Dairy cows

The EC compensation scheme for suppliers affected by the Russian import ban may be extended to cover dairy and meat

As the fallout from the Russian trade ban on Western foods continues, the European Commission is considering extending its emergency fund for fruit and vegetable growers to meat and dairy producers.

In setting up the €125m fund – announced on Monday (18 August) – the Commission had prioritised fruit & veg because of their highly perishable nature and to avoid them being dumped, said spokesman Roger Waite. “We decided to focus on perishables in the first instance as many products are currently in season, and to avoid them being dumped elsewhere in the European market as a result of the Russian trade embargo.”

However, the EC was now investigating the need to take further measures by “also looking at the effect the ban will have on dairy and meat products”, Waite added.

Read this: What the Russian export ban means for UK food and drink

The dairy sector is believed to be particularly vulnerable. Experts last week said they expected UK dairy prices could fall in response, as Russia is a major importer of EU cheese and butter, and UK prices typically follow EU trends.

The compensation scheme is funded through the CAP emergency measures mechanism. Waite said any extension of the fund to cover other sectors would need to apply for further funding from the CAP, which has a reserve for market crises paid for primarily by withholding approximately 1% of all farmer direct payments.

In allocating the fruit & veg funds, compensation would be based on volumes producers have wasted or harvested early, Waite said. The scheme is open for applications until the end of November. To claim compensation producers need to apply through their local producer organisations, even if they are not a member, and need to supply proof of the volumes withdrawn from the market.

It is not clear yet how much of the €125m fund British growers will be eligible for. A spokeswoman for Defra said it was “continuing to monitor our food and farming industry to assess the potential impact of the Russian food ban on businesses”.

FDF figures suggest the total value of UK food exports to Russia in 2013 came to £97m – less than 1% of the UK’s total £12.4bn food exports. Of this total, products worth just under £39m have been banned. UK products covered by the compensation scheme amount to less than £900,000, while the value of meat and dairy exports that could become eligible if it is extended amount to £8.8m.

NFU chief economic adviser Phil Bicknell welcomed the introduction of the EC’s fruit and veg compensation scheme. UK food and drink exports directly to Russia were relatively small, he said, so the biggest risk for the UK from the embargo was “the potential impact a congested EU marketplace could have on the supply and demand balance”.

The EC is hoping its compensation scheme will prevent a price crash for EU produce, with Waite saying “the emergency fund has been designed to ensure that prices in the EU market for fruit and vegetables do not collapse”.

The Russian Federation announced on 7 August a year-long ban on fruit, vegetables, meat, fish, milk and dairy imports from the EU, US, Australia, Canada and Norway, in response to Western sanctions over its involvement in the Ukraine crisis.