EU beef sector threatened by Russian quotas

Date: 25/07/1996

By Elizabeth Wise

EUROPE's beef producers may be in for another nasty surprise.

If Moscow goes through with plans to introduce quotas on food imports, European cattle growers could lose much of their access to the huge Russian beef market after already losing many of their European consumers because of the scare over 'mad cow' disease.

Union officials are reacting cautiously, for the moment, to continued threats of Russian import curbs. But if those quotas begin to touch beef, they say, the picture could change.

“Our stocks of beef are already so high after the BSE crisis, that if we have to add 200,000 more tonnes because the Russians will not buy them, it will be a catastrophe,” warned a Commission farm expert.

This month, Russian Deputy Prime Minister Alexander Zaveryukha said Moscow was drafting the quotas, which would cover all food products, and discussing the measures with its trading partners.

But Commission officials say they have not been told which products would be affected, or to what extent.

“If it is only geared at stabilising the economy for a while, our reaction will be moderate,” said one. “But if it really starts to cut our exports, the reaction will be more substantial.”

Beef is the Union's biggest export to Russia, at some 200,000 tonnes a year, followed by beverages.

Rather than dealing directly with Moscow on the quota plan as the US is doing, Commission officials say they will turn to the World Trade Organisation (WTO). Russia is seeking WTO membership and the EU has a representative on the working group studying its application. That candidacy, claimed a Commission official, would be damaged if Russia unilaterally raised import barriers.

“As long as Russia wants to join the WTO, we have some leverage,” said the official.

Commission officials also point out that Russia's 6-billion-ecu trade surplus with the Union gives it a strong hand.

“Of course we are worried,” said the official, “but remember that Russia has no interest in deteriorating relations with its trading partners.”

According to Commission estimates, Russia imports 40&percent; of its food - a drastic situation for a nation already short of cash. Since the fall of the Soviet Union, food production has fallen by half.

The EU's Tacis programme, is trying to help Russia boost domestic food production, but officials admit that those efforts will have only a limited impact and say it will take nearly a decade for Russia to return to pre-crash production levels.