8 Aug 2014

Russia punishes EU, eyes NZ cheese

11:22 pm on 8 August 2014

New Zealand cheesemakers might not be in a position to fill the demand opening in the Russian market.

The Russian president, Vladimir Putin, has banned food and agricultural imports from countries that have imposed sanctions against Russia.

The retaliatory move comes after the United States and European Union increased economic sanctions on Moscow for supporting pro-Russian separatists in Ukraine.

Russia's Agriculture Minister said to compensate, the country would get higher supplies of Brazil's meat and New Zealand cheese.

But a spokesperson for the New Zealand's specialist cheesemaker's association, Diane Hawkins, said cheese plants needed certification to export to Russia.

She said those with certification were already supplying Russia, and those without likely could not enter the market.

John Key shakes hands with Dmitry Medvedev at a bi-lateral meeting in Japan after trade talks started in 2010.

John Key shakes hands with Dmitry Medvedev at a bi-lateral meeting in Japan after trade talks started in 2010. Photo: File picture - AFP

Russia's Prime Minister Dmitry Medvedev says the ban goes into effect immediately and will last for up to one year, depending on what western nations do.

Mr Medvedev told a Government meeting that the country would ban fruit, vegetables, meat, fish, milk and dairy imports from Australia, the United States, the European Union, Canada and Norway.

Australia exports more than $400 million in agricultural products to Russia each year, the ABC reported.

The decision followed a decree signed by President Vladimir Putin ordering the Government to ban or limit food imports from countries that imposed sanctions on Moscow for its support of rebels in eastern Ukraine and the annexation of Crimea.

"There is nothing good in sanctions and it wasn't an easy decision to take, but we had to do it," Mr Medvedev said.

Mr Medvedev also warned that Russia could block overflights between Europe and Asia in retaliation for Western sanctions.

New Zealand exports to Russia in 2012 were reported to be worth $230.4 million, including $106 million worth of dairy products.

Russia has been negotiating a bilateral trade agreement with New Zealand for four years.

A senior dairy analyst at Rabobank, Hayley Moynihan said New Zealand typically ships butter rather than cheese into Russia and the ability to switch is quite limited.

She said the ban could have a negative impact on the global dairy market overall as there will be a lot of product out of the European Union now trying to find a new home.