Food embargo and choice of priorities

Abstract

In this paper the authors clarify the concept of “national interest”, for the sake of which the embargo on food deliveries to Russia was introduced on August 7, 2014. Its impact on Russian agricultural producers, consumers and countries under embargo has been estimated. We find that the embargo had a positive effect on producers of agricultural products and a negative one on consumers. The economies of the countries under embargo have not suffered in general - the share of food in their exports increased as they managed to reorient them on other markets. In Russia the effect of the embargo was influenced by ruble devaluation which encouraged consumers to choose domestic food instead of imported one as less expensive. Growth of Russian production, especially meat, in conditions of decrease of solvent demand has led to changes in price trends. The possibility of food reexport to Russia has become an external positive effect of the embargo for other countries. Using other priorities when choosing countersanctions could make them more targeted having less negative impact on the population of Russia.