While European and North American food producers might be worried about the sting of Russia's new ban on western produce, Turkish exporters could soon be celebrating.
As the Wall Street Journal reports, Moscow's ban -- enacted in response to western sanctions on Russia to punish it for its role in the current crisis in Ukraine -- is providing Turkey with an opportunity for expanding its agricultural exports:
Russian President Vladimir Putin's decision last week to block certain food imports from the European Union and the U.S. is a potential boon for Turkey just as Islamist insurgents in Iraq choke off trade to key markets for Turkish goods. Exporting food to Russia could also help make up for slowly recovering demand from the EU, Turkey's biggest market.
Shipping more fruit, vegetables and dairy products would also aid Turkey in plugging an annual trade deficit of about $20 billion with Russia.
"This is 100% positive, we need to seize this opportunity, Russia can devour everything we produce," said Ahmet Ozer, vice president of the general assembly at the Istanbul Chamber of Commerce. "We don't have energy like Russia, but we have agriculture, water and farmlands; we must work them and sell our produce."
Last year, Turkey sold $7 billion worth of goods to Russia, which Mr. Ozer said could jump by 25% as Moscow turns to Ankara, among others, for food it previously imported from Australia, Canada, Norway, the U.S. and the EU.
With Russia and Ukraine facing off over the fate of the small separatist region in eastern Ukraine supported by Moscow, the two countries have been using food policy as a way to punish each other.
This Russian-Ukrainian food fight actually already started last year, when Moscow banned the import of a popular line of Ukrainian chocolates, apparently to punish Kiev's overtures to Europe. In response, the Ukrainian government put a halt to the import of certain Russian sweets.
But with things heating up in eastern Ukraine, so is the use of food import restrictions as a weapon. In late July, Kiev banned the import of Russian pork products, citing a concern about the presence in Asian Swine Flu in certain regions in Russia. Not to be outdone, Moscow soon after announced a ban on Ukrainian soy and a few other agricultural products due to "a breach of phytosanitary requirements" (whatever that means).
But recent moves by the Kremlin are dragging Ukraine's neighbors into the food battle. After the European Union announced new sanctions against Russia last week, Moscow retaliated by announcing a ban on most fruit and vegetable imports from EU-member Poland. The move, the Kremlin said, was due to "sanitary reasons" and could be extended to the entire EU.
For Poland, the ban is serious business, as Reuters explains:
In its effort to stake claim to the title of being the "birthplace" of wine, Georgia a few years back petitioned the European Union, successfully earning the right to sell its wine in Europe using the tagline "The Cradle of Wine."
Considering there are others -- namely next door Armenia -- that are also claiming to be the place where wine was born, it appears that Georgian authorities are taking extra steps to solidify their claim on the title. As the Georgian wine news site Hvino.com reports, Levan Davitashvili, director of Georgia's National Wine Agency, has said his organization has provided numerous labs -- including one run by the American space agency NASA -- with archeological material that will prove "Georgia’s status as the motherland of wine." From Hvino's report:
According to Levan Davitashvili, the research project can’t be accomplished in a short period of time, but the Georgian side expects that a lot of material will prove that grape vine domestication and wine production started in Georgia.
Director of the National Wine Agency notes that in April new excavations were carried out in the region of Kartli, and the unearthed artifacts will supposedly prove that Georgia is the homeland of wine. "We have a fragmentary material. However, it is not recognized by leading scientists.
We are convinced that we are a wine country, but it must be proved scientifically," said Levan Davitashvli.
When the Turkish parliament passed last year strict new regulations on where and when alcohol can be sold, among the changes was a stipulation that shops, bars and restaurants selling alcohol could no longer have signs advertising that they sell, well, alcohol.
After an almost year-long grace period, the time has now come for Turkey's groceries and beer shops to take down any mention of booze from their signs. Reports the Hurriyet Daily News:
After June 11, shops and restaurants will be banned from displaying the signs of alcoholic beverage companies, removing another possible source of revenue. Many alcohol companies make deals with shops to pay for signboard costs in exchange for their advertisement. Alcohol advertising was banned in Turkey last year, and shops are now also required to hide alcoholic drinks from their windows.
“It’s alcoholic drink firms that have renewed our shop signs. Without logos, even tourists won’t want to enter the shops. Before, they would come and do their shopping here when they saw famous brands on the signs,” said Yusuf Deniz, a retailer who has been working in Istanbul for 22 years.
The latest measure affects around 250,000 retailers across Turkey. They were initially given a September 2013 deadline to complete the signboard transition, but this period was prolonged following difficulties in implementation.
To get around the regulation, many shop owners are planning to only remove the alcoholic brand logos and will keep the colors and lines that remind customers of them.
As a story in today's New York Times makes clear, among the many things Ukraine lost when Russia recently annexed Crimea was the historic Massandra winery, which was first set up by Czar Nicholas II in 1894. From the NYT:
Agriculture is a crucial sector that the Kremlin hopes to rejuvenate to make Crimea an economic success story under Russian tutelage. The new administration hopes to exploit the wine industry not least to draw more tourists, blaming Ukraine for neglecting both when it ran Crimea.
“Thank God it has not been completely ruined within these 23 years,” said Yelena Yurchenko, Crimea’s minister of tourism and resorts, speaking of viniculture. “Of course it would be in better shape if there had been investments in this field.”
Actually, while much of Crimea was bemoaning empty hotel rooms and a scant number of tourists, the bedrock of the economy, the team at Massandra was in a buoyant mood. Wines flew off the shelves at their three local stores last month, on track to double the sales volume from last year, they said.
The winery attributed the increase to many first-time Russian visitors’ eagerly snapping up potable souvenirs. The czar’s former winery now caters more to those day-to-day visitors than to the elite, producing 10 million bottles a year. Winemaking in Crimea dates back more than 3,500 years, but the intense Black Sea sunshine means it is most known for sweet wines and sherry.
Thanks to the rich soil of its steppes, Ukraine has long been known as "Europe's Breadbasket." But it appears that the recent turmoil affecting the country may impact this year's Ukrainian wheat harvest, which is expected to be down ten percent from last year. Reports the Kyiv Post:
Political turmoil, currency fluctuations and loss of territory will prevent major Ukrainian grain producers from enjoying another banner year. Analysts expect the grain harvest this year to reach 54-56 million tons, 12 percent down from last year’s record of 63 million tons.
Statistics do not include forecasted Crimean yield figures because Russia has annexed the peninsula.
Indeed, losing a large swath of fertile territory can certainly have an impact on a country's agricultural output. Being next door to a threatening and belligerent neighbor can also make things tough, as the Registan blog points out in a very interesting post on how the Ukraine crisis is affecting that country's agricultural sector:
This blog has previously written about the great work being done by Hvino News, a pioneering website that's been reporting on the Georgian wine industry since 2012.
I recently had a chance to be in contact with the site's Tbilisi-born founder, Alexander Kaffka, who has had a long career in international marketing and advertising, which led to an email interview about his work with Hvino News and the general state of Georgia's wine industry. Our interview is below:
How did you get the idea for Hvino?
I must explain I was born in Georgia, and was seeking for ways to contribute professionally to the country's progress. As my experience is largely in publishing, PR and marketing, I started with writing an article for a Tbilisi-based business newspaper, in which I shared my views about necessity for better international promotion of Georgia's "signature products," including wine and tourism. At that time – back in 2012 – someone interested in Georgian products faced a complete information vacuum. Despite a declaration that wine plays a special role in Georgia’s culture and history, neither the government agency responsible for wine nor the business association of wine producers had any presence on the internet.
The feedback received after article, which was published in The Financial both in English and in Georgian languages under title "For A More Attractive Georgia: A (friendly) view from abroad", was unexpected. It was: If you know how to do it, why don't you do such promotion by yourself?
Although the rules of conflict forbid the targeting of civilians, that hasn't stopped Russia and Ukraine from punishing each other's populations with a very cruel method: cutting off access to beloved chocolate and candy brands.
Moscow fired the first shot in this confectionary war, placing a ban last summer on chocolates, candies and cookies made by Roshen, a Ukrainian company that is one of Europe's largest manufacturers of sweets and whose products have a large and devoted following in Russia. As the New York Times explained last October: "Roshen was doing so well in Russia partly because it introduced a Russian Classic line of chocolates, reviving 18 Soviet brands like the Seagull bar, a plain milk chocolate slab with a Socialist Realist style beach scene on the wrapper."
When Turkey's parliament last summer passed a new law that curtailed when and where alcohol can be sold and also placed new limits on booze advertising, wine and beer manufacturers expressed concern about how these new restrictions might impact their bottom line.
Almost a year later, it would appear that this concern was justified. As the Hurriyet Daily News reports, the recent decision by Efes, Turkey's largest beer maker, to shut down one of its breweries, is highlighting wider difficulties facing Turkey's liquor industry. From the HDN's article:
Players in the sector, especially wine producers, are feeling the pressure of tough regulations as alcohol fights to survive in a tough environment.
Anadolu Efes, which has faced setbacks in its main markets in Turkey and Russia due to legal regulations, announced April 2 that it had decided to shut down its Lüleburgaz factory in the northwestern province of Kırklareli, four months after closing two breweries in Russia.
The beer market in Turkey shrank by 12 percent in 2013 after Turkey banned alcohol advertising and tightened restrictions on its sale. Price hikes in the market stemming from the rise in Special Consumption Tax (ÖTV) caused a further retreat in the company’s revenues. Beer makes up 90 percent of alcoholic beverage consumption in Turkey, which fell to just over 1 billion liters in 2013 from 1.12 billion liters in 2012.
Selim Ellialtı, the owner of wine producer Suvla, said the sector’s morale had long been hurt by the government’s strict regulations.
As described in a Turko-File blog post yesterday, the Tuesday death of 15-year-old Berkin Elvan -- an Istanbul boy who spent 269 days in a coma after apparantly being struck in the head by a police tear gas canister -- has helped to reignite the protests that first rocked Istanbul last summer during the Gezi Park demonstrations.
One of the interesting elements of these new events has been the presence of bread loaves carried by demonstrators as symbols of protest, to commemorate the fact that Berkin had left his home on the day he was injured in order to go buy bread. (The Bianet website has a nice gallery of silent "bread" protests held two days ago after Berkin died.)
Writing on her blog, sociologist Zeynep Tufekci explains why bread is proving to be such a powerful symbol of protest in Turkey:
Bread is quasi-sacred in Turkey. In Turkey, it is the source of nourishment and it represents both human labor and God’s bounty through nature. If a piece of bread falls to the ground, my grandmother kisses it after picking it up from where it fell. Wasting bread is seen as a sin, and not having bread at a table will get you howls of protest from people who will tell you they’ll be hungry without bread. (Yes, in Turkey, people will eat bread with pasta, for example).
Berkin was buried today, in a procession that was attended by perhaps tens of thousands and which was soon forcibly broken up by police using gas and water cannons. Held aloft by many of the mourners? Loaves of bread.