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09/12/2016

EU ready to support dairy sector hit by Russia food ban

Agriculture & Food

EU ready to support dairy sector hit by Russia food ban

The EU will support dairy product exporters hit by Russian sanctions. [Dave Young/Flickr]

The European Union is ready to support exporters of dairy products hit by Russia’s ban on Western food imports, adding to emergency measures already taken for fruit and vegetables, the EU’s executive arm said on Friday (22 August).

Moscow this month imposed a one-year embargo on meat, fish, dairy, fruit and vegetables from the United States, the EU, Canada, Australia and Norway in retaliation for Western economic sanctions over Moscow’s involvement in the Ukraine crisis.

Agricultural experts from all 28 EU countries continued emergency talks with the European Commission, the EU executive, to analyse the latest data on sectors affected by Russia’s ban so that EU farmers could be compensated for the loss of the Russian market.

“The Commission […] will not hesitate to take any further emergency market support measures if necessary, notably for certain dairy products where the impact of the Russian ban seems obvious,” the executive said in a statement.

A week ago the Commission announced it would provide aid of up to €125 million to EU farmers to help them cope with a glut of produce, notably fruit and vegetables, in peak harvest time.

But farmers’ associations such as Copa-Cogeca, the European farmers’ union, have warned of sharply declining prices across the EU and pushed for additional support measures to cover dairy products as well.

Russia imported over €1.3 billion euros worth of cheese, curd and butter from the EU in 2013.

In all, EU farm exports to Russia are worth around €11 billion annually, making up roughly 10% of all EU agricultural sales.

EU emergency fund not enough

The Commission has drawn on provisions in the reformed Common Agricultural Policy (CAP), which includes an emergency reserve of some €420 million to compensate for market disruption, to support fruit and vegetable prices in the EU.

But Finland’s dairy cooperative Valio alone estimates that it stands to lose €240 million worth of exports to Russia.

The EU’s emergency pool may prove insufficient, even if Russia rowed back on some of the sanctions on Wednesday.

Producers of peaches and nectarines were the first to receive EU help this month, when the Commission increased to 10% from 5% the amount of surplus production that can be withdrawn from the market and distributed free while compensating producers financially with around €30 million.

The impact on the dairy and meat sectors will be assessed in more detail at a meeting of agriculture experts representing member states on 28 August.

EU agriculture ministers will hold an extraordinary meeting to discuss Russia’s food ban on 5 September.

Background

The crisis in Ukraine erupted after its former President Viktor Yanukovich cancelled plans to sign trade and political pacts with the EU in November 2013 and instead sought closer ties with Russia, triggering protests that turned bloody and drove him from power.

Moscow annexed Crimea in March following a referendum staged after Russian forces established control over the Black Sea peninsula in the biggest East-West crisis since the Cold War.

Pro-Russian militants control buildings in more than ten towns in eastern Ukraine after launching their uprising on 6 April. On 11 May pro-Moscow rebels declared a resounding victory in a referendum in Donetsk and Luhansk, which the West called illegal and illegitimate.

The situation has worsened since then. In July, EU resolve to punish Russia strengthened after the downing in Ukraine earlier this month of a Malaysia Airlines passenger plane, killing all 298 people on board. 194 of the passengers were from the Netherlands.

Western leaders say pro-Russian rebels almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile. Moscow has blamed Kyiv for the tragedy.

Timeline

  • 28 August: Meeting of EU agriculture experts
  • 5 September: Extrordinary meeting of EU agriculture ministers

Further Reading