The agriculture and fish industries have been the hardest hit by the financial crisis that has plagued Russia since the ruble was devalued on Aug. 17. The Russian government is still restricting all dollar transactions and will probably continue to do so until their political situation stabilizes.
Russian Prime Minister Viktor Chernomyrdin outlined his plan to print money to pay government workers and bail out banks, a move that could lead to hyperinflation reminiscent of the early 1990s and will likely do little to pay foreign companies who want their money in dollars.
On Sept. 1, United Dairy announced that it was laying off 300 people, almost half their workforce and lowering their milk prices. Additionally, their subsidiaries that export to Russia are also sending employees on extended holidays.
"It's not a final decision because we are fighting for stabilization in the Russian financial sector," said Aivar Pargmae, chairman of United Dairy. Viru Rand, one of the largest fish producers in Estonia, exports almost 40 percent of their product to Russia and exports have slowed to a trickle since the crisis began. By Sept. 3, fish manufacturers from the Baltics met in Tallinn to discuss ways to deal with the financial crisis in Russia.
Finding new markets in which to sell their products is a difficult process for all the companies affected by the crisis. Dairy producers, like United Dairy, have been trying to develop markets in countries other than Russia.
Breaking into the European Union (EU) market takes more than a few weeks, even if a company has a buyer ready. The EU inspects all producers before allowing them to sell their products in the EU. At this time, there are no dairy producers in Estonia that have received EU certification. In addition, the EU has quotas on the quantity of milk or other products that a country can export to it.
That leaves only non-EU countries as potential markets for Estonian dairy or fish producers. United Dairy and other companies have been targeting the Ukraine but their investments are now in jeopardy there too.
Last week, the Ukrainian government restricted trading of the dollar, the currency in which United Dairy is paid.
"But we see the same problems as in Russia. It's coming a little bit later but it's the same scheme as in Russia," Pargmae said.
People in the Russian city of Ivangorod, near the Estonian border, may be going without water in the near future because of the Russian crisis. The city receives its water from Narva Vesi, an Estonian water company. In the past, Narva Vesi has cut the water supply to Ivangorod because the municipality wasn't paying its water bills. Narva Vesi received the last payment Aug. 4, according to Director Aksel Ers.
"I hope that next month we get some money," said Ers. "If we do not get the money, I think it is possible that we will cut off the water and, with 40,000 people, it's a big problem for the local government where they get their water." According to Ers, Ivangorod usually pays 40 percent of the bill every month, instead of the full amount.
Officials in Ivangorod were scheduled to meet with the Leningrad governor yesterday to discuss the money they owe.
Many companies that export agricultural products to Russia are waiting to see what will happen when food reserves run out in Moscow, St. Petersburg and other large cities. Some local companies have been able to put their products in cold storage while they wait out the crisis. Butter can keep for years but other products such as milk and yoghurt, last a few months, at the most.
Unlike in Lithuania, where the government has decided to help out meat and dairy companies that are reliant on exports to Russia, most Estonian industries say they haven't received any help from the government, nor do they expect any in the near future.
"They are always saying 'We told you four or five years ago that it is your problem if you make business in Russia,'" Pargmae said.
The government says it has no plans to offer financial assistance to those industries hit by the crisis. Government policies that encouraged Western investments spared Estonia from the worst of the Russian crisis. As a result, many Estonian businesspeople can shake their heads in amazement rather than apprehension at the Russian situation.
But other Estonian businesses do have reason to be apprehensive. They can only wait and see what will happen next.
"We all hope that it doesn't take long, the stabilization in Russia, and we can start our normal business once more," said Pargmae.
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