After weeks of aggressive posturing, Russian leader Vladimir Putin pulled the trigger and sent Russian troops across the Ukrainian border today. Yesterday, Russia reportedly sent troops dubbed ‘peacekeepers’ to two enclaves in far eastern Ukraine where low-level conflict has been going on for several years.
At the time of today’s publication, however, Ukraine is believed to be under full-scale attack from the north, east and south. Russian warplanes have bombed sites in Ukraine and a pitched battle is said to be taking place near the buried Chernobyl nuclear reactor. Ukraine has reported at least 40 soldiers killed and claims to have shot down two helicopters and seven Russian planes.
Few major ingredients come from the region
At least two ingredients of interest to industry come from Russian territory — Rhodiola (Rhodiola rosea) and Eleuthero (Eleutherococcus senticosus, also known in some markets as Siberian ginseng). According to Stefan Gafner, PhD, scientific director of the American Botanical Council, these ingredients come from the Russian Far East and are therefore not subject to immediate disruption from military action.
“There is a lot of cross-border trade with Chinese pickers crossing the border to get Rhodiola and Eleuthero,”Gafner said.
Western nations are responding to the Russian invasion with economic sanctions, including major restrictions imposed on banking and cross-border payments. China, however, while publicly supporting the concept of international territorial integrity, did not sanction Russia for the invasion. Cross-border trade can therefore be expected to continue as it has. And in any case, the harvest season is months away and the international situation could then be very different.
As far as Ukraine is concerned, the country is not a major source of herbal medicines, according to Peter Landes, director of KHL Flavors, a company based in Flushing, New York, which imports herbs and medicinal plants from many parts of Eastern Europe. .
Landes said Ukraine is best known as a supplier of bulk agricultural products like wheat and corn. Whatever botanical ingredients of interest to industry are sourced domestically, they are only found in minor quantities.
Interruption of payment to complicate the life of sellers of finished products
For sellers of finished goods, however, the picture looks bleak, at least in the short term. Capital flows are disrupted, which will likely make it difficult, if not impossible, to trade in Russia for importers.
At least two major US-based multilevel marketing companies that focus on sales of nutritional products, Herbalife and Nature’s Sunshine, have operations in Russia and Ukraine.
On a conference call with stock market analysts yesterday (before the invasion), Herbalife President John DeSimone said: “[J]Like all other companies doing business in these markets, we are developing contingency plans. We have distributors and customers who rely on this company.
“[T]there is a risk in Russia, there is a risk in Brazil, but the biggest risk is probably in Ukraine, and it is not an important country for us”,said DeSimone.
Herbalife did not respond to a request for comment on how those plans might have changed in light of the outbreak of full-scale war. Nature’s Sunshine also did not respond to a request for comment.