The gap in the supply of products is not beneficial neither for Russia, nor Turkey

The gap in the supply of products is not beneficial neither for Russia, nor Turkey

Turkey buys Russian grain, with the beginning of 2015, it imported 3.5 million tons. In turn, Russia is supplying from Turkey nuts, vegetables, fruits and berries.

MOSCOW, 26 Nov. The cooling of relations between Russia and Turkey in agriculture — possible refusal of Turkey to buy Russian grain, or a ban of the Russian Federation on export of products from Turkey are not favorable for both sides: the Turkish side will have to find a more expensive and lower quality grain, while Russia will face the need to replace significant volumes of supplies of vegetables and fruits, the analysts surveyed.

Last Tuesday, the Russian tactical bomber su-24 crashed in Syria. The President of Russia Vladimir Putin reported that the plane was shot down by a missile “air-air” with a Turkish F-16 fighter over Syrian territory and fell in Syria four kilometers from the border with Turkey. The Russian General staff stated that attacked the su-24 did not cross the border with Turkey and this is confirmed by Syrian air defense. Turkey claims that a Russian aircraft entered its airspace.

Prime Minister Dmitry Medvedev later said that this undermines good neighbourly relations between Russia and Turkey, including in the economy and the humanitarian sphere. One possible “victims” of worsening relations between countries can become the agribusiness sector: Russia and Turkey maintain close ties here, a gap which may affect the economies of the countries, but not so close that they take risks.

However, experts mostly agree on one thing: the rupture of relations in the food supply would have negative consequences for both countries. “Such a ban benefits no one, Turkey largely. He is not beneficial”, — said General Director of “Prozerno” Vladimir Petrichenko.

Turkey is not profitable to abandon the Russian grain…

Turkey is the second after Egypt to buy Russian grain. According to the head of the Ministry of agriculture of the Russian Federation Alexander Tkachev, from the beginning of 2015, we have exported to Turkey, 3.5 million tons of grain, nearly 12% of the total volume of grain exports.

According to the expert of the Analytical center under the government of the Russian Federation Elena Razumova, the total amount of exports of wheat, maize and sunflower oil in 2015 was about $ 1.4 billion. “Russian grain is generally cheaper and of sufficient quality, necessary for the Turkish milling industry, the production of which Turkey, in its turn, exports to Asian markets”, — the analyst specifies.

Experts believe that if Turkey will stop or limit the purchases of grain in Russia, this will be unpleasant, but not critical news for both countries. On the one hand, Turkey will be able to find a replacement for Russian grain to Ukraine, France or Romania. But the CEO of the Institute for agricultural market studies (IKAR) Dmitry Rylko points: Turkey is in this case essentially lose the price of the procurement.

“To find a replacement they can, of course, but they will lose a tremendous amount of money. They will buy grain at much higher prices,” he says. “The milling industry of Turkey sharpened by our grain. Theoretically, our grain could replace Ukraine and France, but they are inferior in price and quality,” agrees the head of “Prozerno” Petrichenko.

As for the Russian market, here the experts differ in assessing the consequences of a possible refusal of the Turkish side from purchases of grain from Russia. The General Director of IKAR has called such a scenario “is extremely painful for both countries.” In turn, the President of the Russian grain Union (RGU) Arkady Zlochevsky believes that Russia’s grain market won’t be affected.

“We have quite a large number of buyers in other countries. Another question, if such a decision is adopted, it must be done carefully and accurately, not to beat her, so that others feared. Unilateral refusal of supply entails penalties. It will hit our exporters”, — says the head of the RGU.

Certain negative impacts from such development of the situation indicates and the expert of the Analytical center for the government. “Russian exporters will be forced to dump in foreign markets, incurring losses. Of the benefits of this situation — lowering of prices on the domestic market in the medium term, as well as possible cancel export duties”, — Razumova adds.

She also noted that Russia will be difficult to redirect to other countries large volumes of grain exports that went to Turkey. As for those countries that can act as buyers of grain from Russia instead of Turkey, they called the head of the Ministry of agriculture of the Russian Federation: the countries of the Middle East and Africa.

…And Russia — from Turkish tomatoes

If Turkey buys Russian grain, Russia, Turkey, nuts, vegetables, fruits and berries. And possible ban on imports from Turkey of these goods has been estimated by analysts in different ways. “We import a lot of vegetables, seeds. But we could well do without this import without any problems”, — Zlochevsky optimistic.

CEO at ICARUS more cautious stance. “They are the leader suppliers of tomatoes and cucumbers. We will be able somehow to substitute cucumbers, considering the fact that our greenhouses are booming. But not without problems,” says Rylko.

On Russia’s dependence on Turkish tomatoes and specifies Razumova from the Analytical center under the government. “In 2015, Turkey’s share in imports of these vegetables was over 50%, to replace these volumes will be almost impossible in the conditions of embargo from the European Union. Therefore, the introduction of restrictions in Russia will begin to grow tomato prices and products of their processing,” she says.

“There are more specific products — cherries, used primarily in dairy, juice and confectionery industry. Their replacement is more complicated, primarily because of climatic possibilities for their commercial cultivation. In these segments in 2014, Turkey import volumes was second only to Spain,” continues the analyst.

Accordingly, warns Razumova, the ban on trade with Turkey processors these berries will not just raise prices and modify or completely to close the proceedings.

The head of the Ministry of agriculture of the Russian Federation Tkachev indicates that if necessary, Russia can substitute imports of vegetables, particularly tomatoes, from Iran, Morocco, Israel, Azerbaijan or Uzbekistan. Citrus can be imported from South Africa, Morocco, China, Argentina, Israel, Abkhazia, Georgia.