5 Years of Sanctions Have Been a Huge Stimulus to Russian Economy

 We can be proud of the Russians.  They have obviously got it and then some.  The criminals are no longer running the zoo either.

Now we see a rising capital based entrepreneurial class emerging.  Shrimp farming seems unlikely, but it looks to work and this is good news as well. 

The same thing happened to South Africa back in the day as well.

5 Years of Sanctions Have Been a Huge Stimulus to Russian Economy 

Thu, Sep 19, 2019

This post first appeared on Russia Insider

 https://russia-insider.com/en/5-years-sanctions-have-been-huge-stimulus-russian-economy-russian-tv-news/ri27530

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After John McCain and Victoria Nuland's "Maidan Revolution," the US decided to kick Russia out of international polite society. Naturally sanctions followed. How's that all going?

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Transcript:

FIRST FIVE YEARS SPECIAL REPORT BY ARSENY MOLCHANOV

In the northwest of Crimea, there used to be the biggest fish collective farm where they bred carp. Now, in the field laboratory, agronomist Kennia from Belize, a state in Central America, and senior technologist Dmitry are conducting an important experiment. They figure out if it's possible to breed shrimp in the waters of the Black Sea. Opening a shrimp farm is a risky, pioneer business in Russia. Nobody has done it here yet. The Shubaev family, that moved to Crimea from Sochi, had to buy the land of a former fish collective farm. As for any agricultural enterprise, the time the transportation of perishables takes is what matters the most.

Dmitry Shubaev, senior technologist: “This year, we bought about 15-16 million baby shrimps. We faced a problem that we have just 40 hours to deliver them. It was incredibly hard to do it because we had to transport them from Thailand to Moscow, then from Moscow to Crimea. Then, we had to transport them from Simferopol, Crimea, to Razdolnoye. That's 90 miles farther, and the amount wasn't small.”

 Near the village of Razdolnoye, there are still rusty gasoline stations and a pumping station, which pumped water from the North Crimean Canal. The head of the project, Alexander, says that Crimea fell into disuse until the spring of 2014. Then, there were big investments.

Alexander Shubaev, head of the shrimp farm's project: “Over those five years, we've spent a total of about $13 million. That covers infrastructure, costs, everything. That's in total.”

-When do you expect to turn a profit?

-We expect to reach a break-even point in about 3-4 years.

At the same time, just five years ago, the government announced counter-sanctions. They applied to the countries that introduced restrictive measures with respect to Russia. The food ban applied to the European Union, the USA, Australia, Canada, and Norway. Since then, words such as "banned products", "prohibited goods", and "import substitution" have entered our everyday language.

 Veliky Novgorod. Four years ago, Oleg Bondarev, an entrepreneur from Novgorod, opened a farm where they breed bulls.

Oleg Bondarev, farmer: “A very long production cycle is typical of beef farming. So, two years pass from the moment a calf is born to the moment we sell it. It takes from 1.5 to 2 years. We first bought bred heifers. So, our production cycle increased by at least nine months.”

 Now, in August, they're beginning to actively make preparations for the winter.

Farmer: “ As of now, we've prepared about 2,000 tons. We've also prepared almost 50% of the hay. “

Haystacks in the fields are outdated technology. Everyone uses polyethylene to wrap hay. To make preparations for the winter, they need to crop 3,200 tons of grass and make these white cylinders of it.

Ivan Levandivsky, director of operations:” In winter, air doesn't enter there. When we open it in winter, it'll be green and fresh. All of the nutrients and vitamins, which grass contains, will be preserved.”

The cold summer of 2019 in European Russia turned out to be perfect for bulls. They don't like hot weather.

But in Crimea, despite its warm climate, the shrimp-breeding season is over in September.

Alexander Shubaev, head of the shrimp farm's project: “We'll have five tons of product from each pool from May to late September. At the beginning of May, a baby shrimp weighs 20 milligrams. It's like this. Four months later, at the end of September, they weight about 35 grams.”

 Shrimp breeding is a pretty exotic business for Europe, let alone Russia. Actually, Asia is the center of the world's aquaculture. Chine produces 80% of fish in the world. In Crimea, they breed shrimps in artificial pools with warm seawater. And they feed them with bloodworms. Natural food is what the Shubaevs take pride in. They catch bloodworms in Syvash - a bay in the Sea of Azov, which separates the peninsula from the continent.

Alexander Shubaev, head of the shrimp farm's project: “It's the most expensive product. It's called living gold. In Asia, they cost about $14 per pound. And we catch them ourselves here. They can afford to feed shrimp with bloodworms for only 15 days. We can afford to do it for about two months.”

The aquafarm's territory was divided into two parts. It's well seen from above. There are natural and artificial bodies of water. The latter provide larger catches.

-What can you say about the taste?

-It tastes like a shrimp. But it's an unusual shrimp. 
- There's something sweet in it.
- Yes.

 The Shubaevs plan to sell shrimp not only to Moscow and Saint Petersburg, which is where the main market for them is but also here in Crimea, at the price of 320 rubles ($4.83) per pound. They expect to turn a profit in 2023. Oleg Bondarev from Novgorod Oblast has already broken even.

Oleg Bondarev, farmer: “For such farmers as we are, there are basically two ways to make money. It's either not to think of anything and work with companies such as Miratorg, which are ready to pay in advance and send trucks to take the cattle, or to act differently - to cooperate, process, and realize independently to make a bit more money on it.”

When a calf is one month old, it must be gradually accustomed to feed and taken to pastures. In summer, for the animals to gain weight quickly and easily, they need 66 pounds of green forage per day.

Import substitution has influenced not only agriculture. In five years, Russian specialists did a great job in hi-tech development, machine building, and making complex engineering devices. This is the Klimov engine plant in Saint Petersburg. Assembler-mechanics work in the test room on the TV7-117 engine. It's the one that could replace American-Canadian Pratt&Whitney engines in Mi-38 helicopters. Every engine requires exquisite workmanship and costs tens of millions of rubles. In other words, it's an expensive, hand-made product. The TV7-117 turboprop engine is used in the Russian Il-112 military transport aircraft.

The engines were tested on a Russian aircraft for the first time this March. Pratt&Whitney and UEC were historically monopolists in the market. The Canadian firm is good in service and after-sales. The Russian engine is attractive because of its price.

 Alexey Grigoriev, senior designer: “When our company was transformed into UEC, Rostec set a task to develop our service line as the key task. We need to provide opportunities for good service maintenance of an engine. And the TV7-117 is good for that. It provides almost a complete analog of a performance map and maintenance works of Western engines.”

They managed to substitute imports of other important components of aircraft and engine making. These black boxes are an electronic automatic jet engine control system. Every fourth-generation MiG-29 fighter jet is equipped with it.

Now, we'll deal a thermal bloc to the control unit. From -76°F, that's the temperature at an altitude of 30,000 feet, look, it's covered with ice, we'll take this unit to 140°F. Such temperatures are the maximum limits for this device. The new digital system replaced technically outdated devices made in Ukraine, although the program to localize production was developed even before the sanctions were introduced.

Alexey Grigoriev, senior designer: “Our opportunities to deliver and work with Ukrainian units were restricted. We can say that we foretold that we had to work on those units, substitute the imports of the mainly outdated technology but not copy it.”

And this is Kirov Oblast. They launched biotechnological production here in 2017. At the same time, they first made inactivated polio vaccines. The production is fully automated. Specialists check that there are no malfunctions or defects. One can interfere with the line's work only in a contactless manner, using special sterile gloves.

Alexandra Grigorieva, head of a department: “Five years ago, there was a large deficit of the polio vaccine. This is a socially sensitive disease. That's why our company undertook supplying this vaccine and provide the population with it as a part of the national vaccination schedule.”

 So far, they make polio vaccines based on foreign-made substances. They'll begin to make Russian vaccines in 2020. They'll be based on a Sabin strain - a bacteria culture. Weakened forms of strains of the virus, which American virologist Albert Sabin developed in the 1950s, are called Sabin strains.

Alexandra Grigorieva, head of a department: “It's better because it's based on Sabin strains. They're not inactivated strains but the ones that are safer for adults and small children, for whom this vaccine is made. The WHO intends to gradually replace all of the inactivated vaccines with safer ones.”

By 2020, the state intends to bring the share of Russian-made essential medicines to 90%, and one out of every two medicines on the Russian pharmaceutical market should be made in the country.

There are no fresh shrimps as a kind in the Russian market. With the help of foreign specialists, the Shubaevs hope to make the project highly-profitable.

Kennia Matamores, specialist in aquaculture: “I've been working with my father since I was 14. We've worked in different countries. I've already worked in Bangladesh on a similar farm, in the Philippines, Malaysia, and in Thailand for a few years.”

Kennia came to the shrimp farm in Crimea with her father. He's a specialist in aquaculture. Although the girl has been living here for several years, she hasn't managed to learn Russian.

Kennia Matamores, specialist in aquaculture: “Russian is a serious barrier for me. I've been trying to learn it for three years already, but all in vain. But the people here are nice, so I don't have big problems with communication.”

So far, agriculture shows the biggest successes in import substitution. There's practically no competition on the Russian market. Those who took advantage of empty niches in the five years of the food ban can take not only the domestic market but export their goods.