and it’s this: today, Russia still has to turn to Ireland for practical livestock farming solutions and innovative milk processing models.
Fortunately, we are well-prepared and well able, to oblige. When he was Minister for Agriculture and Food, Simon Coveney launched a very progressive initiative to sell Irish food and agricultural technology systems worldwide.
Sustainable Food Solutions is co-ordinated by the Department of Agriculture, Enterprise Ireland and Bord Bia. It brings together all Irish food and agricultural organisations in the state sector. Teagasc, in particular, should have a key role too in this project.
Sustainable Food Solutions is an excellent idea that could now suit Russia very well at this time.
It will also provide critical support to all Irish food and agricultural companies interested in selling their technologies and services into fast-growing Russian markets.
Prediction
Sustainable Food Solutions proved its worth at the recent big annual Agricultural Trade Fair in Moscow. For the first time ever, Ireland had a national stand at this highly influential Russian agribusiness event.
Some of our most prominent agricultural technology exporters took their place on the Irish stand. The main Irish exhibitors included Hermitage Pedigree Pigs, Bimeda Animal Health, Inform Nutrition & Agritech, David Clarke (cattle exporter), McHale, Dairymaster, HiSpec, the ICBF and NCBC, and some others.
All these groups made a big and a very positive impression on Russian agricultural policy makers and agribusiness directors at Russia’s premier agri-trade fair.
Many of these potential new customers have already visited Ireland looking for pedigree cattle, sheep, pigs and farm machinery. These visits are now likely to increase and become more frequent.
Enterprise Ireland director in Moscow Gerard McCarthy predicts that a lot of serious new Irish agribusiness is now about to be done in Russia.