Bloomberg News

France Backs EU150 Million for Farms Hit by E. Coli Crisis

June 07, 2011

(Updates with growers’ losses in second paragraph, possible new aid proposal in sixth paragraph.)

June 7 (Bloomberg) -- France, the European Union’s largest agricultural producer, backed a 150 million-euro ($220 million) aid plan as a “first gesture” to compensate farmers in the 27- nation bloc after a deadly outbreak of E. coli decimated demand.

As much as 80 percent of vegetables are being destroyed in some areas because there is no market for them, Copa-Cogeca, a farm lobby group based in Brussels, said today in a report. EU food producers are losing as much as 400 million euros a week from the drop in demand, it said.

EU agriculture ministers were meeting in Luxembourg today to discuss their response to the outbreak, which has killed 23 people and sickened 2,429. They are also contending with an trade crisis after Russia banned imports June 2 and Prime Minister Vladimir Putin said he won’t “poison people” to meet international trade rules.

“It is fair to try to define the way of compensating the loss of the producers,” French Agriculture Minister Bruno Le Maire said in an interview in London today, adding that its scale had yet to be decided. “There has been a great failure, and we have to take that into account and try to improve our safety system so that it will never happen again.”

‘Broad Support Measures’

The Netherlands, the world’s second-largest agricultural exporter, after the U.S., said yesterday it is asking for “broad support measures” for vegetable growers, including buying up of produce that can no longer be sold to consumers. The origin of the outbreak is still unknown.

The European Commission may make an “improved” aid proposal as soon as tomorrow after some member states balked at the initial offer of 150 million euros, EU Agriculture Commissioner Dacian Ciolos said today at a news conference in Luxembourg.

The commission, the EU’s regulatory arm, may look again at “the total available envelope” and the rate of compensation for growers, Ciolos said after the news conference. “We’ll improve this offer but within the available budget.”

The EU had offered to pay 30 percent of the average price over the past four years for cucumbers, tomatoes and salads offered for destruction, commission spokesman Roger Waite said.

‘First Gesture’

The 150 million-euro plan is a “first gesture,” Le Maire said at a press conference in Luxembourg. “I think the crisis will continue, and we’ll need additional aid. French growers are losing money day after day.”

The EU should spend as much as 55 million euros on a three- week media campaign to promote fresh produce, Freshfel Europe, which represents the industry, said today. Sales of cucumbers fell 80 percent to 100 percent in some member states, tomatoes 50 percent to 80 percent and lettuce more than 50 percent, it said in a statement.

Cucumbers slumped to 5 cents a unit from a five-year average of 21 cents, while tomatoes now cost 13 cents a kilogram (2.2 pounds), compared with an average of 60 cents, Copa-Cogeca said. Prices are “well below” production costs, it said.

Spanish fruit and vegetable producers are losing 225 million euros a week because of the outbreak, said Jose Maria Pozancos, director general of trade group FEPEX. The Dutch vegetable industry is losing 80 million euros a week as orders are canceled, the farm group LTO Nederland said yesterday.

--Editors: Daniel Enoch, Patrick McKiernan.

To contact the reporters on this story: Stuart Wallace in London at swallace6@bloomberg.net; Francine Lacqua in London at flacqua@bloomberg.net; Rudy Ruitenberg in Luxembourg at rruitenberg@bloomberg.net.

To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net


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