MOSCOW (Bloomberg) — Russian President Vladimir Putin ordered restrictions on food imports to strike back at the U.S. and other countries that have imposed sanctions over the turmoil in Ukraine.

Putin’s decree bans or limits food and agricultural imports for one year from countries that have imposed or supported sanctions, according to the Kremlin website. The government is drawing up a list of restricted goods.

Russia is embroiled in the worst standoff with the U.S. and its allies since the Cold War over Ukraine, where government troops are cracking down on separatist strongholds in the east. The U.S. and the European Union targeted the Russian economy, expanding penalties last week, joined by Canada, Japan, and Switzerland, after the downing of a Malaysian Airlines System Bhd. passenger jet in Ukraine’s rebel-controlled area.

“America’s farmers and ranchers would have been more surprised if they hadn’t announced a ban,” said Dale Moore, public policy director for the American Farm Bureau Federation, the biggest U.S. farmer group. “Russia does so regularly for seemingly small reasons, and now they have to deal with sanctions. This is a typical reaction by Russia.”

The U.S. shipped $1.6 billion of food to Russia last year, or 4 percent of total imports, according to the U.S. Department of Agriculture.

‘National Interests’


Putin has refused to bow to sanctions, aiming with today’s measure “to protect national interests,” according to the decree. He called on the government to increase domestic supplies with the help of producers and retailers and to avoid spurring food-price growth.

“The decision is not as critical as it looks at first glance,” Elena Tyurina, director of the Institute of Agrarian Marketing, said by phone in Moscow. “Many foodstuffs are imported from Latin America, Arab countries and Asia. We’ll be eating fewer apples and more bananas, oranges and kiwis.’

Russia imported $43.1 billion of food and raw agricultural materials last year, including $36.9 billion from countries outside of the former Soviet republics in the Commonwealth of Independent States, according to Federal Customs Service data.

EU Suppliers

EU members the Netherlands, Germany and Poland are among Russia’s 15 biggest food suppliers, as is the U.S., the USDA said in a July 31 guide for exporters, citing data from the Global Trade Atlas.

About three-fifths of all U.S. farm exports to Russia this year have been soybeans, poultry and pork, according to USDA data. Even before the decree, Russia’s public health regulators banned some imports from EU member countries, the U.S. and Ukraine, in what those nations have called a veiled form of trade protectionism.

‘‘Russia, while very important, is only one of hundreds of our customers worldwide.” said Ray Graeser, president of the American Soybean Association, in an e-mail. “Sanctions and bans like the one proposed by President Putin serve only to hurt the Russian people by limiting their access to the food and products they need and want.”

Russia’s decision to retaliate against Western companies will simply cause further damage to its own economy, a State Department official said. The official, who spoke on the condition of anonymity because he wasn’t authorized to speak publicly, said going after Western companies will underscore that Russia lacks stability and respect for international law critical to continued investment and growth.

Arms Shipments

A more productive response would be for Russia to stop sending arms and fighters into Ukraine and end its occupation of Crimea, the U.S. official said.

Russia’s list of banned goods will be published no later than tomorrow, said Natalya Timakova, spokeswoman for Prime Minister Dmitry Medvedev in a telephone interview, declining to elaborate. The list will be flexible, allowing for revisions in goods and timing, according to the decree.

The limitations will include vegetables, fruits, meat products, and exclude wine and baby food, the Russian newspaper Vedomosti reported, citing an unidentified government official. Some dairy products will also be restricted, the newspaper said, citing another unidentified official.

The ruble, which has weakened 9.1 percent against the dollar this year, is among the 10 worst-performing currencies, according to data compiled by Bloomberg. It depreciated 0.3 percent to 36.1775 against the greenback at 6 p.m. in Moscow.

Food Prices


Import restrictions have a “direct effect” on food prices, keeping them high despite a deceleration in the cost of fruits and vegetables, Maxim Oreshkin, head of the Finance Ministry’s strategic planning department, said Aug. 4 on its Facebook page.

Imported goods account for as much as 25 percent of retail sales in Russia, Andrey Karpov, executive director of the Retail Companies Association, said by phone. The country already provides about 90 percent of its own poultry, he said.

Inflation as the biggest challenge facing Russia, a poll published by the state-run VTsIOM research center July 10 showed. While consumer-price growth decelerated for the first time this year in July, the rate remained above the central bank’s target for the 23rd month. The central bank declined to comment on the decree.

“I can’t yet tell whether it’s a benefit or a threat,” said Dmitry Vostrikov, head of development at Russia’s food producers lobby, Rosprodsoyuz. “We’ll need to wait for a detailed list from the government.”

Tyurina said domestic producers will provide the nation with its basic food needs and Putin’s decision may act as stimulus.

 

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