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Baltic nations agriculture and transportation sectors suffer due to Russian sanctions

Western sanctions on Russia due to the events that unfolded in Crimea in 2014 resulted in Russia only days later reciprocating and introducing its own sanctions on the EU and the US. Whilst the EU sanctions have focused on oil companies and Russian banks, Russian sanctions on the EU have focused on the agricultural sector. This has been bad news for players in the agricultural and transportation sectors in the Baltic nations. Russia has historically been a key export market for Baltic exporters and the two have a long history of economic and political ties.

The sudden disappearance of the Russian market for Baltic exporters has had a profound impact on Baltic players in the agricultural and transportation sectors. Traffic volume has been diverted from Baltic ports to neighboring Russian ports, and with the Russian government increasingly investing in its nation’s infrastructure including the building and planning of several new ports, the Baltic ports have ended up losing a significant percentage of their total volume. The agricultural sector too has suffered despite attempts at finding a replacement to the Russian market. Japan is looking to become a potentially strong importer of Baltic agricultural produce but it is unlikely to ever be able to replace on its own the importance the Russian market had for Baltic exporters. Further with Russia looking to become completely self-sufficient in food items by 2023, even if sanctions were removed in the near future, Baltic exporters would now find a market far less interested in importing their products.

Ultimately the Baltic nations will have to find several replacement markets that can together potentially resemble the importance the Russian market had for Baltic exporters. These potential markets include not only Japan but also other large food importing nations such as the US and China. This would help increase activity in the agricultural sector and as a consequence the transportation sector as well.