Position of the Union of Entrepreneurs and Employers: Let’s impose sanctions on exports of Russian food to the EU

Warsaw, 5^th April 2023

Position of the Union of Entrepreneurs and Employers: Let’s impose sanctions on exports of
Russian food to the EU

• EU sanctions against the Russian Federation specifically exclude the export of agri-food products (excluding seafood, alcohol and tobacco products) and fertilisers, while activities involving food and fertilisers from Russia are allowed, as are their procurement, transport, and delivery.
• Russian producers bear much lower costs than Polish food producers. This makes Russian agri-food products a huge competition for Polish products.
• Russia can still export food products to Poland. Meanwhile, our country has been subject to an embargo since 2014 that prevents the shipment of many product categories to Russia. The effects of the closure of this market are particularly acute in the horticultural production sector.
• The Union of Entrepreneurs and Employers calls for the extension of EU sanctions imposed on Russia to include food products and, in the longer term, depending on the situation on the EU market, the export of fertilisers.

Successive sanctions imposed on the Russian Federation since the beginning of the armed invasion of Ukraine are aimed at numerous key areas of the invader’s socio-economic life. They cover the following sectors: energy, finance, transport, defence, raw materials, and services. Also in place are a media embargo, visa, and diplomatic restrictions, as well as a number of measures regarding economic cooperation. However, there are still huge loopholes in the sanctions system that allow for a lively trade in many instances, such as food and fertilisers.

According to the European Commission’s website, EU sanctions explicitly exclude the export of agri-food products (excluding seafood, alcohol, and tobacco products) and fertilisers, and activities involving food and fertilisers from Russia are allowed, as well as their purchase, transport, and delivery. The EU emphasises that the loophole has been left in order to ensure the continuity of supplies of these goods to countries most in need.

In the case of food exports, many of the Russian “obligations” can be easily fulfilled by EU member states. However, from the national perspective, the influx of Russian (and Belarusian) agri-food products to Poland remains a problematic issue.

Russian vegetables and fruit are still imported to Poland. This is a major problem for domestic producers who are in no way able to compete with regard to price with products coming from the aggressor abroad. Poles are not able to use cheap Russian coal, they incur significant costs of CO₂ emissions – Russians do not, Poles have to face – unlike Russians – the restrictions of the European Green Deal etc. Also, labour, and natural gas costs in Poland are many times higher than in Russia. This puts Polish producers in an inconvenient situation. Whereas in peacetime, market competition is the desirable, during an economic crisis – to a substantial extent deliberately and meticulously planned by the Russian side (for instance: the price crisis on the gas market) – it can become a serious threat.

Deliveries of fruit and vegetables from Russia to Poland may these days not reach record volumes – according to the Chief Inspectorate of Plant and Seed Health, close to 1666 tonnes of cucumbers have been delivered to Poland from Russia and Belarus since the beginning of the year until 7^th March. Nevertheless, exports are still growing. According to data from the Ministry of Agriculture and Rural Development, the value of agri-food imports from the Russian Federation to Poland amounted in April 2022to EUR 178 million. This is an increase of 48% compared to the same period last year. While this is not a value that may undermine the stability of the agricultural production sector in Poland, it translates into difficulties in the functioning of specific Polish companies.

The moral aspect of the aggression against Ukraine alone ought to prompt EU officials to impose sanctions on Russian food exports. Besides, should we consider the significant role that the Russian Federation plays on the global map of food producers, the threats related to the intensification of exports, which are fully allowed by EU regulations currently in force, should be given due consideration. Furthermore, there is a gross disproportion in trade relations between Poland and Russia. Let us recall that there is an embargo imposed by Russia since 2014 on certain Polish foods. For this reason, record losses were reported, for example, by fruit producers. Our country is an EU powerhouse it terms of apple production, but only one in four apples from Polish orchards remains in our country, while the rest is a surplus intended for exports. Until 2014, the most important recipient of Polish apples was Russia. The losses incurred by Polish fruit producers related to the closure of this market have already amounted to several billion euro.

Finally, the issue of fertiliser supplies from Russia may also be controversial. While Europe is not self-sufficient in the production of agricultural fertilisers, one must not forget that not including this market in the sanctions system allows Russia to multiply export revenues. Sparked by Putin, the price crisis regarding gas, which is the most key component in the production of fertilisers, has multiplied the price of the product. As a result, revenue from fertiliser skyrocketed, which – despite a 10% decrease in volume – recorded a 70% increase in revenues in 2022 (year on year).

The Union of Entrepreneurs and Employers calls for the extension of EU sanctions to cover a ban on exports of Russian food products to the territory of the Community and – in the longer term, depending on the situation on the EU market – exports of fertilisers.

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