The Effect of Russian Import Ban on the Industry of Milk and Dairy Products in European Union

European Union (EU) is the most important actor in the production, consumption and trade of milk and dairy products in the World. EU is on the top of the list of the dairy products (especially cheese) exporting Countries. Milk is produced in every single country of the Union without an exception. Dairy products in the union are worth 55 Billion Euro which comprises 15% of the value of agricultural products in EU. Russia is the most important market, after USA, for EU with regard to dairy products. Sudden and important changes have occurred in the dairy industry of EU after the imposition of import ban of Russia for Agricultural Products from EU on August 6th, 2014. In this connection, the main objective of this study is to put forward the changes in the export and the commodity prices of dairy products related to the Russian import ban. According to the results of this study, in the year following the ban, the exports of cheese, butter and skim milk powder have dropped by 48.1, 35.6 and 62.9% respectively. On the other hand the prices of milk powder, butter and cheese (Gouda) have dropped by 35.0, 25.0 and 13.0% respectively. It is expected that the value of the agricultural products that will be imported from EU by Russia will drop by 43.0% (5.1 Billion Euro) as a result of the import ban.