UPDATE: 125 million Euro compensation for growers. But what about exporters?

The European Commission is initially reserving 125 million Euros for the growers that have been hit by Russian sanctions. The commission announced on Monday. This applies to handing out free produce, harvesting unripe produce and non-harvesting. The measures apply to tomatoes, carrots, bell peppers, white cabbage, cauliflower, cucumbers, gherkins, mushrooms, apples, pears, red fruit, kiwis and grapes. All growers, both in growers cooperatives as well as outside of those, will be able to make use of the measures in the coming months. The measures will come into effect starting August 18. 

Left to right: Lennart van den Heuvel, Alexander Visser and Rien Panneman

Ehec
"Suddenly, everything has ground to a halt. That's pretty dramatic, of course. My biggest concern is how to continue, when your whole business is pulled out from underneath you", Van den Heuvel says. The situation is completely different than in 2011, when Russia banned all European vegetables due to the EHEC outbreak. The trader then thought that the flow of goods would resume after a few weeks. And it did. "Now I seriously reckon with the worst-case scenario: that it could take at least a year, and perhaps even longer. Mister Putin is, in that sense, rather pigheaded."

On Friday, the cabinet announced in a letter to the House that Dutch companies can use shorter working hours. The government also actively assists companies with finding new markets. In addition, entrepreneurs get guarantees, through which it's easier for them to get a loan. On Monday, the European Commission announced targeted measures for all EU member states. According to Van den Heuvel, it's still unclear to what extent export companies can rely on support measures. "There's a lot of talk about growers and farmers. I understand all that, but they shouldn't forget us. Because we are hit just as hard, and perhaps even harder." 

Market forces
The exporter doesn't think that the EU is capable of maintaining price levels of banned products, because there's been overproduction within the EU for a few years now. He doesn't believe politicians will be able to agree quickly, because member states have diverse interests. "To be perfectly honest, I fear the market will have to solve it on its own, and a re-mediation will have to take place with the weak dropping out, and the strong remaining. In that sense, it's all just a matter of market forces. No matter how tough it is for some people."

He also wonders if his Russian customers will still pay their outstanding bills. "Unfortunately, in the past such a crisis has been a cause for certain people not to pay their bills. I think this will happen now as well. I don't have all my money in the bank yet." The manager employs seventeen people who deal with purchasing, selling and everything surrounding it. A number of them are Russian nationals. "So we can't just start exporting to Germany overnight, because those people speak Dutch and Russian, but not German."

"It's not just the exporters. We also hire several services, they are also losing that work. I think the damage is actually far greater than we can all imagine right now. Furthermore, products aren't exported to Russia directly, but for instance through Lithuania. Those channels are also gone now. There are still opportunities to export non-EU products. Of course we have done that a bit, so we're not completely at a standstill, but of course that's a fraction of the revenue we would normally get." According to Van den Heuvel, there's nothing else for it but to "be inventive and creative and to work hard. You have to be willing to fight and see where your chances lie, but of course that's not easy at the moment. Boycotting back and forth, no matter how logical, in the end it doesn't bring anything", he finds. "I'm not frustrated about it either, because I'm an entrepreneur, and you have to be inventive and remain positive. But it takes a lot out of you at such a time to be able to switch very quickly."

Disproportionate
Staay Food Group acknowledges that each sector should be able to take hits. "Otherwise you have no right to exist", Rien Panneman says. "But the sector isn't to blame here, and it hits us disproportionately." His colleague Alexander Visser, manager of Staay Export, adds: "Why do we need to take these hits, when a painting business doesn't?" Despite the promise of support from Brussels, the two managers can't be sure that the compensation really ends up with parties who truly suffer damages. There's talk of compensating the growers and transport companies", Visser says. "If exporting companies fall outside of this, that's incomprehensible for us."

Staay now tries selling the products it can't supply to Russia any longer, to other markets. But even if that fetches a reasonable price, the problem isn't solved. A lot has been invested in trade with Russia, in the form of expertise, for instance regarding food safety demands. "If this takes months, our export position will be taken over by companies from other countries", says Visser. "You already see Russia signing several trade agreements with Egypt, Turkey and Latin American countries." The hope is that the sanctions will be temporary in nature. Panneman's company, meanwhile, is hard at work looking for new markets. "Staay is healthy, and will certainly live through this."

GMO
Incidentally, not everyone appreciates the government support for the growers. "First they increase the production with GMO money, and then they take the overproduction out of the market with new subsidies. That's a bit crooked", Kees van den Bosch of Freeland in Emmen is wondering in a comment on this site. A grower from Brabant confirms that: "Without GMO, a whole lot of companies would already be bankrupt, and market forces would be able to do their job."

Source: Financieel Dagblad / NU.nl