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Gluten Free and Putin Free: The Effects of the Russian Embargo on Growers

Putin and Covington A couple of years ago we ran an advertisement for our Covington Vodka that exclaimed our vodka was both “Gluten Free and Putin Free”. This fun advertisement was meant to create awareness for our American made product, but now is more relevant than ever.

As a result of the imposed western sanctions for Russia’s involvement in Ukraine in 2014, President Vladimir Putin announced a ban on all produce and food imports from western countries. In the past week, there have been talks to extend this ban beyond 2018. This policy has had a dramatic effect on both the global economy and Russian economy. In fact, some reports suggest that Russia’s economy has shrunk by 4% in 2015, when it could have gained up to 5% of growth without this policy. To find out more about the effects of this policy read this article.

The consequences of this embargo go further than just having an adverse effect on the Russian economy. Prior to the embargo, Russia was importing $1.5 billion from US growers and $15.8 billion from European farmers. Production in Europe and North America has stayed the same causing an increase in supply of products. Economics 101 states that when supply goes up, but demand decreases, prices fall. Although I don’t have the estimated revenue lost by farmers as a result of this price decrease, I am guessing it is much larger than people think. We, ourselves, have lost out in multi millions of dollars in revenue because of the Embargo.

Every industry is now a part of the globalized economy. I know we cannot instantaneously deliver our produce with a click of the mouse around the world, but around 30% of our business is exports. Leaders need to understand the global ramifications of their policies. This is especially true when dealing with products that are essential to survival. So how do we solve this problem? My suggestion; send Putin a bottle of our Covington Vodka to open up the dialogue. Anyone have his address?

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