BETHELEHEM, Pennsylvania — In response to Russia’s Food Ban, the European Commission has committed 125 million euros ($170 million) for compensating fruit and vegetable growers for produce that will not be sold.
The funds come from a special 420 million euro fund established by the current Common Agricultural Policy for farmers to combat devastating emergencies.
The measure, intended to prevent prices from reaching crisis levels, is effective immediately and will continue until November.
The arrangement will cover a variety of produce, including but not limited to tomatoes, carrots, white cabbage, peppers, cucumbers, mushrooms, apples, pears and kiwis. The crops that are the most affected by the ban are apples, pears, tomatoes and cucumbers, all produce currently in full season.
EU officials hope that most of the unsold produce will be given away for free to institutions such as food banks, prisons, schools and hospitals. However, it is inevitable that some food will perish. The compensation includes produce that are harvested before they ripen and those left to rot.
The economic costs of the food ban are beginning to affect both Europe and Russia.
In Europe, some prices of products have fallen by more than 50 percent. Also, while producers have appreciated the move toward compensation and crisis alleviation, they worry about the long-term consequences on the sector. Lithuania, Poland, Finland and Denmark each are already facing estimated losses in the millions of euros from the ban.
For Russia, where EU exports of fruits and vegetables accounted for $2.7 billion last year, prices have already begun to rise. In St. Petersburg food prices rose by 10 percent even before the sanctions could impact prices. St. Peterburg’s government economic policy chief, Anatoly Kotov, has said the price of pork has increased by 23.5 percent while the price of chicken has risen by 25.8 percent.
Russia has begun to look for alternative countries, such as Brazil, New Zealand and China, to import its produce. Robert Wood of The Economist Intelligence Unit reported that Russian companies have already agreed to business deals with Argentina and Brazil.
Even with the promising search for alternative markets, Russia is currently facing the consequences of the EU sanctions and its own food ban. Disposable Incomes have decreased dramatically and the growth forecast is projected at 0.5 percent, the lowest since the economic contraction in 2009 following the global recession.
However, despite the economic slowdown, Putin’s popularity with Russians has caused consumer confidence and ‘social comfort’ to soar. For now, it is unknown whether the Russian population will continue to be positive as their economy begins to show troubling signs.
Nonetheless, through all these geopolitical maneuverings, bans and sanctions, ultimately, those in poverty will face the harshest consequences as essential resources are used as political tools.
– William Ying