Grain industry: unilateral ban on Russian grain transit would hurt Latvian farmers and ports
An opinion piece in Latvian business daily Dienas Bizness argues that a unilateral Latvian ban on Russian grain transit would not stop exports but would raise logistics costs for local growers. The author urges adopting sanctions jointly at European Union level.
A possible unilateral ban on Russian grain transit through Latvian ports is under discussion in Latvia. An opinion piece in the business daily Dienas Bizness argues that such a step would economically harm Latvia itself while doing little to restrict Russian exports. The author stresses that tough sanctions on Russia are needed, but they should be common across the European Union (EU).
Current rules
Transit of grain from Russian farmers and agricultural companies to third countries is currently not subject to EU sanctions. The bloc has set higher customs tariffs on imports of these products into the EU, but transit to countries outside it is permitted. The author describes this as a deliberate common-policy decision that took global food availability into account.
Impact on Latvian farmers
Latvian grain growers use the same rail, terminal and warehouse infrastructure that transit cargo helps to maintain. According to industry calculations, if transit fell significantly, the logistics cost of local cargo could rise from about 10 euros to 25–30 euros per tonne. That would affect more than a million tonnes of Latvian grain a year. Latvian grain makes up roughly 0.3–0.5% of world grain trade, so international traders such as ADM, Bunge, Cargill and Louis Dreyfus Company could redirect supply chains to other countries.
Legal and foreign-policy risks
International traders have often already bought part of the Russian-origin grain, so a ban could also affect the property and contracts of companies registered in the US, Switzerland, Singapore and elsewhere. The author cites Lithuania's decision to halt transit of fertiliser from the Belarusian company Belaruskali; the company is seeking more than 12 billion US dollars at an international arbitration court, while Lithuania rejects the claim. The author also says that, according to information available to him, Russia suspended transit of Kazakh fertiliser and other Central Asian cargo to Estonia after Estonia introduced national restrictions. Poland has not banned Russian grain transit.
The author concludes that Latvia should initiate tougher joint EU restrictions rather than bear the consequences alone.
