Russia says no to Armenian-Iranian dairy forgery Punishment of "ally" or consumer protection?

On April 5, the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) prohibited the import and sale of dairy products produced in Armenia to the Russian Federation. The main reason for the restrictions is the difficulty in controlling product quality due to the use of Iranian raw materials and other ingredients in Armenian milk. Water scarcity, pasture erosion, feed shortages, and high feed costs have all contributed to the Armenian livestock industry's catastrophic decline in recent years. Under the current circumstances, dairy enterprises in the "country of stones" are forced to rely on imported, primarily Iranian raw materials, the quality of which is questioned.

Over the past decades, the very active operation of the Rosselkhoznadzor, which guards the safety of the Russian food market, has been repeatedly covered by the world media. This is due to the fact that during periods of aggravation of political or business disagreements between the Russian Federation and its neighbours in the post-Soviet space, this federal body often prohibited the import of agricultural raw materials and food products to the Russian market, explaining this by the presence of "harmful chemicals, viruses" in the supplies. Canned fish and cheeses from the Baltic States, Moldovan and Georgian wines, vegetables and fruits from other countries have been banned at various times, and not so long ago such restrictions were imposed on Azerbaijani tomatoes and apples. Moreover, the punishing sword of the Rosselkhoznadzor was carried even over almost flawless dairy products from the union country Belarus.

At the same time, the Rosselkhoznadzor treated food imports from Armenia very favourably, although the same Russian media periodically published complaints about alcohol falsifications and violations of regulations on other food supplies from Armenian companies. The fact is that there has always been a regime of "special" preferences in relation to Armenia, and the existing shortcomings did not interfere with trade, as long as Yerevan pursued a "correct" foreign and domestic policy. It is possible that, given the current pro-Western course of the Armenian establishment and numerous anti-Russian actions in the Kremlin, they are no longer motivated to turn a blind eye to various kinds of flaws in the quality of Armenian food products. At least, similar assumptions were put forward in Armenian media resources and social networks.

The other day, Armenian Economy Minister Vahan Kerobyan dismissed the political context in this issue, noting that Armenian dairy producers do not violate production standards, but acknowledged, however, that raw materials from Iran are used in the production of dairy products.

Moscow decided otherwise: despite a series of negotiations held between the Russian and Armenian veterinary services, including the discussion of the results of the inspection of Armenian dairy processing enterprises conducted from March 20 to 24, 2023, the Rosselkhoznadzor concluded that the Armenian veterinary service is not able to guarantee the safety of dairy products for Russian recipients. "Taking into account the results of the negotiations and the unsatisfactory results of the inspection, which were reported earlier, the Rosselkhoznadzor appealed to the Veterinary Service of Armenia with a request to suspend the certification of dairy products to Russia from all enterprises of the country from April 5, 2023," a recent TASS report noted.

It must be said that the Rosselkhoznadzor's claims about Armenian dairy products are fully justified: the sectoral problems in the livestock industry of Armenia have been accumulating for years, having intensified many times in the last three years, and taking into account a number of negative factors have led the industry to a deep decline. There was a shortage of meadows for grazing, neglect of irrigation systems and the inability to grow the necessary amount of fodder crops. In fact, Armenian animal husbandry has been maintained for all these decades due to the predatory plundering of the natural resources of the occupied territories of Azerbaijan. From spring to autumn, flocks of sheep were driven away from Armenia for fattening on the fat pastures of the Lachin, Kalbajar, Gubadli, and Zangilan districts, and in the opposite direction, the separatists exported tens of thousands of tons of grain, and fodder crops, and hay. In some periods, the abundant and rich green meadows of Karabakh provided two-thirds of the entire fodder base of the "apricot" republic.

All this freebie ended after Azerbaijan's victory in the 44-day war and the liberation of its occupied territories. Since then, the livestock sector in Armenia has entered into a protracted systemic crisis: an attempt to switch the industry to imported feed grains and compound feeds failed - this is too costly, given the difficulties with logistics and rising feed prices around the world.

According to the Armenian expert economist Suren Parsyan, the lost 44-day war and the loss of the raw material base had a very negative impact on the activities of the Armenian food industry enterprises. "Due to the excessive strengthening of the national currency, food imports are incomparably cheaper than its production in Armenia. As a result, domestic producers are losing even the domestic market. In particular, the decline in livestock production in 2022 amounted to 4.1 per cent, which led to a sharp decrease in milk production," Parsyan said.

As a result, Armenian dairy enterprises, which have been purchasing powdered milk all over the world for many years, were forced to almost completely reorient themselves to the use of dairy raw materials, sourdough and all other ingredients from the Islamic Republic of Iran. Alas, the Iranian livestock industry, subsidised by the government, is experiencing similar problems: every year desertification and drying up of fresh water sources deprive the industry of arable land and meadows for grazing. The dairy herd in Iran has 9 million heads, and Iranian milk is supplied to the markets of the Middle East and Central Asia, while the main importers are Iraq and Afghanistan. Iranian dairy raw materials are relatively cheap, as they are subsidised from the budget to maintain low domestic retail prices, while the 10 largest processing enterprises that provide 90 per cent of all milk production belong to the state. However, in addition to the low price, everything else in the Iranian profile industry has a minus sign: the smuggling of milk powder is very common, but this raw material is of extremely poor quality, as are the finished products made from it. So, back in 2017, Dutch specialists from Wageningen University, with the support of Friesland Campina and other companies, conducted a study of the dairy sector in Iran, and, according to its results, huge problems were found with storage, product delivery chains from farmers to dairies - milk often deteriorates, and the products produced from it do not meet quality standards. For example, back in 2016, Iranian suppliers of dry cream tried to occupy 10 per cent of the market of raw materials for the production of butter in Russia, but due to problems in transportation and the poor quality of the supplied raw materials, the Russian market refused these products. To recap, currently, many Iranian dairy producers are not included in the register allowing exports to the countries of the Eurasian Economic Union (EAEU), moreover, the Russian Federation has its own restrictive list excluding the supply of low-quality dairy raw materials and finished products from the Islamic Republic.

In the current situation, clever processors in Armenia, using customs preferences (with Iran), decided to warm up their hands on purchases of low-grade Iranian dairy raw materials and the production of products from it, hoping to sell some of the dubious goods to the Russian market under sanctions pressure. This is approximately how expert Suren Parsyan explains the 3.1-fold increase in butter production last year, which, according to him, is due to the import of cheap cream and other raw materials from Iran. It is obvious that little Armenia simply does not need so much butter and the excess was intended for export, probably to the EAEU [Eurasian Economic Union] countries. But the vigilance of Rosselkhoznadzor put an end to all the export-dairy dreams of the "apricot" republic.

However, as it turned out recently, the problems are not only related to the poor quality of Iranian dairy raw materials - the situation is no better for Armenian processors. Recently, the results of monitoring the dairy market by the local Food Safety Inspection body were published in the Armenian media: out of 10 dairy companies tested, sour cream samples did not meet the standards in four, for example, the amount of yeast exceeded the norm by seven times, three more producers found Escherichia coli bacteria in sour cream. A similar negative was found among cottage cheese producers: in four out of ten tested producers, the indicators of lactic acid bacteria and yeast fungi did not meet the requirements of the technical regulations of the Customs Union "On the safety of milk and dairy products". Even worse, in the cottage cheese of six companies, Escherichia coli bacteria and an unacceptably high content of mould fungi were found.

Taking into account that the monitoring was carried out by the State Inspectorate, which was not interested in revealing the "secrets" of Armenian producers, it is not difficult to imagine what chaos is happening in the rest of the dairy industry of this republic. Comments, in this case, are really unnecessary.