Stand-off with Russia leaves Europe with huge unsold food stocks

19 Aug 2014

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The recoiling of the West's economic blockade on Russia has left farmers in the major food exporting countries in Europe like Germany, the Netherlands, Poland, Spain and France with huge unsold food stocks.

Russia's move to ban European food in retaliation for EU sanctions is having a telling effect on an already slowing European economy, which is now moving towards another recession.

Unwanted French pears, Polish apples, Scottish mackerel and German sausage have all left farmers in the West with a glut across the continent.

Many of these produce will inevitably head for the US or sold in western Europe itself, potentially displacing some of the more expensive European rivals. Others will go to markets in Asia and the Middle East, traditionally supplied by EU countries such as France.

But, for that, from Polish apples to French pork and Greek peaches, exporters to Russia might have to slash prices drastically, or destroy produce (See: Putin effect: EU to pay farmers for destroying produce).

It is perhaps the last thing that the European Central Bank policy makers want to see as they struggle with an economy in deflation.

Germany, the biggest European supplier of food agricultural produce to Russia, exported €1.6 billion-worth in 2013 while total EU food exports to Russia stood at $11 billion during the period.

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 added.

Europe is now looking for markets like the Philippines, Japan and South Korea. The demand for new markets may increase as South American and Asian suppliers take their meat to Moscow.

Brussels is scrambling to come up with new measures, which may be announced early next week, to soften the impact of a ban that could cut Europe's food export market in half.

The effects of the economic blockade and counter measures are already felt in countries like Hungary, Slovakia and Sweden and their leaders have all spoken out about the damage the stand-off has done on both sides.

Hungary's Prime minister Viktor Orban called it ''shooting oneself in the foot.''

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