Russian food embargo leaves Europe with a glut

August 17, 2014 

It is farmers in the major food exporters — Germany, the Netherlands, Poland, Spain and France — who have been hobbled.

A glut of French pears, warehouses full of German sausage, rotting Polish peppers and unwanted Scottish mackerel: Russia’s move to ban European food imports in retaliation for EU sanctions is having a telling effect across a continent already slouching towards another recession.

Last year, EU farm exports to Russia were worth €11 billion. Officials in Brussels are scrambling to come up with measures, which may be announced early next week, to soften the impact of a ban that could cut that export market in half.

But already there is sign of dissent. In recent days, the leaders of Hungary, Slovakia and Sweden have all spoken out about the damage done by tit-for-tat sanctions that are really starting to bite for businesses on both sides of the stand-off. Most notably, Hungary’s Viktor Orban called it “shooting oneself in the foot.” And it is farmers in the major food exporters — Germany, the Netherlands, Poland, Spain and France — who have been hobbled.

Across Europe

The Germans export more food and agricultural produce to Russia than any other EU country — €1.6 billion-worth in 2013. Germany’s biggest export to Russia is pig meat: of the 7,50,000 tonnes of pork, worth over €1 billion, sold to Russia last year, about a quarter came from Germany.

The association of German pig farmers, ISN, has calculated the average farm could lose out on as much as €40,000 this year. “Luckily Europe’s meat exporters have been able to open up new markets in other countries over the last few months, thus balancing out the amounts usually sold to Russia,” the ISN said.

“Especially the Philippines, Japan and South Korea have increasingly received exports from Europe. The demand may increase as South American suppliers take their meat to Moscow instead.”

France: The French exported €1 billion of foodstuffs to Russia last year, and the embargo is hitting France’s 27,000 fruit and vegetable farmers hardest. — one per cent of its fresh fruit and three per cent of vegetables — 50,000 tonnes a year in total — leave France directly for Russia. A further 50,000 tonnes more are exported to Russia via the Benelux and Baltic countries in a trade worth €48 million a year.

Xavier Beulin, head of the main French agricultural union, has asked to see the French President, Francois Hollande, and said he was worried a glut of fruit and vegetables destined for Russia would flood the European market, dragging down prices, especially produce that has a limited shelf life. He warned that some producers had already started laying off staff.

Eric Guasch, an apple producer from the Avignon region, sells 80 per cent of his fruit to the Russians, and has already laid off nine seasonal workers. “We are still in a state of shock over the embargo,” he said. “It wasn’t just that all the orders we had were cancelled, but that our lorries already on the road were stopped at the Russian border and turned back.”

Spain: Spain is counting its blessings: though fruit, meat and vegetables were included in the Russian sanctions, wine and olive oil were not. But some Spanish farmers are still feeling the pinch, particularly as 30,000 tonnes of tomatoes, peaches and mandarin oranges exported to Russian annually will now have to find another home on a continent facing a glut.

“Orders have been cancelled yesterday and this morning,” noted COAG, an association that represents Spanish farmers. Producers in the regions of Murcia, Valencia and Andalusia are expected to be hardest hit by the sanctions.

Poland: The most notable response to the ban in Poland has been a social media campaign urging Poles to “stand up to Putin by eating apples.” But it is more perishable vegetables being harvested now such as peppers and cabbage that are greater cause for concern. The price of some vegetables has fallen by about 50 per cent.

Poland’s Agriculture Minister, Marek Sawicki, expressed “disappointment” this week after talks with EU officials on the issue. While Mr. Sawicki went to Brussels demanding immediate compensation for Polish farmers, he was told the EU needed to wait for more data with which to analyse potential losses from the Russia ban.

The U.K.: Mackerel is the most valuable stock to the Scottish fishing fleet, and about 20 per cent — £16 million worth — is exported to Russia annually. The Scottish government’s Cabinet Secretary for Rural Affairs, Food and the Environment, Richard Lochhead, has met his U.K. government counterpart, Elizabeth Truss, to discuss the impact of Russian trade sanctions on Scotland’s mackerel fleet and onshore processing sector.

Mr. Lochhead highlighted the need for the U.K. to look at export insurance to help the industry with exports to Ukraine and to explore with the EU the possibility of “banking of quota”, meaning leaving fish in the sea.

Alex Wiseman, a mackerel fisherman and chair of the Scottish Pelagic Fishermen’s Association, foresees serious economic hardship as a result of the ban. “Trying to find a market out there to replace the hole left by Russia is impossible in the short term,” he said. Though the widely publicised health benefits of eating oily fish have increased demand in the U.K. and mainland Europe in recent years, Mr. Wiseman said there was “no way” that this demand could pick up the shortfall. “It might happen but it could take 10 years,” he said, explaining that countries with emerging markets for mackerel would have to invest in cold storage infrastructure to handle sufficient volume.

(Ashifa Kassam in Madrid, Kim Willsher in Paris, Philip Oltermann in Berlin, Remi Adekoya in Warsaw, and Libby Brooks.)

© Guardian Newspapers Limited, 2014

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