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. Last Updated: 07/27/2016

Regions Forbid Exports Of Food




In a sign of the growing power and independence of local governors, Siberia's vast Krasnoyarsk and Kemerovo regions next week will join several other Russian provinces in imposing restrictions on the export of food to other areas of Russia.


Such trade restrictions are explicitly banned by federal law, but governors Alexander Lebed of Krasnoyarsk and Aman Tuleyev of Kemerovo do not expect their decrees to be overturned by Moscow authorities. The governors are worried about the possibility of food shortages in their regions, and they do not care what the federal government thinks.


Nor are they too concerned about the compatibility of trade restrictions with a market economy. Lebed is a former general who knows and cares little about economics, and Tuleyev is a communist.


Two regions - Tatarstan and Altai - introduced restrictions on the export of milk and meat back in September, and a host of other regions have de-facto trade barriers that were not imposed by any official decrees.


But Lebed and Tuleyev are not going to do anything on the sly. Lebed on Wednesday signed an order making it practically impossible to take milk, dairy products, flour, meat, poultry, eggs, pasta, grains, margarine, butter, oil, fish, candy, cigarettes and vegetables out of the Krasnoyarsk region after Tuesday.


Tuleyev is expected to sign an order Monday banning the export of meat from the Kemerovo region.


"We have very little meat left in Kemerovo," said Larisa Likhacheva, spokeswoman for the Kemerovo administration. The administration said meat prices in the mining city have jumped to between 40 and 90 rubles a kilogram, while the average price at the end of November was about 25 rubles, according to the State Statistics Committee.


"Some rich businessmen from Moscow came with sacks full of dollars and bought our cheap meat," said an employee of the Kemerovo administration's trade department, who gave her name only as Tatiana Nikolayevna.


In Krasnoyarsk and other provinces, the motives are similar. Besides, in some parts of Russia agriculture is more heavily subsidized than in others, and regional governors say they want the subsidies to work for their own regions.


"About 15 percent of Tatarstan's budget goes to support the agricultural sector," said Anvar Malikov, a spokesman for the government of Tatarstan. "Why should we allow produce that is subsidized by our republic to leave it?"


The answer to that question seems straightforward: The 1993 law on local governments forbids regions to impose restrictions that violate companies' economic freedom.


But Lyubov Yelizaryeva, head of the legal department at the Krasnoyarsk Legislative Assembly, said the law can be easily circumvented.


"If the administration does not say directly that it is imposing restrictions, but just sets complicated procedures for 'registering' exports, its actions do not fall under this law," Yelizaryeva said.


According to Yuri Gnatovsky, head of the analytical department at OGO, a major Russian grain trader, in some provinces, such as the Volgograd Region, the local governments have ordered railroad authorities not to provide OGO with railroad cars for the export of grain.


"Some regions tell their traffic police to find faults with the cargo documentation, claiming there are not enough permissions for the cargo export, and trailers carrying cargo are being detained and sent back," Gnatovsky said. "They don't officially restrict exports, but we can't actually take anything out."


The federal government has been unable to stop governors from erecting domestic trade barriers.


"We do not have enough leverage on the situation," Agriculture Ministry spokesman Oleg Temeshev said. "We have scolded [governors], but


nothing more concrete was done as far as I know."


Prime Minister Yevgeny Primakov mildly reproached the governors for the trade restrictions during a recent meeting of the Federation Council, the upper house of the Russian parliament.


Tatarstan government spokesman Malikov agreed that the federal authorities just do not have the power to remove the restrictions.


"We receive some written instructions [from Moscow] on this," Malikov said. "But I would not like to comment on what we do with them."


Gnatovsky said the governors, who have a lot of power not only as local mini-tsars, but as members of the Federation Council, are using the Moscow authorities' weakness to impose their own rules.


"I think the governors just have too much power now," the analyst said.


Anatoly Manellya, an agriculture analyst with the government's Center of Economic Analysis and Forecasting, said that by imposing trade restrictions, local governors are in the end hurting companies in their own regions.


"Companies that will be unable to sell to neighboring regions and forced to sell at low prices in their home regions will go insolvent," Manellya said. "The regions will in fact bankrupt their own manufacturers. And we will be back to the command economy, lines and food shortages."