EU food industry: More trade agreements can limit the impact of Russia’s import ban

Roxane Feller

Roxane Feller [FoodDrinkEurope]

European food manufacturers affected by the Russian ban on EU food imports will need to find new export markets. The European Commission could help, by accelerating the conclusion of on-going trade negotiations with like-minded trade partners, says Roxane Feller.

Roxane Feller is Economic and Trade Affairs Director at FoodDrinkEurope which represents Europe’s food & drink manufacturing industry. She spoke to EURACTIV’s Henriette Jacobsen.

It’s been a little more almost three months since Russia banned food imports from the EU. How critical is the situation for food producers?

Generally speaking, it is not a nice situation to be in. It is no mystery that European exporters and manufacturers of food products destined for the Russian market will be impacted. In fact, the ban has been particularly felt by some agri-food sectors – notably the fresh fruit and vegetables sector.

Market measures, today and in the long term, must be found to facilitate trade, especially by removing non-tariff barriers. Clearly, the solution cannot be inward-looking, focused on the internal market alone, and support in general is not a solution. So trade with third countries – including Russia when possible – is the healthiest option.

The situation is complex because some of the products are purely agricultural products, some of the products are transformed and some of them are half-transformed. But in general, it’s not a nice situation to be in.

The solution is not in the hands of industry, and that’s why we have asked for them to look for a solution as soon as possible.

Can you give us an overview about which countries and sectors have been hit the most so far?

We have to consider the importance of the Russian market. Russia is the second biggest export market for the European food and drink industry after the US. The total European agri-food exports to Russia, including agri-commodities and fresh produce, were close to €12 billion in 2013 – and now the ban is estimated to impact on half of these exports.

Some European countries such as Lithuania, Latvia, and Estonia export more than half of their agri-food export to Russia. Other key exporters affected by the ban include Poland, Germany, and the Netherlands amongst others.

The Commission’s DG Agri has published a lot of information, trying to estimate the impact the Russian ban would have on the whole range of agricultural food products that we usually export to Russia, and they have come up with an estimate which they released some weeks ago.

The main categories are the meat and dairy products, fruit and vegetables which have been more prominent in the press because they are perishable goods to a large extent.  

If we take into account all products of the farming and fisheries sectors the total damage is estimated at around €5 billion.

The main product categories affected are dairy, with €1.3 billion, fruit with €1.3 billion, meat and sausages with €1.2 billion, vegetables with €0.8 billion, food preparations with €0.5 billion, and fisheries with €0.1 billion. The impact on trade may be even greater if we consider the knock-on effects of the ban, for example the reluctance of shipping companies to handle consignments of food and drink products destined for Russia even if they are not on the list of banned products.

What’s happening to the food that can’t be sold?

Global trade flows will be redirected. This is bound to cause disturbances in the global market as well as in the EU market, and it will require great flexibility from the agri-food sectors concerned. All agri-food sectors in the countries impacted by the ban ie the EU, the US, Norway, Australia, and Canada will need to redirect their exports and to find new markets for their products.

The situation demands that you turn to other markets or start with your own. You have to be practical and pragmatic, for instance by not harvesting some of the products, early harvesting or leaving them on the trees. Those are measures that have been triggered. The same applies to dairy products, where some money has been allocated for storage.

I think the system is working though this isn’t easy. You just don’t all of a sudden find new markets.

What do you think of EU member states encouraging their population to start buying products from their struggling food producers? We have seen that in Poland with their ministers, we have seen the same in Belgium…

We don’t have a position on that per se. Everyone is trying to find a way to ensure that the producers are not only helped through financial means, but also by other measures put in place. One of them is to promote local products, at least for a short period of time. It is not for us to say whether it’s good or bad. It’s being done. It’s a short-term reaction.

Which markets could be potential new markets?

There is a clear need for European exporters and manufacturers to seek alternative export markets. This means that deepening trade relations and concluding negotiations with third countries should remain a top priority for the EU’s trade agenda.

There are free-trade negotiations which are ongoing for example with Japan, Canada, the US and with emerging economies, where they are changing consumer patterns and consuming more European products.  

So there are a lot of possibilities, even with markets where we either have ongoing negotiations or where negotiations have been concluded, but where there are still some barriers remaining.

Have you pushed for more free-trade negotiations at EU level during the economic crisis and after the Russian EU food import ban?

Generally speaking, we have always favoured trade negotiations and the concluding of trade agreements. We have two important pillars in order to keep sustainable growth in our sector: innovation and sharing products through trade. We’re the number one exporter of food and drinks products in the world, so we have to be in favour of opening markets.

Of course, there are temporary support and promotion measures available, but still European food manufacturers and exporters affected by the ban will need to find new export markets. In this regard, we ask the European Commission to accelerate the conclusion of on-going trade negotiations. We need to deepen trade relations with like-minded trade partners, and to tackle sanitary, phyto-sanitary, and other non-tariff measures in third country markets.

What do you think of the EU initiatives regarding aiding farmers financially set up by the Commission’s DG Agri?

The European Commission has two options: To support the EU agri-food sectors in accessing new markets outlets, and to continue its efforts to lift non-tariff measures in third countries that will restrict market access for EU products.

Fortunately, the European fresh fruit and vegetable sector and dairy sector, which are covered by the European Common Agricultural Policy, can benefit from emergency financial compensation to cover up incurred losses. Support should be able to meet the needs of all sectors affected, if and when required.

I think the Commission did its best with the means at its disposal. It reacted quickly and efficiently.

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