Sanctions plant the seeds for Israeli ag exports to Russia

With Russia sanctioning Turkey over the latter’s downing of a plane that Ankara said breached its border, Israeli farmers see an opportunity to revive their exports.

Zvi Alon, chairman of the Israel Plant Production and Marketing Board, said that Russia in recent years has become a top market for Israeli produce – and that both countries are interested in increasing that trade.

According to Russian Agriculture Minister Alexander Tkachev, some 20 percent of the country’s vegetables are imported from Turkey. If Moscow is serious about stopping those imports, the country will have to look for other sources – and Israel, said Alon, is ready to fill that gap.

“Already most of the carrots sold in Russia are Israeli,” said Alon. “Over the past several years. we’ve exported between 150,000 and 180,000 tons of carrots to Russia. Peppers are also a major export for us, with 150,000 tons going to Russia over the past two years, which constitutes 50% of our pepper exports. Overall Israel earns a billion dollars annually in agricultural exports, and we estimate that about a quarter of that comes from sales to Russia.”

Russia became a target market for Israeli farmers long before Moscow decided to pull back in its relationship with Turkey. With European Union labeling rules in effect on produce from the West Bank, East Jerusalem and the Golan, and the Golan – as well as international boycott efforts aimed at Israeli products in general – Israel has sought to groom markets outside the EU for its products, services, and technology. China, for example, has become a favorite export target for Israeli start-up technology, while Israeli water and agricultural tech is a major export to India and many countries in the developing world.

Produce is in some ways much harder to export since it has a very limited shelf life, unlike technology. As a result, Israeli agricultural officials have been wooing several non-EU countries – especially Russia – to buy more Israeli produce.

Russia has its own sanctions problems. The US in August imposed a third round of sanctions on Moscow over that country’s annexation of Crimea and support for anti-government rebels in Ukraine. In a statement, the Treasury Department said that “due to continued Russian efforts to destabilize eastern Ukraine, Treasury Secretary Jacob J. Lew today determined that persons operating within Russia’s defense and related materiel sector may now be subject to targeted sanctions.” Russia has responded by banning imports of agricultural goods from the countries boycotting its goods, including the US and most of Western Europe.

Israel is far from the only country helping Russia out in its time of agricultural need. Besides the three aforementioned countries, Russia will also be increasing or initiating imports of fruits and vegetables from Argentina, Chile, Uzbekistan, Azerbaijan, Uzbekistan, Azerbaijan, South Africa, Morocco, and Egypt. But Israel has risen to the top of the ranks among the group; in 2012, Israel was the number three vegetable exporter to Russia, after Turkey and China — and those ties are set to become even closer now, with Turkey effectively out of the picture.

Once known for its kibbutz and moshav farming communities, Israel today is a much more urbanized society than it has been in the past. In 2010, agriculture represented 1.9% of Israel’s total annual GDP; only 2% of Israelis work in agriculture today. According to the Agriculture Ministry, agricultural exports (fresh and processed) in 2010 amounted to $2.13 billion, or 4.2% of the country’s total exports. Fresh produce exports totaled $1.33 billion, mainly to the European Union, while processed food exports totaled $798 million.

Now, Israel had the opportunity to export even more, taking the place of Turkish produce and food products in Russian pantries. To strike while the iron is hot, the Israel Farmers and Agricultural Workers Association said that it was organizing a delegation to leave for Russia this week to meet with government officials there. “In Russia, they have decided that Israeli produce is among the best,” the organization said, and expressed its intention to take advantage of that.