The Russian government decided on Wednesday (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 an already struggling EU agricultural markets.
A “lose-lose” game
The EU-Russia trade war has severely impacted the Russian economy, with food prices increasing, and quality declining.
On the other hand, the pan-European farmers’ association Copa-Cogeca, claims that after the Russian ban. EU farmers and agricultural cooperatives lost their main export market overnight worth €5.5 billion.
The sectors most hit by the Russian ban are the dairy, pork, beef and fruit and vegetable sectors. Pork prices are less than they were 11 years ago and milk prices over 40% below levels seen two years ago.
In the meantime, EU ambassadors last week agreed to extend their economic sanctions against Russia to January 2017, due to the lack progress on a peace process to end the fighting in eastern Ukraine.
However, EU farmers are urging the European Commission to give an end to the deadlock.
Re-open the Russian market
Copa-Cogeca, believes that the Commission should make more efforts to find a solution on the issue, either by entering new markets or ending the EU-Russia stalemate.
“To mitigate the impact of the ban, we urge the EU Commission to step up efforts to open new export markets and also to boost promotion measures,” Copa-Cogeca Secretary-General Pekka Pesonen told euractiv.com.
“We are also calling on the EU Commission to increase its efforts to re-open the Russian market,” he added. “The ban hit our sector seeing prices plummeting and many prices have still not recovered.”
In an effort to address aid cash-flow difficulties, last September, the European Commission adopted a special aid package for EU farmers worth €500 million.
“In addition, we urge member states to ensure that aid from the package agreed last September is paid out and that a new package is introduced as soon as possible,” Pesonen underlined.
Divisions in the EU
EU sanctions against Moscow have triggered strong reactions within the bloc.
German and Austrian foreign ministers recently said that EU sanctions on Russia should be gradually phased out as the peace process progresses, abandoning previous positions that sanctions could be lifted only if the Minsk peace plan is fully implemented.
France’s Minister of Foreign Affairs, Jean-Marc Ayrault, also expressed his disagreement with automatic six-month extension of the sanctions.
“We are not just satisfied with the automatic six-month rollover of the sanctions but that there is a real debate,” he recently said.
In an interview with EURACTIV, Greek Minister of Agricultural Development Evangelos Apostolou noted that any attempt to solve the problem would be “entirely legitimate and necessary”.
The imposition of the Russian embargo on agricultural products from the EU has created huge problems for Greek agricultural exports.
In 2013, the codes [of products] that Russia has banned accounted for 74% of our total exports of agricultural products to Russia, which was the first worldwide export destination for kiwifruit, strawberries, cherries, nectarines, bass, and fresh peaches.
According to Eurostat’s 2015 figures, Spain (34.4%), Italy (32.9%), and Greece (23.2%) produced together almost all (90%) EU peaches.