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Europe's Food Industry Tries to Compensate for Russian Embargo

  • Lisa Bryant

A worker arranges boxes of tomatoes at a warehouse near Alexandria, southern Romania, Aug. 20, 2014.

A worker arranges boxes of tomatoes at a warehouse near Alexandria, southern Romania, Aug. 20, 2014.

The European Commission is taking exceptional measures to help fruit and vegetable growers reeling from a new Russian embargo against selected food imports. The aim is to avoid a glut in local European markets, as the West and Russia fight an economic war over the crisis in Ukraine.

You need a heavy coat to walk around the cavernous warehouse of Thomas Exports, just a few minutes from Paris' Orly airport. Crates of French cheeses are lined up in the glacial space at around three degrees centigrade.

Director Thomas Medard said these boxes of camembert, brie and Roquefort were heading to the United Arab Emirates, and the American market, but there was a lonely box or two, sitting on the side.

Medard said those boxes were supposed to go to Russia in October. Now, he will have to find new clients, and that will not be easy.

A worker arranges cheese for sale at a grocery store in St. Petersburg, Russia, Aug.11, 2014.

A worker arranges cheese for sale at a grocery store in St. Petersburg, Russia, Aug.11, 2014.

Unless things change drastically in coming weeks, Russians will not be eating French cheese anytime soon, or German sausage or Belgian pears. Retaliating against European and U.S. trade and investment sanctions over the crisis in Ukraine, Moscow has slapped a one-year ban on selected farm products.

Suddenly, growers and exporters like Medard are facing the prospect of their goods sitting on shelves or rotting in trees with no place to go.

At his office, Medard reads an email from one Russian customer. Due to elements outside its control, this company is ending its contract with Thomas Export.

Medard said France's cheese industry received no official notice about the ban. News came through the media, and clients signing documents stopping business because of a 'force majeur' - an element outside their control.

In some ways, Medard's company is lucky. Russia's food ban came down just as its last summer truckload of cheese made it safely to Moscow. But it stands to lose between $1 million to $2.5 million in business this year.

Others are bracing for much steeper losses. Europe's main farm lobby, Copa-Cogeca, says its members export about 10 percent of their produce to Russia - worth about $15 billion a year.

"Prices for some vegetables, like in the Netherlands, are down 90 percent - for mushrooms, for example. Also 30-50 percent for fruit," said spokeswoman Amanda Cheesley.

The European Commission says it is making $166 million in emergency support available for the most vulnerable foods like tomatoes, apples and kiwis.

"The basic measures are for withdrawing product from the market - in particular for free distribution. But there are also measures such as green harvesting and non-harvesting, which is basically taking fruit out of production before its ripe. Which is more cost-effective. So the idea of these measures is to ease the pressure on European markets given the loss of the export market at such relatively short notice," said spokesman Roger Waite.

Cheesley of Copa-Cogeca said the compensation was welcome, but it was nowhere near what was needed.

"Because it is a crisis that has had nothing to do with the producers themselves. We are just being taken into a political situation. So we will make sure we get as much compensation as possible," she said.

Farmer Martin Hagen inspects his Gala apple trees ahead of the harvest in two weeks time, in Kressbronn near Lindau at lake Bodensee, southern Germany, Aug. 20, 2014.

Farmer Martin Hagen inspects his Gala apple trees ahead of the harvest in two weeks time, in Kressbronn near Lindau at lake Bodensee, southern Germany, Aug. 20, 2014.

Countries like Germany, Poland and the Netherlands are expected to be among the hardest hit by the food ban.

In France, Daniel Corbel, who heads the National Association of Fruit and Vegetable Exporters called Aneefel, said the pear, apple and apricot industry would face the biggest problems.

"We have got everything against us. We have got the weather, we have got the financial crisis where the purchasing power of the consumer is not there. Plus the Russian crisis. So you accumulate all whose factors ... together, it is something that is really difficult to overcome," said Corbel.

French producers are also feeling another spinoff of Russia's embargo - like the Spanish peaches selling at bargain prices in markets like this one. Corbel said the farm industry would shortly be launching a "buy local" drive.

That is a push that seller Vincent Costaz - who has a stand in Paris' Alligre market - said was already catching on. And not just because of Russia.

Costaz said he was selling lots of French products because that was what his customers were demanding, for financial and ecological reasons.

But some shoppers interviewed at Alligre said price and quality - not French solidarity - would drive their choices. That is the case of Thomas.

He said what was happening with Russia will not change his habits. Taste comes first.

At Thomas Exports, director Medard is now looking for new clients for his cheeses.

But the French cheese industry has weathered the sting of international disputes before. In 2009, for example, the U.S. government slapped a 300 percent tax on imported Roquefort as part of a trade war with Europe. The Roquefort guys were smart, Medard said they cut their prices, and American gourmets had their cheese.

(In an earlier version of this story we incorrectly reported "Europe's main farm lobby, Copa-Cogeca, says its members export about 10 percent of their produce to Russia - worth about $10 billion a year." VOA regrets the error.)

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