September 29, 2014 / 3:28 PM / in 3 years

Young EU farmers struggle as Russian sanctions bite

CAMPOSANTO Italy (Thomson Reuters Foundation) - The neat rows of manicured trees seem a world away from the barricades of eastern Ukraine, but political tensions between the European Union and Russia are reverberating in Fabio Lambertini’s pear farm in the tranquil Italian countryside.

“There is a lot of fear,” said Lambertini, 25, at his family’s farmhouse sitting on the breezy, open plains of Modena. “We are seeing a decrease in prices.”

In August, Russia declared a one-year embargo on meat, fish, dairy, fruit and vegetables from the European Union, the United States and other Western nations in retaliation for economic sanctions over Moscow’s actions in Ukraine.

Before anger over Russia’s support for rebels in Ukraine erupted into a trade war, the future looked bright for Lambertini. Rising demand from emerging markets, and investments in buildings, solar panels and an irrigation system meant sales were expected to rise.

Across the continent, figures are not yet available on how much money EU farmers have lost since Aug. 7 when Moscow imposed the ban.. Russia’s move followed EU sanctions on key Russian energy and defence firms.

EU farm exports to Russia had been worth about 11 billion euros a year, roughly 10 percent of all EU agricultural sales. The tit-for-tat sanctions could cost farmers dearly.

“These political decisions have nothing to do with simple citizens,” Lambertini told the Thomson Reuters Foundation in an interview at his farm north of Rome. “We farmers are the ones paying for this situation.”

Italian farmers like Lambertini sold about 706 million euros worth of food and drink to Russia last year, trailing other EU members including Poland, Germany, France and the Netherlands.

The loss Russia’s growing market for high-end fruits and vegetables is causing a ripple effect throughout Europe as farmers seek to unload perishable produce as harvests peak.

Francesco Vincenzi, president of Coldiretti Modena, a local farming association, said Europe had entered a “vicious cycle” on fruit prices.

“Italian pears had 10 to 15 percent of the Russian market. Other countries had the remaining 90 percent,” Vincenzi told the Thomson Reuters Foundation.

“Because of the sanctions, other producers like Holland and Spain are now exporting to European countries that were the typical market for Italian products.”

Last year, farmers received about 50 cents per kilo of pears, but Coldiretti said it feared prices would dip to 40 cents as a result of the trade dispute.

In 2013, Russia bought 72 million euros worth of Italian fruit and vegetables, meat worth 61 million euros, dairy products worth 72 million euros and pasta worth 50 million euros, Coldiretti reported.

“We invested a lot of money to enter into the Russian market,” through new promotions and agreements, said Vincenzi. “Now that they aren’t accepting our products, we are losing that investment.”

Turkey, China and Latin American countries are rushing to fill Russian shelves now emptied of European food products. Even if the sanctions end, some European farmers worry they will be permanently displaced from the market.

WINE PROTECTED

The Russian ban does not affect alcohol, which should protect wine, which accounted for 16 percent of Italy’s food and drink exports to Russia last year, according to Coldiretti.

If the sanctions drag on, some farmers could consider planting different crops, responding to market demands. But pear trees take about six years before they start bearing fruit. “It isn’t so easy to change the production,” said Fabio’s father, Gaetano Lambertini.

The European Union in August announced an initial aid package of 125 million euros for EU fruit and vegetable growers hit by the sanctions. An updated plan is expected to be announced this week, EU officials said.

When asked if the money was enough, Roger Waite, the European Commission’s spokesman for Agriculture and Rural Development, said: “I think we are all doing our best, we have seen a relatively well coordinated response ... At the moment, there is no spare cash anywhere in the EU budget.”

Young farmers appear particularly vulnerable to the sanctions. “They are starting from the beginning so it’s difficult even in a normal situation,” said Matteo Bartolini, president of the European Council of Young Farmers.

“They have made many investments; in some cases young farmers might not be able to pay back their monthly loans.”

Playing with the family’s dogs and chatting with his father about their newly constructed barn with solar panels on the roof, Fabio Lambertini is optimistic Russians will once again be able to enjoy his pears. He just hopes it happens sooner, rather than later.

“Agriculture is a tough business, there are a lot of ups and downs,” he said. “The farming market always has problems. But this is a new one.”

Reporting By Chris Arsenault; Editing by Ros Russell

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