The Food Embargo and Food Import Substitution: Russian Experience

B. Frumkin
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B. Frumkin: Institute of Economics, Russian Academy of Sciences, Moscow, Russia

Journal of the New Economic Association, 2016, vol. 32, issue 4, 162-169

Abstract: Rational import substitution is a necessary element of the strategy of national food security, including effective export expansion. Russia's food embargo has helped to significantly decrease its dependence on agro-food imports, improve the balance of import-export relations, enhance their product and geographic diversification. If current trends maintain, Russia by 2020 will be able to balance the agri-food imports and exports, and then to become the net exporter of food. The embargo has also contributed to maintaining high growth rates in "advanced" sectors of agriculture and food industries. The embargo has also contributed to maintaining high growth in "advanced" sectors of agriculture and food industries. However, the stimulating effect of the embargo waned, calling for increased state support of agribusiness development especially in the investment-innovation sphere. Organizational-structural, and consumer-social effects of the embargo and import substitution in general are controversial. It contributed to rapid expansion of large agriholdings, strengthening of their positions and the crowding out of the production of medium and small farms and companies. Consumer and social effects of the embargo are mostly negative. It has spurred inflation of producer price and consumer price of food, significantly decreased the purchasing power of real disposable money incomes of the population. To solve these problems without government food assistance to the9poor is unlikely. In general, both positive and negative potentials of the embargo are close to exhaustion. Further development of the process of rational import substitution requires more careful consideration consideration of its organizational, structural and socio-demographic aspects in the development of long-term agricultural strategy of Russia.

Keywords: import substitution; food embargo; food security; agro-food complex; agro-holding; inflation; food availability and accessibility (search for similar items in EconPapers)
JEL-codes: F14 F17 Q17 Q18 Q28 (search for similar items in EconPapers)
Date: 2016
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