Russian boycott will cost Dutch economy 300 million euros

The export value of goods covered by the Russian boycott amounted to more than 500 million euros in 2013. The Netherlands earned approximately 300 million euros and about 5,000 jobs were involved.

Part goes to other countries

Exports yielded more than 500 million euros; the Netherlands earned 300 million euros, as 200 million euros were required for goods and services produced abroad.  Growers, for example, bought solar panels manufactured in China to generate electricity for the production of their products. Other export products, e.g. pineapples, were bought abroad and subsequently resold with a small profit margin.

Mostly agricultural and food products

The sectors agriculture and food products earned most from the products currently hit by the Russian boycott. They produce and process vegetables, fruit, dairy products and meat, products affected by the Russian boycott, but industries engaged in providing supply and support services are also affected. Tomato growers sell their products to wholesalers and transport companies carry the tomatoes to Russia. Tomato growers also use services provided by accounting and auditing firms and temp agencies. In other words: all these providers in the production chain are hit by the Russian boycott.

Export value goods hit by the Russian import ban, 2013

Approximately 5,000 jobs were involved in the export of goods to Russia.  More than half were engaged in production, i.e. the sector agriculture and the food sector.

Netherlands can also export goods to Russia through other countries

Last year, the Netherlands was a major supplier of goods to Russia’s neighbouring countries. Half of all tomatoes imported by Poland, Estonia, Latvia and Lithuania together were imported from the Netherlands. These tomatoes were partly intended for local markets and partly resold to Russia.

Total imports Poland, Estonia, Latvia and Lithuania, 2013

How many goods from the Netherlands affected by the boycott reached Russia through other countries is unknown. Tomatoes, bell peppers and grapes are hardly grown in the Baltic states, but they do export these products. If these countries themselves did not produce goods covered by the Russian boycott, like tomatoes, bell peppers and grapes and the Dutch share in their exports of each banned product would be the same as the share in their imports, the amount involved would be 700 million euros and another 300 million euros and 5,000 jobs would be involved for the Netherlands.

Trade through Poland and the Baltic states is less profitable for the Netherlands than direct trade with Russia, because Russia imports many products manufactured or grown in the Netherlands, like dairy products. Many products not grown or produced in the Netherlands, like grapes, are resold through Poland and the Baltic states, but generally such transactions are less profitable for the Netherlands.

Additional effects

Companies involved in exports to Russia can also bear the brunt of losing market shares and falling prices as the market is flooded with products from other countries which are also affected by the Russian import ban. Companies can also go bankrupt, if a substantial part of their turnover is lost. Then more jobs are lost than the number of jobs connected to the export of goods covered by the Russian boycott.  The consequences of the boycott would be limited, if companies would be able to open up new markets or trade through countries unaffected by the Russian boycott.

Oscar Lemmers, Roos Smit and Ralph Wijnen