Background and brief overview on the status quo of the Russian agri-food sector
-The legal framework of the relationship between the European Union (EU) and the Russian Federation (Russia) is the EU-Russia Partnership and Co-operation Agreement (PCA) signed in 1994. The PCA contains special provisions regarding the economic relations between the EU and Russia, with one of its main objectives being the promotion of trade and investment as well as the development of harmonious economic relations between the two parties. Dominated by non-agricultural commodities, Russia has become the EU‟s third largest trading partner. In turn, the EU is Russia‟s major trading partner regarding both exports and imports. Russia supplies the EU with large amounts of oil and gas, while the EU exports to Russia are more diversified, covering in addition to machinery and manufactured goods also food and live animals. Since 2008 the EU and Russia are negotiating a new agreement which will update and replace the existing PCA and provide a comprehensive framework for bilateral relations.
During the transition period to a market economy, Russia‟s agricultural output decreased severely throughout the 1990s, especially in the livestock sector. In the 2000s, agricultural production in Russia started to rebound and the country became an important player in world agricultural markets with respect to both exports and imports. Especially grain outputs and exports increased considerably and Russia became a major supplier of grain on the world market. Even though also production in the livestock sector increased, imports of agro-food products continued to grow during the 2000s and Russia became one of the largest net importers of agro-food products. In 2010, agriculture in Russia accounted for 3.7% of GDP and 9% of total employment. During the last five years Russian agro-food exports remained stable at around 2% in total exports, while the share of agricultural imports in total merchandise imports was 16%. Russia‟s negative agro-food trade balance accounted for -27 billion USD in 2010, which is mostly because Russia exports bulk crops (grains, sunflower seeds) and imports high value products like meat and processed food.
