Despite having 16% of the world’s land area and being the world’s eighth-largest economy, Russia still imports most of its food.

Imported food accounts for about 30% of the average Russian household food bill, but that percentage tends to be much higher in urban and more affluent areas.

With 143 million people, the population is growing slowly at 0.2%. However, it is the rapidly expanding middle class and doubling of GDP per capita (€11,000) in the past 10 years that is making Russia attractive. The country has been growing at a rate of between 3% and 5% in the past five years compared to a stagnant Europe.

Domestic production cannot keep up with demand despite national self sufficiency targets and calls from Prime Minister Dmitry Medvedev for farmers to ramp up production. Agriculture only makes up 3.9% of GDP.

Challenges for agriculture include low yields compared with other major global producers; low value-added production; undeveloped infrastructure along the value chain; limited access to bank finance; and unfavourable land ownership laws.

Relevance and impact

While Russia accounts for only a small part of our food exports, it had become a strategic growth area for dairy and beef companies. Russia is the second-largest market, behind USA, for EU food and drinks exports.

Last year, the EU exported €11.8bn agri-food products to Russia, according to the EU Commission, which amounts to about 10% of all EU agri-food sales outside the union. This has been growing at an average annual rate of 14%. The ban will affect about €5.24bn worth of EU agri-food exports. This includes €1.3bn of dairy products – €985m is cheese and curd and €144m is butter and fat.

Ireland exported €232m of food to Russia in 2013, about 2% of Ireland’s total food exports. This included 12,000t of cheese. Germany was the biggest supplier of food to Russia last year, followed by the Netherlands, Lithuania, Poland and Italy, according to Eurostat. Among the categories most affected is dairy, of which Russians imported €3bn last year, five times more than 10 years ago. This growth has been driven by cheese, of which they imported €1.6bn last year, up from €265m 10 years ago.

Although Russia imports four times more beef than in 2003, they eat only 17kg of beef per capita annually – half that of the average American.

Even though inflation in Russia is running at 5% according to the OECD, food prices are up 9.2% compared with a year earlier.

The ban is likely to depress world livestock and dairy prices, due to more competition as each country fights for new customers. But it appears the Russian consumer will end up paying more as domestic food prices increase. It is unlikely that Russian domestic production will increase to such an extent it will have little effect on local prices. Will this lead to queues and empty shelves? Images reminiscent of the Soviet era and in contrast to the UK and Ireland, where it seems supermarkets can’t give the stuff away.