The impact of the embargo and sanctions on the agri-food markets in Russia: Analysis of consequences

Abstract

The paper examines the impact of the embargo and sanctions on the agri-food markets in Russia. The analysis has shown that markets of milk and beef are experiencing serious problems. One of the main reasons for market volatility is a relatively low share of large enterprises with better adaptability in conditions of the embargo and sanctions and underdeveloped market infrastructure. The method that allows to quantify the consequences of the embargo and sanctions impact for the commodity markets is developed on the basis of a partial equilibrium model. The method has been tested on the meat markets (beef, pork, poultry). The estimates of changes in foreign trade, prices of producers and consumers, the dynamics of production, losses of budget, producers and consumers are provided. The results show that the budget suffers losses in all cases, and the markets with higher dependence on imports under the impact of the embargo and sanctions lose more in the welfare than those with less dependence. Poultry market has shown good stability and welfare under the embargo and sanctions due to high competition, mainly among large enterprises.