Russian sanctions against the EU and US agriculture industries will lead to a saturation of the market and massive price cuts, according to Ruud Huinre, head of Food and Agri at Rabobank.

Huinre is currently in Moscow on a fact-finding mission on behalf of Dutch clients such as market gardeners and farmers.

Earlier on Thursday, Russian prime minister Dmitri Medvedev announced that Russia is banning imports of fruit, vegetables, meat, fish and dairy products from countries which support the sanctions imposed on his country by the EU and US.

Reaction

In an interview with the Financieele Dagblad, Huinre said that the original reaction of Dutch farmers and market gardeners to the ban was that it would not be too bad.

Around 3% of the agricultural sector trades with Russia, and the number of companies dependent on Russia for over half of their exports is limited, he said.

However, the follow-up damage will be enormous.

Saturated

‘The food and agri market in western Europe is more or less saturated. If 3% of total exports falls away there will be huge drops in price,’ he told the Telegraaf.

‘You can freeze meat and store milk power, but you have to use vegetables and fruit immediately.’

Airlines

There may also be economic damage for the Dutch airline industry if Russia goes ahead with a mooted ban on the use of Russian airspace by the EU and US.

Airlines such as KLM would have to fly longer routes to Asia, adding extra costs in fuel.

Yesterday, Russian foreign minister Sergei Lavrov said a ban on European flights over Russia was unlikely. However, Medvedev included this possibility in his announcement.