Russia’s ban on food imported from the West won’t make a ruble’s difference to Montana farmers, officials have said.
Russian purchases of U.S. commodities and food products are only a small percentage of American exports, and a minuscule portion of what Montana produces.
Russia last week announced its export ban on food products from the United States and the European Union. The ban came in retaliation for sanctions those nations imposed on Russia for provoking conflict in Ukraine.
“We’re talking about a food industry with sales that are going to be in the order of $1.23 to $1.5 trillion a year,” for all U.S. food-related exports, said Vince Smith, Montana State University economist. “If we lose $1.5 billion in sales to Russia that represents no more than 0.3 percent.”
Smith reiterated comments made by American Farm Bureau Federation officials that as other countries stepped in to sell food to Russia, sales of U.S. food products would shift to areas left underserved because of new Russian demand.
When Russia announced its ban Wednesday, wheat futures for September delivery on the Chicago Board of Trade dropped one percent and an additional 2.2 percent on Friday, though credit for the drop went to reports of ample global supply.
Two years ago, the United States was pushing to normalize trade with Russia, with a potential benefit for farm product sales, specifically beef.
The U.S. International Trade Commission estimated that Montana’s cattle industry, with 2.45 million head, would indirectly benefit from normalized trade with Russia. Beef is Russia’s top agricultural import, valued at about $2 billion in 2010, according to USTC.
To normalize trade, Congress had to repeal the Cold War-era Trade Act of 1974, which blocked Russia from permanent normalized trade relations with the United States.
Former U.S. Sen. Max Baucus, D-Mont, was instrumental in getting Congress to normalize trade with Russia.