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Russian food production BOOMING thanks to import substitutions, Western sanctions

Cheddar, Brie, Prosciutto, Blue Cheese, Bagels and Ciabatta are now all made in Russia

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A relatively recent phrase is now part of the lexicon of everyday life among Russians, it is “import substitution”, or if it were marketed in the USA, it would probably be packaged as “Made in Russia”.

Sanctions and similar geopolitical micro-management policies instituted by Western countries, and directed against Russia have added urgency to efforts in transferring key components of agricultural, consumer and industrial business to domestic producers. At the end of the day, it is hoped (by local companies) that Russian ones will replace the majority of foreign goods traditionally imported.

The import substitution projects are considered here to be a temporary phenomenon, a temporary tool for adjusting to the current situation.

According to President Putin. “The idea of import substitution itself is not universal and is not what we should strive for in the long run, because import substitution should not undermine competition. This is an extremely important thing. We should aim at producing products of such quality and price that it is competitive not just on our own, but on the world’s markets.”

He went on to say “In some cases we did it and are doing it to support domestic producers in difficult economic conditions, especially in situations when our partners violate and distort competition by imposing different sanctions, which are politically motivated, as they claim, but in fact are based on ambition’s to gain some advantage.”

Efforts to reduce imports began in 2014. By 2016, it was already possible to note the presence of impressive successes in many areas of the economy.

On New Year’s Day, January 1 2017 the purchase of Russian goods and services were legislated to have priority over those of foreign origin in accordance with Russian Government Decree No. 925 dated 16 September 2016. Sanctions were the stimulus, but common business sense was the driver. The new decree applies to all suppliers selling goods and services to state corporations, natural resource monopolies, as well as companies in which the Russian state has at least a 50% interest. All types of procurements are affected, as the Decree does not restrict its application to any specific goods or services.

The Decree has placed foreign goods and services suppliers at disadvantage when compared to Russian suppliers in several respects: Russian Local Suppliers will benefit from a 15% virtual discount from the prices specified in their ‘Made in Russia’ offers.

Goods are considered of Russian origin, if they are made or have been sufficiently processed in country according to customs regulations that are applicable in Russia. A supplier is Russian if it is a legal entity registered in Russia (which can be fully foreign-owned, except in cases of specifically regulated sectors, such as media) or a Russian citizen.

Introduction of these rules is to encourage foreign manufacturers to localize their production in Russia, take advantage of low ruble costs, enhance job creation, and provide needed competition between similar providers of goods and services both foreign and domestic.

Products labelled “Made in Russia” now (in 2018) appear frequently in all parts of the market.  This program of import substitution has taken on the force of a countrywide mobilization of domestic as well as non-Russian producers covering a very broad range of goods and services.

The program has one main goal – to reduce or completely stop the import of specific groups of goods, and instead establish Russian production of the same or similar products. For the past three years, this task is seen as one of the highest priorities for the government of the Russian Federation.

By 2015, approximately 20 programs were prioritized as needing assistance in non-governmentally controlled industry for the neediest sectors of private industry. To appreciate the scale of activity, as well as accountability for this challenge it is enough to see that the main players involved in supporting this effort are the Ministries of Transport, Energy, Industry & Trade, and Communications of the Russian Federation.

All have been deeply involved in this program, not to mention a raft of Russia’s analytical, research, banking and commercial associations. Fast forward to 2018, there are today just over 2,500 projects worth $38 billion in development with full completion targeted by latest 2020.

The import ban has of course affected the supply of many goods, but the boost in domestic production has taken up some of the slack. For many foodstuffs, the substitution effort has encouraged investment and development – today, according to the central bank many foodstuffs are more plentiful than they were before sanctions, and more affordable.

The areas prioritized today for Russian manufacturing are:

Machine-tool manufacture (as current imports are 90%)

Civil aviation manufacturing (as current imports are 80%)

Heavy engineering (as current imports are 70%)

Supplies of equipment for the oil and gas industry (as current imports are 60%)

Manufacture of power equipment (as current imports are 50%)

Agricultural machinery (as current imports range from 50-90% in various categories)

Many residents of Russia agree that sanctions were the long-awaited spark that has kick-started domestic producers. Almost immediately after the introduction of sanctions from the west, and reciprocal mirror responses from Russia, a number of experts have identified groups of products that can be easily replaced with domestic products on a countrywide scale without much effort.

These include Meats, Oils (several vegetable and animal varieties. At the beginning of import substitution, the share of imports was about 20%), Milk, including cheeses: by 2020, it is planned to completely “cheese independent”.

According to both international and local expertise, Russia is able to meet 90% of its food requirements, as well as providing some food support to its neighbors.

Financial support for the import substitution projects are implemented via:

  1. Government subsidies, and co-financing of research;
  2. Grants, with preference given to companies participating in government purchases.
  3. Increased lending to companies on preferential percentages and for long terms.

The proposals apply only to competitively demonstrated projects that have been approved by competent assessors. The selection is conducted among enterprises and holdings that are active in the following sectors: Agriculture; mechanical engineering; housing construction; manufacturing industry; chemical industry; power engineering; telecommunications; and transport.

The main requirement for obtaining financial support on favorable terms is the need to locate production in one of the regions of the Russian Federation.

The government has taken other measures to help support projects of import substitution. The government proposes: large targeted loans from the federal budget, financing of enterprises at the pre-production stage, special measures to stimulate import substitution through governmental or municipal procurement.

With the help of these steps, the Russian government can restrict the purchase of raw materials and finished products from foreign producers. The reflective of western embargoes also apply to the procurement of certain groups of essential goods. These include medicines, clothing, equipment manufactured by machine-building companies, technical equipment and components for the defense industry.

From the standpoint of foreign-owned companies, these measures have presented them a “fork in the road”. Either they just try to carry on, in which case eventually they will lose the Russia and associated markets, or they take the necessary steps to establish all or most of their manufacturing in Russia.

Apparently, since 2016 a great many European as well as US companies have managed to begin this process, either by setting up direct subsidiaries, or more often through imaginative origin masking methods to protect themselves against future amplified sanctions and/or other business restrictions from their own governments.

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Multipolar World Order in the Making: Qatar Dumps OPEC

Russia and Qatar’s global strategy also brings together and includes partners like Turkey.

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Authored by Federico Pieraccini via The Strategic Culture Foundation:


The decision by Qatar to abandon OPEC threatens to redefine the global energy market, especially in light of Saudi Arabia’s growing difficulties and the growing influence of the Russian Federation in the OPEC+ mechanism.

In a surprising statement, Qatari energy minister Saad al-Kaabi warned OPEC on Monday December 3 that his country had sent all the necessary documentation to start the country’s withdrawal from the oil organization in January 2019. Al-Kaabi stressed that the decision had nothing to do with recent conflicts with Riyadh but was rather a strategic choice by Doha to focus on the production of LNG, which Qatar, together with the Russian Federation, is one of the largest global exporters of. Despite an annual oil extraction rate of only 1.8% of the total of OPEC countries (about 600,000 barrels a day), Qatar is one of the founding members of the organization and has always had a strong political influence on the governance of the organization. In a global context where international relations are entering a multipolar phase, things like cooperation and development become fundamental; so it should not surprise that Doha has decide to abandon OPEC. OPEC is one of the few unipolar organizations that no longer has a meaningful purpose in 2018, given the new realities governing international relations and the importance of the Russian Federation in the oil market.

Besides that, Saudi Arabia requires the organization to maintain a high level of oil production due to pressure coming from Washington to achieve a very low cost per barrel of oil. The US energy strategy targets Iranian and Russian revenue from oil exports, but it also aims to give the US a speedy economic boost. Trump often talks about the price of oil falling as his personal victory. The US imports about 10 million barrels of oil a day, which is why Trump wrongly believes that a decrease in the cost per barrel could favor a boost to the US economy. The economic reality shows a strong correlation between the price of oil and the financial growth of a country, with low prices of crude oil often synonymous of a slowing down in the economy.

It must be remembered that to keep oil prices low, OPEC countries are required to maintain a high rate of production, doubling the damage to themselves. Firstly, they take less income than expected and, secondly, they deplete their oil reserves to favor the strategy imposed by Saudi Arabia on OPEC to please the White House. It is clearly a strategy that for a country like Qatar (and perhaps Venezuela and Iran in the near future) makes little sense, given the diplomatic and commercial rupture with Riyadh stemming from tensions between the Gulf countries.

In contrast, the OPEC+ organization, which also includes other countries like the Russian Federation, Mexico and Kazakhstan, seems to now to determine oil and its cost per barrel. At the moment, OPEC and Russia have agreed to cut production by 1.2 million barrels per day, contradicting Trump’s desire for high oil output.

With this last choice Qatar sends a clear signal to the region and to traditional allies, moving to the side of OPEC+ and bringing its interests closer in line with those of the Russian Federation and its all-encompassing oil and gas strategy, two sectors in which Qatar and Russia dominate market share.

In addition, Russia and Qatar’s global strategy also brings together and includes partners like Turkey (a future energy hub connecting east and west as well as north and south) and Venezuela. In this sense, the meeting between Maduro and Erdogan seems to be a prelude to further reorganization of OPEC and its members.

The declining leadership role of Saudi Arabia in the oil and financial market goes hand in hand with the increase of power that countries like Qatar and Russia in the energy sectors are enjoying. The realignment of energy and finance signals the evident decline of the Israel-US-Saudi Arabia partnership. Not a day goes by without corruption scandals in Israel, accusations against the Saudis over Khashoggi or Yemen, and Trump’s unsuccessful strategies in the commercial, financial or energy arenas. The path this doomed

trio is taking will only procure less influence and power, isolating them more and more from their opponents and even historical allies.

Moscow, Beijing and New Delhi, the Eurasian powerhouses, seem to have every intention, as seen at the trilateral summit in Buenos Aires, of developing the ideal multipolar frameworks to avoid continued US dominance of the oil market through shale revenues or submissive allies as Saudi Arabia, even though the latest spike in production is a clear signal from Riyadh to the USA. In this sense, Qatar’s decision to abandon OPEC and start a complex and historical discussion with Moscow on LNG in the format of an enlarged OPEC marks the definitive decline of Saudi Arabia as a global energy power, to be replaced by Moscow and Doha as the main players in the energy market.

Qatar’s decision is, officially speaking, unconnected to the feud triggered by Saudi Arabia against the small emirate. However, it is evident that a host of factors has led to this historic decision. The unsuccessful military campaign in Yemen has weakened Saudi Arabia on all fronts, especially militarily and economically. The self-inflicted fall in the price of oil is rapidly consuming Saudi currency reserves, now at a new low of less than 500 billion dollars. Events related to Mohammad bin Salman (MBS) have de-legitimized the role of Riyadh in the world as a reliable diplomatic interlocutor. The internal and external repression by the Kingdom has provoked NGOs and governments like Canada’s to issue public rebukes that have done little to help MBS’s precarious position.

In Syria, the victory of Damascus and her allies has consolidated the role of Moscow in the region, increased Iranian influence, and brought Turkey and Qatar to the multipolar side, with Tehran and Moscow now the main players in the Middle East. In terms of military dominance, there has been a clear regional shift from Washington to Moscow; and from an energy perspective, Doha and Moscow are turning out to be the winners, with Riyadh once again on the losing side.

As long as the Saudi royal family continues to please Donald Trump, who is prone to catering to Israeli interests in the region, the situation of the Kingdom will only get worse. The latest agreement on oil production between Moscow and Riyad signals that someone in the Saudi royal family has probably figured this out.

Countries like Turkey, India, China, Russia and Iran understand the advantages of belonging to a multipolar world, thereby providing a collective geopolitical ballast that is mutually beneficial. The energy alignment between Qatar and the Russian Federation seems to support this general direction, a sort of G2 of LNG gas that will only strengthen the position of Moscow on the global chessboard, while guaranteeing a formidable military umbrella for Doha in case of a further worsening of relations between Saudi Arabia and Qatar.

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Constantinople: Ukrainian Church leader is now uncanonical

October 12 letter proclaims Metropolitan Onuphry as uncanonical and tries to strong-arm him into acquiescing through bribery and force.

Seraphim Hanisch

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The pressure in Ukraine kept ratcheting up over the last few days, with a big revelation today that Patriarch Bartholomew now considers Metropolitan Onuphy “uncanonical.” This news was published on 6 December by a hierarch of the canonical Ukrainian Orthodox Church (running under the Moscow Patriarchate).

This assessment marks a complete 180-degree turn by the leader of the Orthodox Patriarchate of Constantinople, and it further embitters the split that has developed to quite a major row between this church’s leadership and the Moscow Patriarchate.

OrthoChristian reported this today (we have added emphasis):

A letter of Patriarch Bartholomew of Constantinople to His Beatitude Metropolitan Onuphry of Kiev and All Ukraine was published yesterday by a hierarch of the canonical Ukrainian Orthodox Church, in which the Patriarch informed the Metropolitan that his title and position is, in fact, uncanonical.

This assertion represents a negation of the position held by Pat. Bartholomew himself until April of this year, when the latest stage in the Ukrainian crisis began…

The same letter was independently published by the Greek news agency Romfea today as well.

It is dated October 12, meaning it was written just one day after Constantinople made its historic decision to rehabilitate the Ukrainian schismatics and rescind the 1686 document whereby the Kiev Metropolitanate was transferred to the Russian Orthodox Church, thereby, in Constantinople’s view, taking full control of Ukraine.

In the letter, Pat. Bartholomew informs Met. Onuphry that after the council, currently scheduled for December 15, he will no longer be able to carry his current title of “Metropolitan of Kiev and All Ukraine.”

The Patriarch immediately opens his letter with Constantinople’s newly-developed historical claim about the jurisdictional alignment of Kiev: “You know from history and from indisputable archival documents that the holy Metropolitanate of Kiev has always belonged to the jurisdiction of the Mother Church of Constantinople…”

Constantinople has done an about-face on its position regarding Ukraine in recent months, given that it had previously always recognized the Metropolitan of Kiev and All Ukraine of the Ukrainian Orthodox Church-Moscow Patriarchate as the sole canonical primate in Ukraine.

…The bulk of the Patriarch’s letter is a rehash of Constantinople’s historical and canonical arguments, which have already been laid out and discussed elsewhere. (See also here and here). Pat. Bartholomew also writes that Constantinople stepped into the Ukrainian ecclesiastical sphere as the Russian Church had not managed to overcome the schisms that have persisted for 30 years.

It should be noted that the schisms began and have persisted precisely as anti-Russian movements and thus the relevant groups refused to accept union with the Russian Church.

Continuing, Pat. Bartholomew informs Met. Onuphry that his position and title are uncanonical:

Addressing you as ‘Your Eminence the Metropolitan of Kiev’ as a form of economia [indulgence/condescension—OC] and mercy, we inform you that after the elections for the primate of the Ukrainian Church by a body that will consist of clergy and laity, you will not be able ecclesiologically and canonically to bear the title of Metropolitan of Kiev, which, in any case, you now bear in violation of the described conditions of the official documents of 1686.

He also entreats Met. Onuphry to “promptly and in a spirit of harmony and unity” participate, with the other hierarchs of the Ukrainian Orthodox Church, in the founding council of the new Ukrainian church that Constantinople is planning to create, and in the election of its primate.

The Constantinople head also writes that he “allows” Met. Onuphry to be a candidate for the position of primate.

He further implores Met. Onuphry and the UOC hierarchy to communicate with Philaret Denisenko, the former Metropolitan of Kiev, and Makary Maletich, the heads of the schismatic “Kiev Patriarchate” and the schismatic “Ukrainian Autocephalous Orthodox Church” respectively—both of which have been subsumed into Constantinople—but whose canonical condemnations remain in force for the canonical Ukrainian Orthodox Church.

The hierarchs of the Serbian and Polish Churches have also officially rejected the rehabilitation of the Ukrainian schismatics.

Pat. Bartholomew concludes expressing his confidence that Met. Onuphry will decide to heal the schism through the creation of a new church in Ukraine.

The Ukrainian Orthodox Church under Metropolitan Onuphry’s leadership is recognized as the sole canonical Orthodox jurisdiction in Ukraine by just about every other canonical Orthodox Jurisdiction besides Constantinople. Even NATO member Albania, whose expressed reaction was “both sides are wrong for recent actions” still does not accept the canonicity of the “restored hierarchs.”

In fact, about the only people in this dispute that seem to be in support of the “restored” hierarchs, Filaret and Makary, are President Poroshenko, Patriarch Bartholomew, Filaret and Makary… and NATO.

While this letter was released to the public eye yesterday, the nearly two months that Metropolitan Onuphry has had to comply with it have not been helped in any way by the actions of both the Ecumenical Patriarchate and the Ukrainian government.

Priests of the Canonical Church in Ukraine awaiting interrogation by the State authorities

For example, in parallel reports released on December 6th, the government is reportedly accusing canonical priests in Ukraine of treason because they are carrying and distributing a brochure entitled (in English): The Ukrainian Orthodox Church: Relations with the State. The Attitude Towards the Conflict in Donbass and to the Church Schism. Questions and Answers.

In a manner that would do any American liberal proud, these priests are being accused of inciting religious hatred, though really all they are doing is offering an explanation for the situation in Ukraine as it exists.

A further piece also released yesterday notes that the Ukrainian government rehabilitated an old Soviet-style technique of performing “inspections of church artifacts” at the Pochaev Lavra. This move appears to be both intended to intimidate the monastics who are living there now, who are members of the canonical Church, as well as preparation for an expected forcible takeover by the new “united Church” that is under creation. The brotherhood characterized the inspections in this way:

The brotherhood of the Pochaev Lavra previously characterized the state’s actions as communist methods of putting pressure on the monastery and aimed at destroying monasticism.

Commenting on the situation with the Pochaev Lavra, His Eminence Archbishop Clement of Nizhyn and Prilusk, the head of the Ukrainian Church’s Information-Education Department, noted:

This is a formal raiding, because no reserve ever built the Pochaev Lavra, and no Ministry of Culture ever invested a single penny to restoring the Lavra, and the state has done nothing to preserve the Lavra in its modern form. The state destroyed the Lavra, turned it into a psychiatric hospital, a hospital for infectious diseases, and so on—the state has done nothing more. And now it just declares that it all belongs to the state. No one asked the Church, the people that built it. When did the Lavra and the land become state property? They belonged to the Church from time immemorial.

With the massive pressure both geopolitically and ecclesiastically building in Ukraine almost by the day, it is anyone’s guess what will happen next.

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Ukrainian leadership is a party of war, and it will continue as long as they’re in power – Putin

“We care about Ukraine because Ukraine is our neighbor,” Putin said.

RT

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Via RT…


Russia’s President Vladimir Putin has branded the Ukrainian leadership a “party of war” which would continue fueling conflicts while they stay in power, giving the recent Kerch Strait incident as an example.

“When I look at this latest incident in the Black Sea, all what’s happening in Donbass – everything indicates that the current Ukrainian leadership is not interested in resolving this situation at all, especially in a peaceful way,” Putin told reporters during a media conference in the aftermath of the G20 summit in Buenos Aires, Argentina.

This is a party of war and as long as they stay in power, all such tragedies, all this war will go on.

The Kiev authorities are craving war primarily for two reasons – to rip profits from it, and to blame all their own domestic failures on it and actions of some sort of “aggressors.”

“As they say, for one it’s war, for other – it’s mother. That’s reason number one why the Ukrainian government is not interested in a peaceful resolution of the conflict,” Putin stated.

Second, you can always use war to justify your failures in economy, social policy. You can always blame things on an aggressor.

This approach to statecraft by the Ukrainian authorities deeply concerns Russia’s President. “We care about Ukraine because Ukraine is our neighbor,” Putin said.

Tensions between Russia and Ukraine have been soaring after the incident in the Kerch Strait. Last weekend three Ukrainian Navy ships tried to break through the strait without seeking the proper permission from Russia. Following a tense stand-off and altercation with Russia’s border guard, the vessels were seized and their crews detained over their violation of the country’s border.

While Kiev branded the incident an act of “aggression” on Moscow’s part, Russia believes the whole Kerch affair to be a deliberate “provocation” which allowed Kiev to declare a so-called “partial” martial law ahead of Ukraine’s presidential election.

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