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IKAR in Mass Media

Russian economy falters in face of western sanctions

25 ноября 2014 года

Kremlin flags tit-for-tat food import restrictions as boost for domestic agriculture and chance for Russians to eat home-grown produce

Trade is not usually brisk at Ala Smirnova’s corner shop sitting among apartment blocks in a suburb of north Moscow. It is mainly seen as a late-night, last resort for locals who have run out of essentials such as soap, beer or bread. That changed this week as word went round that the thinly stocked little store contained a trove of some of the last affordable grechka, or buckwheat, left in town.

Reports that an unusually early snow fall in Siberia last month had buried half of Russia’s grechka crop have sparked a wave of panic buying across the country. Prices for the nutty-tasting staple, prized as a super food in Russia, have risen by more than 27 per cent in the past three weeks. Some shops have run out.

“I bought before the rumours started,” said Smirnova as a crowd pressed into her shop, wondering out loud why the grechka, at 45 roubles a pack, was half the price the nearby budget supermarket was charging. “Buy now – it will never be this cheap again.”

The Kremlin had set a goal to bring inflation to a post-Soviet low of 5 per cent this year, but the economic fallout of the Ukraine crisis has derailed that plan and cast a dark shadow over Russia’s economic prospects. Prices for basic food products have soared, putting even middle-class Russians on edge.

After Vladimir Putin decided to annex Ukraine’s Crimea in March, western governments began imposing tough economic sanctions, barring leading Russian banks and corporations from international capital markets and restricting the country’s high technology imports. Adding to the problems, world oil prices have been plummeting, slashing Russia’s main source of foreign revenue and dragging the already weak rouble to record lows. Rouble depreciation has pushed up the cost of imports, eroding people’s purchasing power, Alexei Ulyukayev, Russia’s economy minister, told the Echo Moskva radio station this week. Inflation would reach 9 per cent by the end of the year – almost double the government’s original target – and continue to rise in 2015, he said.

Amid the dismal economic news, Russians are wondering if Putin erred when, striking back at countries that had sanctioned Russia, he banned imports of meat, fruit and vegetables and dairy products from the west in August.

The Kremlin has flagged the tit-for-tat food import restrictions as a boost for domestic agriculture and an opportunity for Russians to return to their roots and eat home-grown produce.

Russian grocery chains have been scouring the world for new non-western suppliers, buying salmon in Chile, apples in China and Turkish fruit and vegetables.

Moscow sanitary inspectors have even approved the import of crocodile meat from the Philippines as an alternative to European pork and beef. Although there is no risk of serious food shortages, Russians, remembering the deprivations of the past, have begun hoarding flour, salt and cooking oil in cupboards and balconies.

Even without the bad harvest in Siberia, grechka would have been high on Russian panic buyers’ shopping lists. Whether served as a breakfast porridge, a garnish for cutlets or stuffing for suckling pig, the home-grown staple is the nearest thing Russia has to a national dish.

“Grechka is the sacred cow of Russian crops,” says Dmitry Rylko, managing director of the Institute for Agricultural Market Studies, a Moscow-based consultancy. “Whenever people suspect there will be shortages, they immediately jump to buy grechka.”

Public opinion surveys indicate that Putin’s approval rating, which soared after Russia took over Crimea, is still cruising at a dizzy 85 per cent. However, when asked if they are ready to pay out of their own pockets for Crimea, most Russians say no, according to the Levada Centre polling agency.

Mindful of the politically sensitive nature of food prices, Russian officials have taken steps to cool the grechka fever gripping the country. Some supermarkets have introduced rations to prevent shoppers from filling their trolleys.

Rylko suspects that rouble depreciation may have prompted some grechka producers to play a waiting game and withhold supplies until the currency stabilises. “There’s a temptation to sit on stocks rather than sell,” he said.

Source: The Irish Times  |  #cereal   |  Comments: 0   Views: 164

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