Russian Agricultural Industry under Sanction Wars

TL;DR

This paper evaluates the impact of international sanctions on Russia's agricultural trade, showing significant import reductions and a shift towards domestic self-sufficiency following the 2014 embargo.

Contribution

It provides empirical evidence on how sanctions affected Russian agricultural trade flows and the country's adaptation strategies post-2014.

Findings

Food imports halved within two years of sanctions

Russia increased domestic agricultural production

Sanctions influenced trade dependency reduction

Abstract

The motivation for focusing on economic sanctions is the mixed evidence of their effectiveness. We assess the role of sanctions on the Russian international trade flow of agricultural products after 2014. We use a differences-in-differences model of trade flows data for imported and exported agricultural products from 2010 to 2020 in Russia. The main expectation was that the Russian economy would take a hit since it had lost its importers. We assess the economic impact of the Russian food embargo on agricultural commodities, questioning whether it has achieved its objective and resulted in a window of opportunity for the development of the domestic agricultural sector. Our results confirm that the sanctions have significantly impacted foodstuff imports; they have almost halved in the first two years since the sanctions were imposed. However, Russia has embarked on a path to reduce dependence on food imports and managed self-sufficient agricultural production.