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Brazil stands to profit

August 8, 2014

Russia's embargo on Western foods could present a huge opportunity for South American exporters looking to boost their own agricultural production. A top food exporter, Brazil in particular stands to profit from the ban.

A grocery store in Russia
Image: picture-alliance/dpa

As Russians flock to supermarkets to scoop up any remaining Western delicacies, one country stands to profit immensely from Moscow's recently imposed ban on American and European foodstuffs: Brazil.

The agricultural powerhouse is already stepping up its output of corn and soybeans and has given 90 new meat factories the green light to export beef, chicken and pork to Russia.

A top exporter of beef, chicken and soybeans, Brazil is also one of the only countries in the world with enough land to actually produce more food.

Its ability to pick up any slack left over by an absence of Western goods makes it a clear beneficiary of the embargo.

"Russia has huge potential as a consumer of agricultural commodities," Brazil's Secretary of Agricultural Policy, Seneri Paludo, told journalists.

Picking up the slack

Last year, the United States exported $1.2 billion (895 million euros) to Russia - a figure that was dwarfed by the amount of food European Union member states sold to their eastern neighbor.

The 28-member bloc sold 11.8 billion euros worth of agricultural products to Russia in 2013. Of that, 1.6 billion euros came from Germany; 1.6 billion euros from Poland; 1.5 billion from the Netherlands; and 1.2 billion euros from Poland.

And while Moscow and the West are locked in a Cold-War-esque tit-for-tat over each side's role in the conflict in Ukraine, Russia has already taken steps to compensate for a lag in food imports.

Officials in Moscow held meetings with a number of Latin American embassies a day before the Kremlin imposed its embargo, the head of Chile's Direcon trade body told the Reuters news agency. Chile was involved, so were Brazil and others.

"They said they were looking for the possibility of more food providers," said Andres Rebolledo, Direcon's director, referring to Russian government officials.

Last-minute shopping

Chile could provide a viable alternative to European fruit, Rebolledo said. In 2013, his country sold hundreds of millions of dollars worth of processed foods, salmon and fruit to Russia.

But most exporters believe Brazil will benefit most from Russia's food ban, as the two countries are members of the BRICS economic bloc that also includes India, China and South Africa.

Last year, Brazil's food exports to Brazil totaled $2.72 billion. In addition to meat and grain, Brazil also sells sugar, coffee orange juice and bananas.

A day after the embargo went into effect, Russian shoppers could still peruse aisles lined with Dutch cheeses and Italian fruits. But once the foreign products are out of stock, they will not be reordered.

"The result will be that we'll have to replace the affected products," Vladimir Rusanov from the Perekrostok supermarket chain told DW in a television interview. "Of course we'll look for our own Russian products and items from countries that haven't levied sanctions against Russia."

cjc/hg (Reuters, AP, dpa)