The Ukrainian-Russian conflict: what is going on?


by Iurii Mykhaylov, Ukraine

To name the things with their real names it must be said that Ukraine for the time being is in a limited-scale war with Russia.

At the moment, Russia is providing massive support to terrorists in weapons and live force (soldiers and officers of the regular Russian Army and Intelligence). In fact according to the International law they are mercenaries. The Russian Army regularly shells Ukrainian troops from the Russian territory.

We now live in the second wave of anxiety fearing the invasion of the Russian Army into Ukraine (the first wave was in April).

The Russians in Crimea are anxious to occupy South East Ukraine to establish a corridor between the peninsula and Rostov oblast because they unable to provide the necessary amount of food and goods supplied from Russia to Crimea directly by ferries. Also they want to guarantee the supply of the fresh water from Dnieper River.

The war had already taken its toll on the Ukrainian economy and agriculture. It is practically impossible to harvest the crop in the Donbass region because of the severe fighting there. In many cases crop fields are mined and machine operators are threatened with death if they do start harvesting. Practically all transport vehicles were confiscated, and fuel is scarce. The infrastructure is purposely being ruined (roads, railways, bridges). Since the July 4, Cargill’s oilseeds crushing plant in Donetsk has been occupied and remains idle. The grain traders are reluctant to make transactions with the Donbass producers.

Crop losses are estimated between 5-10 percent of the total Ukrainian crops (about 3-5 million tons).

The Ukrainian military forces promise to finish the military operation in a couple of weeks provided the supply of weapons and “volunteers” from Russia has stopped.

On August, 6, Vladimir Putin, President of Russia signed the decree that bans the import of agricultural commodities and foodstuffs from countries that introduced sanctions to Russia. These include the European Union, Norway, the United States, Canada, and Australia. Russia is only 50 percent self-sufficient in food. Now the Russian government must hastily negotiate the possibility of supplying meat and dairy from Latin America (Chile, Argentina, Brazil, and Ecuador) and vegetables from Turkey. But from the EU Russia imports mainly added-value high-quality foodstuffs like salami, cheese, chocolate, etc. that will be very difficult to replace from other sources or to produce domestically in necessary volumes. Many Russian analysts foresee hard times for the Russian population.

The western farmers are very anxious to know how Russian sanctions may affect their business. The answer may seem very odd but it is: very little!

The Russia, Belarus and Kazakhstan formed the so-called “the Custom union” and now there are no customs control between this states. It means that the banned Western products will be imported to Russia via Belarus and Kazakhstan where they will be repacked and relabeled with “made in …” or “product of …”.

There seems to be no reason to worry for Australian dairy producers as Far East Russia has no other way to feed its population there but to import dairy products and lamb meat from Australia and New Zealand.

Now, Russia is seeking an agreement with China for pork. It will be interesting to see if American companies like Smithfield Foods (owned by the Chinese company Shuanghui International) will deliver American pork labeled “product of China” to Russia directly.

And even in the worst case, in which American foodstuff will be cut off one way or the other from Russia, American farmers will benefit from the expanded shipments of corn and soybeans to China (which is already a major importer) to enable Chinese farmers to grow pigs for Russia.

The next couple of weeks will help clarify the situation. Either Russia will eventually calm and withdraw or we will see the very hot fall with the unpredictable outcome not for only Russia and Ukraine but for the whole world.

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