Estonian producers: Russian ban came as cold shower

“The decision was tougher than we expected. We assumed that friendlier partners such as Finland would be left outside, but Russia was very resolute. This is the new reality,” said Jaanus Murakas, head of the Estonian Milk Association.

Producers and exporters say that while Russia has been a risky trade partners for years, the problem is where to sell the surplus production.

Now that EU is likely to have an oversupply of food production, it would first affect farmers, and then food industries themselves.

“I think that changes in prices will be very big because markets have a tendency to overreact. Prices of milk products in Europe are already falling,” said Murakas.

While producers of dairy products could theoretically find new markets in Europe, the ban has put the Baltic fish processing industry on the brink of extinction because Russia, Ukraine and Belarus are the main target markets of the Baltic herring, the main fish in the local waters.

Mati Undrest, head of the Estonian Fishers’ Association, said that fish trade from the Baltic Sea region to Russia is big to be easily re-directed.

“It means that several hundred tons of fish will have to find a new market. Alternative markets such as Ukraine is not veyr positive either. East has been the main market also for fish canneries,” he said.

Heido Vitsur, analyst of LHV, says that PM’s optimism about producers’ chances of finding new markets in Europe to replace them with the loss of Russian trade is overoptimistic.

“I don’t know how Estonia could compete in Europe with such producers as the Netherlands, for instance. We could probably find some niches, but the overall competition will become tougher. I am not saying that we are not able to sell anything, but it will be extremely difficult,” said the analyst.

Vitsur recommended that since the Estonian market itself is a major food consumer, it is important to increase domestic demand.

Olle Horm, CEO of Atria Eesti, says that while the Russian trade has been relatively modest for Estonian meat packers, the ban will hit such large exporters as Denmark, The Netherlands, Germany and Spain.

“EU has in recent years been exporting to Russia vast quantities of meat. All this meat will not remain in Europe and must find a new market. This will be a major blow to large exporting countries,” said Soorm.

Jaanus Marrandi from OÜ Estonia, one of Estonia’s largest milk farms, says that the food ban will affect the whole dairy market.

“We are selling our milk to Estonian dairy companies, but if they cannot sell their own products, it will affect us and the price of raw milk,” said Marrandi, adding that also Lithuanian dairy companies that are big exporters to Russia and have been buying raw milk from Estonia are in a similarly bad situation.