Putin’s Import Substitution Plan Leaving Russians without Enough High-Quality Food than Would Otherwise Be the Case, Shelin Says

Paul Goble

            Staunton, December 8 – Yesterday, Kommersant reported that “in spite of the hopes of the authorities, Russia wasn’t able on the basis of domestic production to replace the main products” that the country had been importing before 2014 but stopped because of Putin’s counter-sanctions regime (kommersant.ru/doc/4603211).

            The Moscow newspaper reported significant declines in imports and only small increases in domestic production, but Rosbalt observer Sergey Shelin says that the actual figures are far larger because the ruble has declined in value, thus making imports more expensive and exports easier (rosbalt.ru/blogs/2020/12/08/1877007.html).

            Indeed, he argues, the declines in real disposable income that Russians have suffered would have sent consumption down on their own; but Putin’s “import substitution” program has driven imports down to the point that Russians really do not have enough high-quality food or have any prospects of getting it anytime soon.

            The only “fact” that anyone should be focusing on, Shelin continues, is that “the importation of food to Russia in fact has fallen sharply,” adding to the suffering of the Russian population at the time of a pandemic. But in addition to providing detailed statistics on that, he points to another failure of the Putin program.

            According to the Kremlin leader, banning the import of food and even destroying that which reached the border before any one could eat it would guarantee a dramatic rise in domestic production. But that hasn’t happened. In the years before 2014, agricultural production in Russia rose two percent a year; in the years since, it has risen three percent annually, a tiny increase.

            That failure to grow more rapidly is truly sad because Russian agricultural firms should have enjoyed a competitive advantage given declines in the ruble exchange rates and should also have gotten a boost from domestic consumers who no longer could choose imports. But falling incomes among consumers precluded that possibility.

            As a result, Shelin concludes, “the Russian consumer now is getting not only fewer foods from abroad than in the era of the strong ruble and growing incomes but also is paying the price with his own health” because of the policies the Kremlin has adopted without much thinking about what it was doing.