Trade sanctions and agriculture support in milk and dairy industry: Case of Russia

Abstract

Economic sanctions between the European Union and Russia have significantly changed trade relations between them, while there are controversial assessments of sanctions’ impact on both economies. Russian import ban has changed domestic producer prices in Russia, offering domestic producers a unique opportunity. There is an opinion that increasing self-sufficiency supports sustainable growth in agricultural production. At the same time, there is question of when and whether Russian import ban will be lifted? This paper offers an overview of changes in milk producer prices and support for milk producers in Russia in the period after the Russian import ban. We argue that currently the Russian Government has little incentive to lift import ban for milk and dairy products, as state support of agricultural producers has been decreased in significance for producers and was replaced by market prices support. Main findings suggest that all Russian federal regions experienced significant increases in transfers to producers from consumers; however, the pace of the increase appears to be different across regions. Paradoxically, the Western sanctions helped Russian milk and dairy industry to strengthen its position.