Canadian exporters hit by ruble slide and Russian retaliatory sanctions

Several Canadian exporters who saw business decline as a result of the ruble’s crash and retaliatory sanctions by Russia against the West hope 2015 may bring them better fortunes.

Companies across the country, from food producers to agricultural equipment makers reported declining sales as exports to Russia plummeted.

In just the agricultural sector, Canadian companies sold C$563 millions’ worth of goods to Russia in 2012. Things were looking up in 2013 and the first half of 2014, and then nosedived in the second half of last year.

CTV News quoted Richard Davies, vice-president of Olymel, a poultry and pork processor, who explained that the fallout from the Ukraine crisis had a considerably detrimental effect on business after Russia retaliated to western sanctions by blocking the imports of a wide range of food products.

Mr. Davies said in recent years his company was reaching annual sales to Russia of about $250 million per year before the tit-for-tat measures began.

While pork producers have managed to redirect some of their products into existing markets, they have had to sell at much lower prices.

According to figures published by Statistics Canada, exports of frozen, chilled and fresh pork to Russia for the period Aug-Sep-Oct fell from $64 million in 2013 to just $7 million in 2014. Exports of frozen fish over the same periods fell from $19 million to $0.75 million.

Richard Davies Olymel

Mr. Davies wonders what the price will eventually be for Mr. Harper’s aggressive rhetoric. (Photo: Olymel)

Canadian Prime Minister Stephen Harper has been a strong vocal critic of Russian President Vladimir Putin’s meddling in Ukrainian affairs. When the two men met at the G20 summit in November in Australia, Mr. Harper said to Mr. Putin “I guess I’ll shake your, hand but I have only one thing to say to you: You need to get out of Ukraine!”

Mr. Davies said regarding the Canadian government’s vocal criticisms:

“My personal view is it’s just too loud, too much rhetoric for the political weight we carry in the grand scheme of things in the world political map. I think long term that might have a negative impact when eventually things tend toward coming to normal.”

“I think we might be in the penalty box for a little longer than we should.”

Germany the worst affected

Thousands of German companies have been badly hit by the economic sanctions against Russia and its tit-for-tat responses. German exports to the country declined by 16.6% in the first eight months of 2014 to €20.3 billion.

Analysts are expecting 2014’s full-year decline to be at least 25% lower than in 2013.

Germany is bracing itself for an increase in insolvencies across the country in 2015. Russia is Germany’s fourth largest export market for machinery and plant technology sales.