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Major Trends and Prospects in Agri-Food Trade between Russia, Central Asia and South Caucus Countries

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Major Trends and Prospects in Agri-Food Trade between Russia, Central Asia and South Caucus Countries

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Roman Romashkin
GLOBAL FOOD POLICY REPORT
Virtual Event--Discussion on the Implications of the 2020 Global Food Policy Report for Eurasia
Co-Organized by the Eurasian Center for Food Security at Lomonosov Moscow State University, Westminster International University in Tashkent, the World Bank Group, and IFPRI
MAY 27, 2020 - 02:30 PM TO 04:00 PM MSK

Roman Romashkin
GLOBAL FOOD POLICY REPORT
Virtual Event--Discussion on the Implications of the 2020 Global Food Policy Report for Eurasia
Co-Organized by the Eurasian Center for Food Security at Lomonosov Moscow State University, Westminster International University in Tashkent, the World Bank Group, and IFPRI
MAY 27, 2020 - 02:30 PM TO 04:00 PM MSK

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Major Trends and Prospects in Agri-Food Trade between Russia, Central Asia and South Caucus Countries

  1. 1. Major Trends and Prospects in Agri-Food Trade between Russia, Central Asia and South Caucasus Countries Roman Romashkin Deputy Director, Eurasian Center for Food Security at Lomonosov Moscow State University
  2. 2. Contents  Dynamics of Agri-Food Trade  Russia’s Role in Agri-Food Trade  Trade structures  Trade Complementarity  Major Traded Commodities  Intra-Industry Trade  Key Factors for Agri-Food Systems and Trade
  3. 3. Dynamics of Agri-Food Trade between Russia and CA&SC Exports to Russia, mln $ Imports from Russia, mln $ Trade balance with Russia, mln $ 0 100 200 300 400 500 600 2013 2015 2018 2019 Armenia Kazakhstan Kyrgyzstan Uzbekistan Tajikistan 0 300 600 900 1200 1500 1800 2100 2013 2015 2018 2019 Armenia Kazakhstan Kyrgyzstan Uzbekistan Tajikistan -1800 -1500 -1200 -900 -600 -300 0 300 2013 2015 2018 2019 Armenia Kazakhstan Kyrgyzstan Uzbekistan Tajikistan 773 553 448 568 806 918 1,133 2,303 2,272 1,887 1,798 2,363 2,599 3,066 -1,530 -1,719 -1,440 -1,231 -1,558 -1,681 -1,934 -3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 2013 2014 2015 2016 2017 2018 2019 mln$ CA&SC exports to Russia CA&SC imports from Russia Trade balance • Positive trade developments between Russia and CA&SC • Exports grow faster than imports • Highest export growth rates in Kyrgyzstan and Armenia • CA countries are net importers in agri-food trade with Russia • Kazakhstan is the main trading partner for Russia (60% of Russia exports to CA&SC and 40% of Russia Imports from CA&SC)
  4. 4. Russia’s Role in Agri-Food Trade with CA&SC Countries Share of Russia in the geographic export structure of CA&SC countries Share of Russia in the geographic import structure of CA&SC countries 65 57 42 48 50 49 51 18 11 13 13 12 12 13 10 12 5 27 30 23 30 4 4 5 6 10 11 16 17 2013 2014 2015 2016 2017 2018 2019 Armenia Kazakhstan Kyrgyzstan Tajikistan Uzbekistan 29 29 33 34 36 35 32 39 37 39 42 43 42 48 29 27 32 33 30 35 33 20 21 25 32 28 30 18 24 2013 2014 2015 2016 2017 2018 2019 Armenia Kazakhstan Kyrgyzstan Tajikistan Uzbekistan Share of CA&SC countries in Russia’s agri-food export Share of CA&SC countries in Russia’s agri-food import 14.5 13.2 12.6 12.2 11.4 10.0 12.1 2013 2014 2015 2016 2017 2018 2019 1.8 1.5 1.7 2.6 2.6 3.0 3.5 2013 2014 2015 2016 2017 2018 2019 • CA&SC countries are heavily dependent both on Russian market and Russian agri-food supply • Facilitating access to the Russian market was one of the main reasons to participate in Eurasian integration project
  5. 5. Agri-Food Trade Complementarity The trade complementarity (TC) index can provide useful information on prospects for intraregional trade in that it shows how well the structures of a country’s imports and exports match. It also has the attraction that its values for countries considering the formation of a regional trade agreement can be compared with others that have formed or tried to form similar arrangements. The TC between countries k and j is defined as: TCij = 100(1 – sum(|mik – xij| / 2)) Where xij is the share of good i in global exports of country j and mik is the share of good i in all imports of country k. The index is zero when no goods are exported by one country or imported by the other and 100 when the export and import shares exactly match. https://wits.worldbank.org/wits/wits/witshelp/Content/Utilities/e1.trade_i ndicators.htm 0 10 20 30 40 50 60 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Agri-food trade complementarity indices between Russia and Armenia (2001-2019, %) Complementarity between Russia exports and Armenia imports Complementarity between Armenia exports and Russia imports 0 10 20 30 40 50 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Agri-food trade complementarity indices between Russia and Kazakhstan (2001-2019, %) Complementarity between Russia exports and Kazakhstan imports Complementarity between Kazakhstan exports and Russia imports 0 10 20 30 40 50 60 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Agri-food trade complementarity indices between Russia and Kyrgyzstan (2001-2019, %) Complementarity between Russia exports and Kyrgyzstan imports Complementarity between Kyrgyzstan exports and Russia imports 0 10 20 30 40 50 60 2014 2015 2016 2017 2018 2019 Agri-food trade complementarity indices between Russia and Tajikistan (2014-2019, %) Complementarity between Russia's exports and Tajikistan's imports Complementarity between Tajikistan's exports and Russia's imports 0 10 20 30 40 50 60 2017 2018 2019 Agri-food trade complementarity indices between Russia and Uzbekistan (2017-2019, %) Complementarity between Russia exports and Uzbekistan imports Complementarity between Uzbekistan exports and Russia imports • Negative balances in agri-food trade with Russia are likely to remain in the future, as CA countries’ export profiles are not in the line with Russia’s import profile compared with trade complementarity between Russian exports and CA countries’ imports • Complementarities between EEU members’ exports (Armenia, Kazakhstan and Kyrgyzstan) and Russian agri-food imports tend to increase slightly, that indicates improvements in trade environment. However, 66 intra-regional trade obstacles still exist in the EEU (EEC, 2020). Equivalent trade costs resulting from NTBs range from 7.6% to 39.2% of agricultural trade values and from 8.1% to 39.7% of food trade values between EEU countries (Vinokurov et al., 2015)
  6. 6. Major Traded Commodities for CA&SC 0 50 100 150 200 250 300 Sugar confectionery Oil seeds Fish Preparations of vegetables, fruit, nuts Chocolate Cereals Dairy products Vegetables Fruits Alcohol beverages Top-10 commodities exported to Russia, mln $ 0 100 200 300 400 500 Tobacco Water Dairy products Cereals Preparations of vegetables, fruit, nuts Edible preparations Chocolate Sugars and sugar confectionery Preparations of cereals, flour Fats and oils Top-10 commodities imported from Russia, mln $ Share of major commodities in total agri-food country specific exports Armenia Kazakhstan Kyrgyzstan Tajikistan Uzbekistan Alcohol beverages 60% Fruits 8% 12% 34% 93% 58% Vegetables 9% 11% 20% 29% Dairy products 13% 37% Cereals 13% Sugar confectionery 5% Oil seeds 5% Preparations of cereals 5% Total 77% 64% 91% 93% 87% Share of major commodities in total agri-food country specific imports Armenia Kazakhstan Kyrgyzstan Tajikistan Uzbekistan Fats and oils 14% 8% 13% 32% 36% Preparations of cereals, flour 8% 11% 17% 13% 7% Sugars and sugar confectionery 7% 4% 10% 24% Chocolate 10% 7% 14% 11% 5% Edible preparations 6% 10% 8% Preparations of vegetables, fruit, nuts 7% 4% 2% Cereals 22% 4% Dairy products 6% Water 7% 5% Animal fodder 6% Total 60% 60% 66% 71% 81% • Low commodity diversification of exports • Fruits and vegetables are mainly exported • More diversified structure of imports • Processed products are mainly imported • Tajikistan and Uzbekistan are vulnerable to Russian trade policy measures
  7. 7. Agri-Food Intra-Industry Trade between Russia and CA&SC Countries Grubel-Lloyd (GL) index GLi =0, if a country only exports or imports good i (situation of inter-industry trade) GLi =1, if a country imports exactly as much of good i as it exports Xi – export of good i Mi – import of good i ii ii i MX MX GL + − −= 1 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 2013 2014 2015 2016 2017 2018 2019 Russia-Armenia Russia-Kazakhstan Russia-Kyrgyzstan Russia-Tajikisyan Russia-Uzbekistan • Inter-industry trade prevails • Positive dynamics in intra-industry trade between Russia and Kazakhstan • Low level of intra-industry trade due to the lack of diversification in agri-food sector in CA&SC 2-digit tariff lines Armenia Kazakhstan Kyrgyzstan Tajikistan Uzbekistan 02 Meat 0,58 03 Fish 0,76 04 Dairy products 0,84 0,71 05Products of animal origin 0,63 06 Live trees and other plants 0,65 08 Fruit and nuts 0,51 0,56 09 Coffee, tea 0,86 0,52 0,74 10 Cereals 0,86 11 Products of the milling industry 0,86 12 Oilseeds 0,70 0,61 0,42 0,54 16 Preparations of meat, of fish 0,68 18 Cocoa and cocoa preparations 0,64 20 Preparations of vegetables, fruit, nuts 0,52 0,75 22 Beverages 0,98 24 Tobacco 0,91 GLi, 2019
  8. 8. Key Factors for Agri-Food Systems and Trade Developments in Eurasia • Russian food embargo on import from Western countries (substitution and shift towards trade with CA) • Slowdown in Eurasian economies due to drop in oil prices and depreciation of national currencies • Reducing real incomes of population, unemployment and poverty growth • Declining remittances from workers in Russia (25% of GDP in Kyrgyzstan and Tajikistan) Rates of substitution of selected EU products by CA&SC ones in Russian market CA&SC Armenia Kazakhstan Kyrgyzstan Tajikistan Uzbekistan Cheese 1,9% 0,1% 1,0% 0,7% 0,0% 0,0% Butter 14,4% 0,1% 6,1% 8,2% 0,0% 0,0% Apples and pears 2,7% 0,2% 1,7% 0,3% 0,0% 0,4% Tomatoes 33,9% 11,5% 9,4% 0,4% 0,0% 12,7% -6 -4 -2 0 2 4 6 8 2019 2020 2021 GDP, percent change World Russia Armenia Kazakhstan Kyrgyzstan Uzbekistan Tajikistan Calculations based on trade volumes, ITC data IMF data Poverty indicators (by national standards) Poverty rate, % Number of poor (thousand) Armenia 23,5 694,8 Kazakhstan 2,5 450,9 Kyrgyzstan 22,4 1414,7 Russia 12,9 18637,7 Uzbekistan 14,1 4300,0 Tajikistan 27,4 2316,4 WB data Exacerbated by COVID-19 outbreak, stagnation of the Russian economy and decrease in consumer demand threaten for sustainable and inclusive development of national food systems of CA&SC countries To strengthen food security and ensure sustainability in agri-food systems, priority policy measures should be focused on: • formation adequate social distance and hygienic regulations for production, transport, logistics and marketing segments of food systems • increasing extent of localization in food value chains • support of agricultural producers • social safety nets for vulnerable population groups
  9. 9. Thank you and stay healthy!

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