RIGA - Russia’s ban on imports of Polish vegetables will mean much tougher competition for Latvian producers, as Polish products will be entering the local market in large quantities; for customers this will mean lower prices, yet also lower quality, several experts said to business portal Nozare.lv.
This development brings to mind the situation a few years ago when Russia also closed its market. This is bad news for producers, as Poland exports enormous amounts of fruit and vegetables, part of which will now be “thrown” at the Baltic market, resulting in higher competition, said Marupes siltumnicas chief Janis Berzins.
He also reiterated that Europe has permitted imports of vegetables from Ukraine. Taking into consideration the much lower requirements on the production of cabbage, onions and other vegetables in Ukraine, as well as on the use of pesticides, the quality of such products is lower than that of EU-produced vegetables. Berzins expects that vegetables from Ukraine will be sold labeled as Polish vegetables. As a result, customers could be buying genetically-modified or chemically-enriched products without even knowing it. Everything depends on the retailers’ stand on the problem, said Berzins.
The Agricultural Market Promotion Center’s head, Inguna Gulbe, also said that the greatest risk posed by an influx of Polish vegetables is that they can push local produce out of the market.
“They have to sell their vegetables fast, but Poles know how to haggle. It means that both sides will come to a solution that will be good to both chain stores and suppliers. Unfortunately, there is a high risk that, as a result, local producers, who are already having hard times competing with the cheaper products from Poland, will be forced out,” believes Gulbe.
Inara Sure, the head of the Latvian Food Producers’ Federation, said that the effect of Russia’s decision was hard to predict, but part of the Polish vegetable output would clearly end up in Latvia.
“We, however, hope very much for the local consumers’ loyalty and that they will prefer to buy Latvia-grown fruit and vegetables.”
The Agriculture Ministry has been holding meetings with experts to better understand the situation.
Latvia’s food producers could also face a more direct threat from Russia. Economy Minister Vjaceslavs Dombrovskis told Latvian Television on July 31 that there is a real possibility that EU sanctions could trigger a direct response against Latvia in the food industry. He said that in the food sector, Russia, like it has done many times before, can call into question food quality standards and ban the import of Latvian food products.
“Russia’s arsenal is quite broad,” he warned.
The minister denied that he believes Russia’s response could trigger a new economic crisis in Latvia; however, he said that they could leave a “destructive impact” on Latvia’s economy and the Baltic region as a whole.
In the most pessimistic scenario in wake of the U.S-EU sanctions against Russia, Latvia’s GDP could drop by 10 percent, but this does not means that Latvia will go through another crisis as serious as in 2008-2009, when Latvia’s GDP fell by about 25 percent, the minister emphasized.
The European Union agreed on July 29 to impose broad economic sanctions against Russia, hoping to force Moscow to reverse course in its aggression on neighboring Ukraine.
The new measures go beyond the asset freezes and visa bans used until now, instead imposing restrictions on the finance, defense and energy sectors so as to increase the cost to Russia of its continued intervention and support of pro-Moscow rebels in Ukraine.