Hit hard by the Russian food embargo, farmers from the Baltic countries and Finland have urged EU politicians to be more effective in finding new markets, as well as continue dialogue with Moscow to overcome the food ban deadlock.
The Russian government decided on 29 June to prolong a ban on EU food imports from August, until the end of 2017, in retaliation for EU sanctions over Ukraine.
The EU imposed economic sanctions on Russia’s banking, oil and defence sectors over its annexation of Crimea in 2014, and support for eastern Ukrainian separatists. In response, Russia banned a significant number of EU food products from entering its market.
As a result, trade between Russia and the EU dropped by over $180 billion between 2013 and last year. Together with slowing Chinese demand, Russia’s embargo has put enormous pressure on already struggling EU agricultural markets.
The Russian embargo on European produce has had a huge economic and social impact on the Baltic countries and Finland, and targeted support is vital, agri-cooperative organisations from Finland, Estonia, Latvia and Lithuania warned today (11 July).
Milk sector most affected
Copa Cogeca, an association which represents European farmers and agri-cooperatives, told euractiv.com that the loss for the milk sector was over €100 million per country.
In 2013, Lithuania’s agricultural exports to Russia were equal to 60% of exports to all EU countries worth more than €1.5 billion. In 2014, exports to Russia fell by 22%, while in 2015, they fell by 54.4%. Exports of milk products fell by 94.3%, while meat exports stopped as a whole.
Concerning Latvia, Russia was the largest trading partner of agricultural and food products, reaching 62% of all exported Latvian agri-food products to third countries in 2013 worth €658 million.
The total decrease of exports of Latvian agricultural products in 2015 was €205.6 million, with dairy being the most affected. The price of milk decreased by 38%, and since the introduction of the embargo, the retail price of milk in Latvia has not covered the cost of production.
According to Latvia’s Ministry of Agriculture, taking in account price trends and milk purchasing volume, dairy sector losses are expected to reach €132.7 million by August.
New markets’ challenge
In an event held in Brussels last week (6 July) agri-cooperative organisations from Finland, Estonia, Latvia and Lithuania stressed that EU’s response to the Russian food ban had not been sufficient.
Tiina Linnainmaa, Vice-Chairwoman of the Pellervo Society, which represents Finnish agri-cooperatives, noted that the impact of the Russian embargo was easily forgotten when new topics are appearing, like the immigrant crisis and Brexit.
“Farmers and their cooperatives are suffering from the embargo. The EU Commission and high-ranking EU politicians have not put enough effort to help them,” she noted.
“There is a deep need for targeted support that better reflects the real financial loss the farmers have faced since the Russian embargo. So far, the EU hasn’t managed to ease the economic burden that is put on Baltic and Finnish farmers,” Andriejus Stancikas, President of the Chamber of Agriculture of Lithuania, emphasised.
In a letter sent to the European Commission, the European Council and the EU Parliament, cooperative organisations from the Baltic countries and Finland said that targeted measures should be established in order to find new markets for their exports as well as continue discussions with Moscow with an aim to re-open its market.
Roomet Sõrmus, chairman of the Estonian Chamber of Agriculture and Commerce, pointed out that finding new markets and adjusting production to new outlets was “costly”.
“Different EU financed export and promotion measures should, therefore be designed to help the Baltic and Finnish processors get to new markets,” he stressed.
Commission: “Unjustified” ban
A European Commission source told EURACTIV that besides the available instruments and flexibility already provided by the Common Agriculture Policy (CAP), the executive has deployed a set of support measures to mitigate the impact of the ban and to open up alternative exports markets for EU agri-food products.
Referring to the Russian food ban, the same source stressed that the Commission would pursue the matter with Moscow, with a view to reopening the Russian market for EU’s agricultural and food products.
“The EU believes that the Russian ban against EU agri-food products is not justified since it is retaliatory in nature. The ban is also hurtful for the Russian population and economy,” the EU official noted.
For the executive, the particular pressure on the dairy sector should not be only attributed to the Russian ban, but also to a large set of factors like price volatility, oversupply, and slowdown of exports.
“An aggregate €40 million was made available to Estonia, Finland, Latvia and Lithuania in 2014 as an immediate cash-flow relief to member states hardest hit by the Russian import embargo,” the Commission source stressed.”
“Two additional support packages were adopted, in September last year with €500 million mostly as targeted aid to member states, and in March,” the source stressed, adding that in the agricultural Council meeting on 18 July, European Commissioner for Agriculture Phil Hogan will announce new measures.