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Serbia and Belarus main suppliers Russia

New compensation EU: additional 165 million

The European Commission has announced the new compensation plan. The EU is reserving an additional 165 million euros for compensation. The most important changes: citrus has been added to the list, and the compensation per member state is based on the export figures of the past three years. Figures show that Ukraine has significantly increased its export to the EU in the months of May and June. The export to the EU nearly completely compensates for the lost export to Russia. The Kremlin is also realizing that the winter months will provide a challenge. The storage facilities are insufficient for the storage, causing fears of price increases. The border with Europe seems to be sealed off better and better. Only small volumes can enter Russia through smuggling routes. And in Tartarstan, cultivation of bell peppers has begun. The boycott has caused a shortage of the vegetable.

This week, Europe is considering the sanctions imposed upon Russia after the ceasefire in Ukraine. Not all member states were immediately in favour of the sanctions, because the ceasefire appeared to be sustainable during the first days. The sanctions temporarily declined Russian companies and institutions access to the European capital markets. The determined 30-day period will soon come to an end.

In order to hit Russian agriculture hard, Europe could ban the export of seeds. In countries like Lithuania, Finland and Poland, suggestions are heard to restrict seed export. But a ban would also harm the EU. The Netherlands in particular will be hit hard. For now, the EU does not appear to be taking any steps in that direction.

EU additional 165 million compensation
The European Commission is reserving an additional 165 million euros for compensation of the fresh produce industry. The sum will be added to the 125 million euros made available by the Commission in August. The money is intended for taking surpluses out of the market. In order to prevent fraud, a list has been made of the product groups and volumes exported by a member state. The volumes have been determined based on export figures over the months of August-January in the past 3 years, minus the volumes already claimed under the 125 million scheme. The new regulations also cover oranges, mandarins and clementines.

The Commission has made four product groups that are eligible for compensation: apples and pears (181,000 tonnes), citrus (96,090 tonnes), other vegetables such as carrots, cucumbers, bell peppers, tomatoes (44,300 tonnes) and other fruit: kiwi, plums and table grapes (76,895 tonnes). A number of products are no longer covered by the compensation regulations: cabbage, kale, broccoli, mushrooms and soft fruit. The member states do get a reserve of 3000 tonnes for additional compensations, which covers all products named above. Member states are able to decide for themselves which products are most important.
The allocation of the money remains as it was: 75% compensation for members of producer organizations, 50% for non-members.

Ukraine increases export EU
In this year's May-June period, export from Ukraine to the EU increased by 25% compared to the same period last year. The export of fruit and vegetables has more than doubled. The export was fuelled because the EU lifted import restrictions, and because of a devaluation of the Ukrainian currency, the hryvnia. Trade with the EU, amounting to 587 million dollars, nearly completely compensates for the lost export to Russia, worth 592 million dollars. Growing markets for Ukrainian produce in the EU are Belgium, the Netherlands and the United Kingdom. Countries that are importing less from Ukraine are Ireland, Croatia, Portugal, Estonia and Slovakia. 

Russia fears high prices in winter
There already were concerns, but now the Russian government has also voiced its concerns on possible price increases in the winter months and the spring of 2015. Although the harvests were larger this year, the country does not have sufficient storage capacity. Investments in modernisation and improvement of infrastructure are therefore necessary. The Ministry of Economic Development also calculated that an additional 2600 ha of greenhouses is needed on top of the 1900 ha the country currently has, in order to be less dependent on import.

Serbia and Belarus main suppliers
According to statistics, 26-31% of fruit and vegetable import originated from the EU. In the first weeks after the boycott, a significant shift is visible in export data. Serbia and Belarus have exported remarkably more to Russia. This mainly concerns re-export of European produce, which is shipped to Russia under the radar. Kazakhstan, Armenia and Turkey are also mentioned as go-betweens for European produce on its way to Russia.

Following reports on smuggling routes, Russia has tightened its border security. Smuggling has become more difficult, and only very small volumes are reportedly crossing the border now. According to a trader, smuggling has decreased by 80% compared to the start of the boycott. The Russians appear to have closed the smuggling routes through Belarus. The past weeks, several reports talked of European produce entering the Russian market despite the ban.

Tartarstan grows bell peppers
Russia is facing a shortage of bell peppers due to the loss of import. For that reason, the republic of Tartarstan has begun cultivation of bell peppers. In the greenhouse complex, half a hectare of bell peppers has been planted.
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