World Economy

Russia Sanctions Hurting Canada

Russia Sanctions Hurting CanadaRussia Sanctions Hurting Canada

Canadian exporters stung by Russia’s currency crisis and its retaliatory sanctions against the West wonder what 2015 will hold for a market filled with promise less than 12 months ago.

Companies from farm-equipment manufacturers to pork producers spent much of 2014 adjusting to the economic instability in Russia, a country that bought $563 million worth of Canada’s agricultural exports in 2012, CBSnews reported Saturday.

For some firms, the first half of 2014 had the hallmark of a banner year — and then sales evaporated.

A senior executive for one of Canada’s biggest exporters to Russia said his company did about $250 million in annual business there in recent years, mostly selling frozen pork products.

Olymel, a pork and poultry processor and distributor, appeared on track for its best year yet in Russia after more than two decades of working there, said Richard Davies, the company’s senior vice-president of sales and marketing. But in August, Russia banned meat products and other goods from countries such as Canada in retaliation for financial sanctions by the western countries.

“We knew (the ban) was potentially going to come, but we certainly didn’t expect it to unravel as quickly and as strongly as it did,” Davies said in an interview.

“Obviously, the embargo in August had a significant impact on us and basically the Canadian and North American pork market, for that matter.”

  Crimean Pushback

Last March, Canada and some of its allies sought to punish Russia for its annexation of Crimea and its provocative military activity in eastern Ukraine. They imposed a number of sanctions against Russia and its supporters.

Russia struck back by slapping a ban on meat, seafood, milk and dairy products, fruit and vegetables from Canada, the US, the European Union, and other countries.

The Canadian hog industry exported more than $490 million worth of pork products to Russia in 2012, according to Canada Pork International. Signs of the impact have already begun to surface in the trade data.

The most-recent Statistics Canada figures show exports of fresh, chilled or frozen pork to Russia totaled $7 million for the months of August, September and October 2014. By comparison, the same three-month stretch in 2013 saw Canadian firms send $64 million worth of those products to Russia.

In another major area, Statistics Canada didn’t record any Canadian exports of crustaceans to Russia from August to October 2014 after it yielded $16.1 million for the same three-month period in 2013. Canadian sales of frozen fish (excluding fillets) were $750,000 between August and October 2014, down from nearly $19 million over those months a year earlier.

Today, the turmoil in Russia reaches far beyond international sanctions. The country’s falling currency — the ruble — and the plunge in oil prices have thrown it into crisis.