Catalan companies face disruptions as Russia-Ukraine war impacts imports

Russia's invasion of Ukraine has sent far-reaching shockwaves across the world. Catalonia, over 2,000 km away from the humanitarian crisis that is unfolding in Eastern Europe, will too face economic consequences as a result of this war.

Ukraine, Catalonia's main sunflower oil and corn supplier

"Our main imports from Ukraine are sunflower oil and corn," Cristina Serradell, the director of international trade for the Catalan government's ACCIÓ business competitiveness agency, told Catalan News.

The imported quantities are not insignificant either: 44% of all sunflower oil and 35% of all corn imports in Catalonia come from Ukraine, which is why Serradell speaks of a "special dependence" on the products from the war-torn country.

Corn and other cereals from Ukraine, such as wheat, are typically used for animal feed in Catalonia. "Most of these products have already arrived for the year because of the harvest," Serradell said. "80% to 90% of what we use in a year is mostly here but the price of all cereals have gone up and we might have a problem for next year."

As for Russian imports, energy products – mainly in the form of gas but also oil – stand out, although Russia is only the 5^th biggest supplier in Catalonia. Spain as a whole does not rely on Russian energy nearly as much as other European countries do, but EU-wide price-setting mechanisms are nonetheless likely to impact already high electricity bills until alternative suppliers are found. 

  

Exports: 'Not extremely significant'

Russia and Ukraine, however, are "not extremely significant" when it comes to exports and account for 0.8% and 0.2% of Catalan goods sold abroad.

But there are geopolitical reasons behind this too. In 2014, Russia's annexation of the Crimean peninsula was met with sanctions from the West. Russian president Vladimir Putin retaliated by imposing sanctions on agricultural and food imports from the EU, which in Catalonia largely meant fruit and meat products.

"Most companies started exporting to China, which has now become one of the main markets for the Catalan pork industry," Serradell said. 

There are around 1,000 Catalan companies that export to Russia and Ukraine on a regular basis. "We're already seeing that they have difficulties with Russia being cut off financially," Serradell said. Not all payments go through anymore as some Russian banks have been forced out of the SWIFT system, while the war has also posed logistical issues as ports and highways in the region can no longer be used.  

ACCIÓ measures

ACCIÓ, with the assistance of its Moscow office, will offer its services free of charge to the 71 companies with subsidiaries in Russia as well as the 11 in Ukraine in an effort to help them find new clients. 

The agency will also further subsidize internationalization projects given the complexity of the situation – closing the airspace and finding alternate trade routes, for example, will not only have an impact on Russian markets, but on Asian logistics as well.

"We think resilience comes with diversifying both in terms of suppliers and of markets to where products are going," Serradell said, acknowledging it would "not be a short-term solution" that "can be done in a week."  

Listen to our podcast on the impact of the war in Catalonia.