GPC: The food security situation in Russia & Belarus: self-sufficiency, logistical headaches and economic instability

Sanctions on Russia and Belarus are causing further pressure on an already problematic global food and logistics environment. The story of an exacerbated food insecurity situation resulting from the war has been covered extensively, both in this publication and elsewhere. But what is the situation in Russia and Belarus in terms of access to food? How is the pulses industry in these two countries faring in light of the sanctions? Interviewing members of the public, the pulse industry and government officials, the journalists of the Global Pulses confederation report on the situation in Belarussia and Russia, sharing exclusive insights into access to and availability of food staples in light of the current conflict. (GPC)  

In contrast to the difficult access to food staples facing many countries across the globe, it seems that, despite a whole host of sanctions on the two countries, food insecurity is not a threat for Russia and Belraus. Very few of the sanctions are food-related; limits have been imposed only on seafood and alcohol imports. Inna Golfand, a member of the Strategy Partners, confirmed that, at the moment, the import of any type of food to Russia has not been stopped because food products are not included in the sanctions lists. She added that, when it comes to basic foods, the only likely problem is with fruit: supplies to the Russian market may be reduced since most fruit is imported. This is confirmed by statistics from New Retail. According to its data, the share of imports in the structure of the fruit market in Russia in 2021 amounts to 58%. In this case, the Russian fruit market may become saturated because of problems with foreign supplies. However, the main fruit suppliers for Russia are countries that have not joined the sanctions.  

In fact, Russia has been gradually working towards self-sufficiency when it comes to food. In 2014, it introduced a food embargo against the EU, the US, Ukraine and some other countries and has been steadily expanding it since. In the meantime, the country built up its domestic food sector, replacing some goods with domestic products and establishing imports of everything else from countries outside of the embargo. 

The situation in Belarus is similar: the Minister of Antimonopoly Regulation and Trade, Alexei Bogdanov, stated that the Belarusian authorities have ensured food security in the country and that Belarus will be able to switch to food imports from Asian markets, if necessary.  

Belarusian economists note that there will be no food shortages in the country as, like Russia, it is fairly independent of imports. This opinion is confirmed by information from the Ministry of Agriculture and Food of Belarus. According to their data, locally produced products prevail in stores. Independent experts express the same opinion, noting that any shortages will be special cases: “For example, there will be cheese on the shelves, but some specific types, like Maasdam, will no longer be available,” said Lev Lvovsky, an economist at the BEROC research center. 

Pulse consumption and volumes

Pulse supplies will not be a problem in Russia and Belarus as these markets are self-sufficient. In the general structure of the Russian chickpea market, imports are less than 1%. The current problems facing the Russian pulses market are entirely related to the sanctions, shipping issues and banking limitations that have halted exports for the time being. As a result, the global pulses market is under pressure as Russia not only ranks second in the world in the production and export of peas but also produces around 25% of the global chickpea supply and is a significant exporter of lentils. 

Sergey Pluzhnikov, the head of the purchasing department of Grainrus, confirmed that production volumes of the main pulse crops in Russia significantly exceed consumption levels. Peas, chickpeas and lentils are not staple foods for most of the population as meat is the principle source of protein. According to Rosstat, the average pulse consumption per capita in Russia is 1.9 kg per year. This figure fluctuates slightly according to geography and is influenced by climatic conditions and cooking traditions; for example, in the Southern Federal District and the Privolzhsky Federal District, pulse consumption is higher than in the Siberian, Central, and Northwestern Districts.

Rustam Guliev, a GPC member from Top Grain Russia, noted that consumption data greatly depends on the sources of information. He estimated that Russian pea consumption is around 25 thousand tons/year while chickpeas sit at around 10 thousand tons/year and lentils at about 8 thousand tons/year. 

Touching on the volumes of old crop products currently available, Guliev stated that there are about 220 thousand tons of peas in Russia with prices currently in the region of $290-300/ton. Meanwhile, chickpea volumes are around 28 thousand tons, with the price sitting at about $750/ton, and green and red lentil volumes are around 10 thousand tons, with prices for red lentils at around $800/ton and green at $1200/ton. 

Transport troubles

Truck driver Sergey Zmitrovich indicated that the usual transport connections between Russia, Belarus and European countries were disrupted because of the sanctions. Since April, Russian and Belarusian motor transport companies have been banned from transporting goods on European roads, although the restrictions do not apply to the delivery of pharmaceutical, medical and some agricultural products. However, there is a big problem with the delivery of packaging for food: drivers are obliged to take detours through different cities and countries to get the necessary materials for packaging food, significantly increasing transport costs, which is then translated into higher food prices. For example, Zmitrovich recently had to go on a tour round Georgia, Azerbaijan and Turkey, a trip which took him about 40 days. He stood in lines and waited for instructions from customers who had to constantly change their plans due to sanctions. On top of this, Sergey noted that some drivers are encountering problems obtaining visas to the European Union.

Currency, logistics and the war: what’s causing the price hikes

A representative from the Korona trading network warned us anonymously of the continuous price rise for some products. For example, prices of sunflower oil are expected to keep increasing significantly due to Ukraine, which is the main supplier, being unable to process or export it. World prices for sunflower oil increased from $1,380 in January 2022 to $1,472 in February while April, May and June supply contracts reached $1,600 per ton. 

Speaking from a buyer perspective, Anastasia Yurkevich, a student, noted that prices for all food products in Belarus have risen by about 30%, particularly for fruit. “Bananas have almost doubled in price. Meat, dairy products – everything has gone up.” 

Currency risks are also contributing to steadily rising prices. Many Belarusian and Russian companies are facing uncertainty about the free purchase of foreign currency at affordable rates, according to the Belretail publication. External suppliers have already increased foreign exchange prices by 20-30%, causing a further proportional increase in prices in rubles for many imported products. Final prices are also dependant on how the government regulates these products and, if the strict restrictions continue, it’s possible that Russians and Belarussians will see a reduced selection of products on their shelves. Finally, the ongoing global logistics crisis, exacerbated by the conflict in Ukraine, is a factor affecting rising prices. A combination of shipping companies not willing to work with Belarus and Russia, the lack of containers, queues at borders and the closure of the Ukrainian and Black Sea supply routes is further complicating an already fraught supply chain situation and is having a knock-on effect on prices. 

According to data of the Ministry of Finance of Russia and Belarus, the minimum wage in Russia in 2022 is approximately $265 and, in Belarus, it is around $180. The average food basket for Russians currently costs $190; $168 for Belarusians. A further increase in the cost of products will have a significant impact on all sections of the population of these countries, with low income brackets and the elderly being at particular risk. A reduction in sales of “optional” foodstuffs, such as confectionery, mineral water and fruit juices is also expected, as well as a decrease in demand for exotic fruits and vegetables. At the same time, buyers will likely shift their spending to lower-price food products. 

Both Russia and Belarus have fairly self-sufficient food systems and will be able to provide themselves with basic food products, ensuring food security in the face of import difficulties. Factors across the board, however, are contributing to steadily rising food prices, threatening to price out not just those in low-income brackets but a large percentage of consumers. It remains to be seen how the restriction of pulse exports will shape the global market in the future but, for now, it is evident that supplies are under pressure and prices are on the rise.