Column by Tatyana Edovina on the consequences of restricting the import of intermediate goods

The desire to replace foreign supplies from “unfriendly” countries as quickly as possible can lead not to a decrease, but to an increase in imports, and if the restriction itself affects the import of any component or consumable material, then an increase in supplies, on the contrary, will occur at the expense of finished products. An example of such restrictions was the story with egg prices: a reduction in the number of livestock amid interruptions in the import of hatching eggs and tightening rules for the circulation of foreign vaccines required the selective zeroing of duties on eggs from “friendly” countries (see Kommersant on December 14).

At the beginning of December, the Ministry of Agriculture also proposed limiting the import of certain types of seeds from “unfriendly” countries by establishing quotas (for this purpose, a draft “On the introduction of temporary quantitative restrictions on the import of certain types of agricultural seeds” was prepared). But business is already asking to change the project, including in it, in particular, a separate quota for the import of high-oleic sunflower seeds (such a proposal is contained in the appeal of Business Russia, which Kommersant has read). This should ensure that supplies are maintained, otherwise imports within the quota may be replaced by other types of seeds.

Entrepreneurs write that the next year’s harvest depends on imported hybrids: foreign seeds are mainly used to grow commercial high-oleic sunflower. The decrease in the import of seeds has already affected the production of high-oleic oil; its output last year decreased to 114 thousand tons, while before that there was rapid growth: from 2018–2019 to 2021–2022, production volume tripled to 120 thousand tons, from of which 44 thousand tons were exported. The increase in output was due to an increase in acreage and investments in special infrastructure, but this year a reduction in seed imports could lead to a drop in output to 100 thousand tons, Business Russia predicts. This will mean an increase in the import of palm oil in those categories of the food industry where it cannot be replaced by conventional sunflower oil.

Adjustments to duties and quotas that affect the conditions of access to the Russian market (the EAEU countries have a single customs tariff, but exceptions are possible) have already become a field for the most heated discussions – these parameters of trade policy directly affect business. Attempts to protect the market, however, are more fraught with side effects the more complex products they are applied to: low dependence on imports is typical only for the production of low-value products.