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Will Russian Ire Make Food Cheaper?

18/08/2014 14:29 BST | Updated 18/10/2014 10:59 BST

It started in Kiev, moved east, engulfed Crimea and now possibly your wallets too.

I'm of course referring to the events in Ukraine and along the Russian border. The developing spat between the Russians and US, bolstered by the EU, have morphed in a tit-for-tat match of embargos: the latest being Russia's food import ban.

For twelve months many European and American food products will be barred from crossing Russia's borders. It's an interesting twist to the story and one can't help to wonder what the Russian government aims to achieve.

There's no denying that European companies will feel effects far more than their American cousins, but will the pinch work out as Putin et al. desire?

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Russia is cutting itself off from high-quality European Livestock imports

As Schroders reported only 0.5% of the EU's total exports to Russia are agricultural products and this equates to a mere 0.1% of the EU's GDP. Therefore, at national level the impact will be minimal.

For business the effects will be greater. Lunar Fishing in Scotland for example, exports sixteen percent of its mackerel and herring to Russia and they're now looking for new customers to fill order books. A situation surely echoed by numerous other companies.

But what does this actually mean for consumers? The possibility of cheaper prices?

Take pork for example: with less pork products destined for Russian consumption, international pressures and competition will inevitably rise. Consequentially UK farmers and retailers will be forced to lower prices to remain competitive.

Bizarrely therefore, we might have to thank Russia for lowering the retail price of food.

With Russian sanctions covering almost every item in any self-respecting weekly shop there could be something for everyone. Polish apples, Norwegian Salmon, US poultry, French Brie, Italian Meats and Canadian Pork all have strong exports to Russia.

Resultantly these products will soon be vying for your pound or penny. Vying equals competition, competition equals lower prices. While certain producers and retailers will take a hit this could benefit consumers.

At this point I should probably caveat my thoughts by saying that prices won't tumble but they could be supressed, so don't expect to celebrate with dirt cheap Dom Pérignon!

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Will we be paying less at the checkout?

In fact the pickings could potentially be so good that Yahoo Finance are presenting stocks in food companies they feel have potential to grow quickly. Will the Russians use this as a measure of success?

However, it's not all good news; spare a thought for the Russian people. 50% of Russian pork, poultry and dairy products are now banned and they're looking to domestic supply to fill the gap.

Russia production costs often make domestic products more expensive, hence the demand for European products, whole milk for example costs 30% more from Russian suppliers than EU counterparts.

Russian consumers therefore are now facing higher costs and potential shortages, driving demand for imports from, in an ideal world, the UK and EU amongst others.

Time will tell if consumers will be paying a collective thanks to Russia for lowering food prices but all the potential is there. Time will also tell if food companies will see greater demand for their products or if a clandestine market will emerge in Russia.

It's certainly food for thought and I can't help think that events aren't going to play out quite how the Russia government had hoped. They may get egg on their face, assuming they can be procured...