Russia Insider; Originally appear at Sputnik-Russian news agency
Sanctions are major instruments by western nations; the weapon of choice to enforce a myriad of US foreign policy goals, from countering terrorism to battling drug trafficking, and preventing oppression and intimidation from strong nation against weak nation. In an increasingly integrated global economy, it is important to have a clear understanding of the costs and benefits of unilateral economic sanctions for the United States. Most of the analysis of the effectiveness of economic sanctions suggests they have limited utility for changing the behavior or governments of target countries.
In retaliation by Russian President; Vladimir Putin, largely seen as an eye-for-an-eye response to sanctions following the downing of flight MH17, which is believed by various intelligence agencies was shot down by pro-Russian militants. This led Russia to instituting huge, widespread bans on imports of various food items, including chicken, nuts, and prepared foods from the USA; beef and pork from the UK; and, most importantly, fruits, vegetables, pork products, beef, eggs, and dairy from the EU.
This year Russia is set to export 23.5 million tons of grain vs Canada's 20 million tons, and 21.8 million tons coming from the US
Due to several factors, including the rise in the US dollar, American agricultural products are becoming too expensive and uncompetitive. Meanwhile, Russian farmers are seizing leading positions in the market.
The international agricultural market saw significant changes this year amid such factors as a stronger dollar, the collapse of oil prices and better crops. As a result, leading exporters have given way to new players, according to the Wall Street Journal.
The world's biggest agricultural exporters, Canada and the US, have recently been lagging behind Russia in overall production of wheat. This year, Russia is set to export 23.5 million tons of grain. Canada can export 20 million tons, and the US — 21.8 million tons. Former leaders in the agricultural market are expected to see their lowest rates of export in 44 years.
"Unless emerging-market currencies stop falling, the U.S. will lose more export market share and will begin to see more foreign products coming in," said Michael McDougall, director of agricultural commodities at Société Générale SA in New York.
Consumers from other countries are currently not very enthusiastic about buying American grain due to stronger dollar, especially now that fierce competition on the international food market has considerably lowered the cost of products in general.
"The dollar's strength is becoming a much bigger issue for farmers than we've seen for a while," said Chad Hart, a grain market analyst at Iowa State University (ISU) Extension. "It's really having an impact this year."
In 2015, Russian agricultural producers exported $20 billion worth of food goods, growing by 15 percent compared to the previous year. Battered by lower commodity prices and credit crunch, Russia can count at least one advantage of having a devalued national currency: soaring agricultural trade with China. The implication of this is the advantage of looking inward in solving national economic problems when there seems to be no external help or no alternative. In light of the above, is the use of economic sanction alone strong enough as corrective measure? Reader's comments are allowed.
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