Russia Sanctions Act: Impact on the Rural Sector

The Russia Sanctions Act 2022 was recently passed to help combat Russia’s breach of international law and aggressive acts towards Ukraine. The Act came into force on 12 March 2022 and imposes sanctions on individuals and entities involved in the attacks on Ukraine. Sanctions may also be imposed for strategic purposes or to undermine Russia’s economy. The sanctions have extraterritorial application and target travel to and from New Zealand, and impose certain controls over assets and services connected to sanctioned entities. There is further detail in the Act’s accompanying Sanctioned Persons Schedule.

These sanctions are expected to have implications on both imports and exports. Russia’s top imports to New Zealand include crude petroleum oils and potassium fertilisers that are key resources used in the rural sector. It is anticipated that supply chain disruption, shortages in raw materials and fluctuations in prices will result.

Some corporates are also choosing to impose sanctions on Russia. Fonterra has announced it will exit its businesses in Russia and suspend all its exports to Russia. This may have implications for dairy farmers, but Fonterra has stated its exports to Russia total only about 1% of its annual exports (primarily butter).

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