Armenia's poisoning incidents expose strained trade relations with Russia Escalating food safety crisis

Recent reports in leading Armenian media and online sources have shed light on the findings of Armenia's Food Safety Inspection Body regarding a tragic incident of mass poisoning from Russian-made meat products in Shinuayr village, Syunik (Zangezur) region. The intense media coverage of what might seem like a routine food safety issue can be attributed to ongoing tensions. Since April 2023, Russia's Federal Service for Veterinary and Phytosanitary Surveillance, "Rosselkhoznadzor," has imposed bans on several Armenian food products, complicating food export negotiations between the two nations.

According to the latest findings from Armenia's Food Safety Inspection Body, the acute poisoning of several family members on July 6-7 in Shinuayr and Gorus, resulting in a tragic child fatality, was traced to the consumption of substandard imported food. The source of the contamination causing "acute exogenous poisoning" was identified as frozen chicken legs, chicken cutlets, and Krakovska sausage from Russia. Laboratory tests revealed the presence of salmonella in a sample of frozen chicken legs from  "Poultry Processing Plant Kurnikov" LLC in Saratov.

Armenia's inspection authorities have forwarded their findings to the investigative body for further action, which includes the removal of hazardous food products from the market. Future measures may also be implemented to prevent similar imports in the future. While such procedures are standard globally, the heightened Armenian media attention to this case suggests deeper underlying concerns.

For over a year now, Russian and Armenian sanitary authorities have been embroiled in a contentious debate over food quality standards and the regulations governing import-export operations in this sector. It's worth noting that until recently, Rosselkhoznadzor had been relatively lenient towards food imports from Armenia. However, Russian media occasionally reported on issues such as alcohol adulteration and other violations of food standards by Armenian companies.

Yerevan's shift away from Moscow's preferred trade partner status began with Armenia's increasing alignment with Western interests, its reluctance to cooperate within the CSTO, and several openly anti-Russian stances taken by Armenian politicians. These developments have strained relations and complicated negotiations over food trade norms between the two nations.

Under these circumstances, Rosselkhoznadzor has ceased overlooking various deficiencies in the quality of Armenian food products. Specifically, starting from April 5, 2023, Rosselkhoznadzor imposed a ban on all Armenian dairy products from being imported and sold on the Russian market. Despite numerous rounds of negotiations between Russian and Armenian veterinary services, including inspections of Armenian dairy processing facilities as recent as March last year, Rosselkhoznadzor remains unconvinced of Armenia's ability to ensure the safety of dairy products destined for Russian consumers.

In 2022, Armenia notably increased its exports of butter to Russia, but suspicions arose on the Russian side regarding Armenian food factories potentially repackaging Iranian cream and butter, and using low-quality dried milk and other dairy raw materials from non-Eurasian Economic Union (EAEU) approved suppliers. Rosselkhoznadzor's concerns also extended to significant bacterial contamination issues during production and in the raw materials sourced from Armenian farmers.

These challenges are compounded by Armenia's longstanding agricultural crisis, including insufficient grazing meadows, neglected irrigation systems, inadequate fodder crop production, and outdated agricultural technologies in livestock farming. Since late 2020, this crisis worsened with the loss of fertile grazing lands and fodder resources in Azerbaijan's Karabakh region following its liberation from Armenian occupation. Unable to access these resources, Armenian producers were compelled to import more fodder from abroad, resulting in increased production costs for local farmers. Consequently, Armenian dairy factories turned to importing cheaper, sometimes lower-quality dried milk and cream, or even substituting milk fats with various vegetable alternatives.

These systemic issues significantly impact Armenia's agricultural sector, influencing production costs and product quality across the dairy industry.

Armenian Minister of Economy Gevorg Papoyan recently highlighted some progress in negotiations with Russian partners aimed at lifting restrictions on Armenian dairy exports. However, Papoyan emphasized that Armenian dairy factories must adopt new technologies to meet higher quality and sanitary standards. Regarding the use of milk powder in production, the Minister acknowledged a decrease in its import over the past two years. Yet, this claim is challenging to believe, given the significant decline in Armenia's dairy herd and milk yields from 2021 to 2023. Importing raw milk not certified to EAEU norms remains a crucial strategy for Armenian dairy producers to remain competitive in the post-Soviet market.

Papoyan also noted that restrictions on grain exports from the EAEU have led to increased use of grains in dairy herd feed in Russia and Belarus, resulting in higher milk yields and a subsequent rise in milk powder volumes and lowered prices within the EAEU market. This intensified competition further impacts the dairy product market in Russia.

According to Papoyan, "Ordinary farms in Armenia sell milk at 150-170 drams per litre (approximately $0.39 to $0.44), while farms employing advanced sanitary technologies can fetch prices of 350-400 drams per litre (approximately $0.90 to $1.03), as these operations save costs on sterilization."

The Minister of Economy omitted the fact that Armenia has very few farming enterprises equipped with such advanced technologies today. Consequently, the cost of milk production remains high, making it less competitive for processing and export in the mass budget segment, including butter, cheese, and other dairy products. This is reflected in the negative trends observed in Armenian cheese exports to the Russian market. For instance, in the first half of 2023, Armenian cheese exports to Russia amounted to $3.1 million, compared to $4.2 million in the same period in 2022, marking a significant decline of 26.2%.

The challenges extend beyond dairy products in Armenia's food exports to Russia. On March 1 of this year, Rosselkhoznadzor restricted imports of red-grained rainbow trout caviar and frozen red rainbow trout caviar from Armenia's "Max Fish" company due to the detection of E. coli bacteria. Earlier, on February 13, Russian sanitary authorities temporarily halted the sale of specific batches of Armenian mineral water "Jermuk" after a resident of Vladikavkaz reportedly died from oesophagal burns, potentially linked to the presence of vinegar essence in one of the bottles of "Jermuk."

In total, by the end of last year, Rosselkhoznadzor's regional offices identified 72 instances of quarantine pests in plant products originating from Armenia. Specifically, in November alone, there was a significant spike in violations, with 36 cases reported of contaminated imports into Russia, including flowers, cucumbers, dried fruits, grapes, cauliflower, tomatoes, peppers, eggplants, apples, pears, and more. Additionally, several cases were documented where pesticide residues in vegetables and fruits from Armenia exceeded permissible limits.

Given the complex trade dynamics and economic considerations involved, Armenia is unlikely to pursue counter-claims regarding the recent incidents of poisoning linked to Russian meat products in Zangezur. The risks of potential retaliatory measures from Russia are substantial, especially given the significant volume of Armenian agricultural exports to the Russian market, which have increased despite ongoing declines in domestic agricultural production since 2021.

Armenia's export of agricultural products to Russia from January 1 to April 20, 2024, amounted to 20.8 thousand tonnes, marking a 1.9-fold increase compared to the same period last year. This growth is notable despite challenges in Armenia's agricultural sector, suggesting a robust trade relationship that Yerevan is keen to preserve.

Armenian media reports indicate a speculative trend where foodstuffs are purchased in third countries for re-export to Russia, possibly influencing trade dynamics further. Against the backdrop of the Russian-Ukrainian conflict and sanctions, Armenia is likely cautious about jeopardizing relations with Rosselkhoznadzor or escalating disputes over food safety incidents. The economic benefits of maintaining stable trade relations with Russia appear to outweigh the potential gains from pursuing confrontational measures in this context.