Sanctions propel Israel, Russia to expand agriculture ties

EU sanctions against Israel and US measures against Russia may be driving the two target nations together. Agricultural Minister Yair Shamir has told Russian media that Russia’s need for fresh produce is “a great opportunity” for Israel.

For Israeli growers, increasing exports to Russia is a way to make up for expected market losses as Europe shies away from Israeli agricultural products. As of September 1, the European Union has banned entry of all dairy, meat, poultry, and egg products from the West Bank, the Golan Heights, and Jerusalem, expanding an existing ban on produce from the region. Reports said that the ban could be extended even further, keeping out food products produced even within the Green Line, unless producers can prove that they did not use any ingredients from the banned regions. The EU sanctions are designed to pressure Israel into negotiating with the Palestinians and withdrawing from the named areas.

In parallel, the US is clamping down on Russia over the Ukraine crisis. Shamir believes its sanctions could benefit Israel in the long run when it comes to the Russian market. “Even if the sanctions are reduced, I believe our products will continue to flow into Russia. It will be easier to deal with us, it will be cheaper and more stable with no political price tag for what you do and what you don’t,” the RIA Novosti news agency quoted Shamir as saying.

Last week, the US imposed a third round of sanctions on Moscow, targeting its financial services, energy and defense sectors. 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.

Shamir feels that Israel cannot judge Russia’s actions. The EU and US, he said, have not asked Israel to avoid exporting to Russia, and it’s unlikely Israel would agree even if asked.

“Take into account that lately the Europeans have been putting some boycotts on our products,” Shamir said in the interview. “They (the Europeans) boycott us and then tell us we can’t help somebody else? They can’t do that. They can’t on the one hand stop [Israeli] sales to Europe and on the other hand stop sales to Russia. That doesn’t go together.” The EU has apparently made its choice, he added, and now Israel intends to make up for its losses in the European market by increasing its exports to Russia.

The Russian import ban, imposed August 7, is set to last for one year, but the increased presence of non-European produce in Russian markets is likely to be self-perpetuating. Israel was already a major supplier of vegetables to Russia — 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.

Note that Israel is far from the only country helping Russia out in her 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. Cairo is set to sign a major agricultural trade agreement with Moscow in the coming weeks, Egyptian Minister of Trade and Industry Mounir Fakhry Abdel-Nour was quoted by Egyptian media as saying.

Once known for its kibbutz and moshav farming communities, Israel today is a much more urbanized society. In 2010, agriculture represented 1.9% of Israel’s total annual GDP, and only 2% of Israelis work in agriculture today. According to the Ministry of Agriculture, agricultural exports (fresh and processed) in 2010 amounted to $2.130 billion, or 4.2% of the country’s total exports. Fresh produce exports totaled $1.33 billion, mainly to the EU, while processed food exports totaled $798 million.

Most Israeli exports go to the EU and Russia. In 2012, 67% of Israeli agricultural exports, worth about $961 million, were shipped to Europe, while 16% of agricultural, worth about $226 million, was sent to Russia. Over the past decade, Israel’s fresh agricultural exports doubled, but exports to Russia increased nearly tenfold, from $23 million in 2003 to $226 million in 2012

That growth is set to continue and even accelerate, said Shamir, as Russia takes advantage of not only Israeli agricultural products, but also agricultural technology. “If the Russian government makes the decision that it wants to build farms to produce this and that and that, we are able to do that. Easily. We have done it in Belarus, we have done it in many other countries in a relatively short time. The results are fantastic. We are also a source of technology and know-how. And we are ready to do that,” Shamir said.

“Once the government wants to go for big production lines in order to get independence, we can help easily,” he said. “We are in the top niche. You are getting the best of the best available today in the market.” And the two sides can communicate easily, he noted: “Most of the (Israelis) dealing in it speak Russian or at least have a Russian accent.”