José M. Alvarez. @jmalvarez60
To paraphrase the title of that legenday James Bond movie, the Russian market doesn't love fresh Spanish products. Or, more specifically, in 2014 Vladimir Putin punished the European Union's meat, fish, dairy and vegetable sectors in response to international sanctions due to his role in the conflict in Ukraine.
This decision still hurts, albeit less, because Spanish exporters of those products have been able to find alternative markets, and sales in 2013 amounted to 584.6 million euros, of which 53% corresponded to fruits and vegetables and 19% to meat and byproducts, the two most affected sectors. On April 18th, 2013, the Russian authorities banned the entry of meats, fishes and cheeses from Spanish companies (and those from other countries such as Germany, the US, Canada, Brazil and Mexico), saying they didn't comply with "health requirements" in a clear-cut case of protectionism.
"Our companies do everything possible, and sometimes the impossible, to advance exports. However, as is occurring now with the paradigmatic case of Russia, on many occasions we are subject to political decisions and strategies of countries and governments that are beyond our control", said Miguel Huerta, Secretary of ANICE, who pointed out that, in 2012, the Spanish meat industry exported 279.85 million euros and 137,675 tons to Russia, which was the main non-EU destination that year, accounting for 8.6% of the total volume and 6.7% of the total value of sector sales outside Spain.
Fruit and vegetable companies from the main producing areas didn't lag too far behind: prior to the ban, Almeria exported 100,000 tons of fruits and vegetables to Russia, and the region of Valencia sold 141,000 tons of fruits and vegetables there in 2012.
Sanctions and recession, a bitter cocktail
"We've gone from almost 100 companies participating during 'the golden years' to 22 at present. This is the result of the current economic situation and the ban that Russia implemented on the West", said David Feijóo, representative of Spain's Commercial Office in Moscow, to Efe at the 27th edition of Prodexpo, the leading agri-food trade fair in Russia and Eastern Europe, held in Moscow from February 6th to the 9th.
The numbers reflect the situation: there were only 20% of the usual Spanish companies in the Spanish pavilion, compared with previous years, at this strategic event for the Spanish agri-food sector in Russia. Only a small number of products were represented, mainly olives, olive oils, canned products, snacks and wines.
At any rate, in addition to the Russian embargo, as mentioned by the Spanish representative from the embassy, Russia suffered a recession that lasted a year and a half, exacerbated by sharp depreciation by the ruble, which lost more than half of its value.
Focusing again on exports
The export strategies of the two leading sectors (back in the day) in Russia have taken two very different paths, according to official data, with successful results in both cases.
The fruit and vegetable sector has focused, even more than in previous years, on sales to EU countries, their natural market, while the meat industry has continued to work on improving its position in non-EU countries, mainly leading markets in Asia, with better opportunities for Spanish exporters than European countries, which are already saturated with rivals.
According to data for the first nine months of the year, exports to EU countries accounted for 93% of the total sold abroad, compared with 7% sold to non-EU countries, according to FEPEX, the Spanish Federation of Associations of Producers and Exporters of Fruits, Vegetables, Flowers and Live Plants. This breakdown contrasts with 91.2% and 8.8%, respectively, in the same period of 2014, statistics which are almost identical to those attained by fruit and vegetable exporters in 2013 and 2012.
The volume exported in 2015 will expand by 5-7%, and exceed 13 million tons, and the value will increase by more than 10%, to over 13 billion euros, according to FEPEX's projections. The value will increase more than volume as the sector shifts its focus to products with greater added value, with sharp growth in products which until now accounted for a smaller portion of exports, such as red berries. Growth in exports is also attributable to the good performance of demand in the EU as a whole, the main market for this Spanish sector, with growth of 17% in Germany and 15% in France and the UK through October.
Russia's ban is one of the lingering issues for 2016, according to FEPEX, since the Spanish sector has lost the main non-EU destination for fruit and vegetable exports.
As for the meat sector, Russia's rejection of EU exports once again highlights the need for the Spanish government to get involved to manage foreign trade as a national strategy and to establish unified administrative structures adapted to the complexities of international trade, bypassing divisions of power between ministries that cause problems, obstacles, and a loss of competitiveness for exporters.
In this case, according to data from Spanish Meat Export Office (OECE), foreign trade data was a source of good news for the sector in 2015. As for pork (including offal and fatty cuts), Spain's leading export, exports totaled 1.11 million tons in the first 9 months of 2015, up 14.5% compared with the same period in 2014, while exports to non-EU countries increased by a spectacular 27% (22.5% in value), reflecting notable progress in sales in those markets, which already account for 34% of total exports.
As for beef, exports amounted to 133,780 tons in that same period, up 26% year-on-year, which is excellent progress that was surpassed by sales in non-EU countries, which expanded by 31% in volume and 48% in value.
Lastly, the advancement of exports to non-EU countries of processed products, which have greater added value and which allow companies to set themselves apart, is still a lingering issue. For example, hams and shoulders, Spain's most emblematic products, saw exports reach 31,294 tons in the first nine months of the year, but just 11.4% of those headed to non-EU countries, such as Mexico, Japan, the US, Australia and Chile. In that sense, Spanish exports have a long way to go.