BMI View: We hold a very positive outlook regarding growth in the Russian agricultural sector and seetremendous opportunities in the grains and dairy segments in particular. We also believe the country'slivestock sector will post strong production growth, despite dominance of the market by domestic playersand the high barriers to entry which could limit investment and productivity gains in the medium term.
Much of the growth across the country's agricultural sphere can be attributed to significant governmentinvestment, aimed to increase self-sufficiency and exports in various products.
On August 7, Russia introduced a one-year ban on imports of certain agricultural products from selectcountries. We outline the major implications of the trade sanctions below:
Multilateral food trade will, generally speaking, be relatively unaffected.
The US poultry and Norwegian fish sectors will be the biggest losers.
The Brazilian meat sector and Belarus's agricultural industry will be the main beneficiaries.
The import ban is likely to marginally increase Russian food price inflation, which will provide addedimpetus for Russia's central bank to raise interest rates in the coming months.
The ban adds downside price pressure to world grain markets.