Following Russia’s recent import ban on certain agriculture and food products from EU countries, the agricultural organisations of Estonia, Latvia and Lithuania would like to express their concerns about the serious consequences these sanctions will have on the agriculture and food production sectors of the Baltic States.
Whilst we are not questioning the European Union’s (EU) joint political decision in relation to Russia, we are calling for European solidarity and joint action to mitigate the disproportionately negative effects of the Russian import ban on rural and farming communities in the Baltic States.
Why are Baltic farmers disproportionately affected by Russian import ban?
Even before the Russian import ban came into effect, farmers in the Baltic States were already facing considerable difficulties. Farm incomes have been on a downward trend since 2012 across the EU – with the Baltic States particularly badly affected in this regard. In addition, Baltic farmers continue to receive the lowest level of direct support in the EU. Finally, Baltic farmers have also been dealing with the exceptional costs of preventing the spread of African swine fever – a disease that has entered our territory from third countries.
The Russian embargo dramatically worsens this situation and is likely to have negative consequences for Baltic markets in both the short and medium term which will have knock-on effects on the EU as a whole unless urgent action is taken.
According to Eurostat data, Lithuania alone contributes 20% of total EU annual agricultural exports to Russia, although representing only 0,27 % of EU GDP. The total value of Baltic States exports is over 1 billion Euros. In addition, a large share of Estonian and Latvian exports to Russia pass through Lithuania – especially in the dairy sector. This means that the effects of the Russian embargo on Lithuania will also have a significant indirect impact on Estonian and Latvian producers.
What sectors are most impacted?
The dairy sector is expected to be one of the hardest hit by the Russian sanctions. Dairy products, especially cheese, constitute a significant part of agricultural exports from the Baltic States. In the short period since the sanctions have been applied, our dairy sector is already facing a deteriorating situation. Sharp reductions in raw milk delivery prices, and unjustified terminations of milk delivery contracts are recorded daily. This tendency can only be expected to escalate as a result of increased supply across the EU market.
It is also necessary to take into account the indirect impact of the sanctions on the meat sector, as well as fruit and vegetables. Cattle farms are facing difficulties, as increased supply within the internal EU market will lead a drop in prices for meat products. This will cause huge losses for producers and may even put their businesses at risk. Furthermore, the sanctions will also have an indirect impact on other sectors related to agriculture, such as employment, logistics, feed production, business reorientation and production shifts.
What can be done to mitigate the consequences of the import ban?
In the spirit of solidarity, the agricultural organisations of Estonia, Latvia and Lithuania support concrete actions from the Commission to compensate all farmers across the EU who have suffered significant losses as a consequence of the Russian import ban. In this regard, we welcome recent decisions to welcome EC decision to introduce private storage for some types of milk products and allow for public intervention. However, we regret to see that actual intervention price is still well beyond the actual production cost and call for further revision of intervention prices in order to help covering actual production costs. We would also welcome the temporary reintroduction of export refunds for products subject to sanctions to alleviate the loss of access to the Russian market.
However, we believe that EU support needs to be more targeted and take account of specific needs in different markets, rather than operating on a first come first serve basis.
Given the exceptional challenges already faced by Baltic farmers coupled with the the disproportionate impact of the Russian import ban, we call on the EU to provide specific support to the agricultural sector in Estonia, Latvia and Lithuania. We encourage the Commission to declare the Baltic States an area of specific need and to establish a targeted fund for these countries, aimed at supporting Baltic farmers and compensating them for their exceptional losses. This fund should take account of the region’s specific price trends including the price of raw materials. We firmly believe that such a measure would be the most efficient and effective way of keeping our agricultural sector alive, and minimizing the medium-term costs to the EU as a whole.
In this context, we would encourage the Commission to take the following targeted measures immediately, aimed at supporting the Baltic States:
- Supporting promotional campaigns towards third countries aimed at creating alternative outlets for our produce. The launch of additional common marketing and image building campaigns for EU food products should also be considered.
- Declaring the current situation as force majeure so that Baltic farmers who potentially fail to meet their rural development support obligations to the EC would be able to avoid non-compliance fines, enabling them to continue their farming activities under these exceptional circumstances.
- Supporting the re-orientation of Baltic farmers to other types of farming.
- Finally, providing specific support needed to stop the spread of African swine fever so that it does not travel further into the EU.
We thank you in advance for your consideration and hope that our suggestions will be taken into account. We urge you to consider our requests, recognizing the above listed proposals as the only chance to preserve the agricultural sector in the Baltic States. Otherwise, we fear the combination of the Russian embargo, added to the existing threat of African swine fever, may be irreversibly detrimental to a considerable part of our agricultural sector.