June 3 (Bloomberg) -- European Union vegetable supplies are being destroyed as demand is curbed by the deadliest outbreak of E. coli on record, with producers losing millions of euros a day because of trade restrictions.
Cucumber, lettuce and tomato prices are tumbling and orders are being canceled, said Philippe Binard, general delegate of Freshfel Europe, which represents the industry. The market is at “an alarming standstill,” according to the Brussels-based group. The losses are forcing some farmers out of business, said Copa-Cogeca, an agricultural lobby group based in Brussels.
“This is having a serious impact because we’re dealing with perishable products,” Binard said by phone today. “We can’t store it and say that in six months, when the market is better, we’ll ship it.”
Infections have been found in 10 European nations and the World Health Organization says at least 16 people died. Some have a rare strain which releases a toxin damaging kidneys and other organs. While German officials are advising consumers to avoid raw tomatoes, cucumbers and lettuce, the original source is most likely cattle, said Rowland Cobbold, a veterinary public health researcher at the University of Queensland in Australia.
Russia, which according to Freshfel buys 400 million euros ($580 million) of EU vegetables a year, banned imports yesterday. That contravenes World Trade Organization rules, Fernando Valenzuela, head of the EU delegation to Russia, was cited by RIA Novosti as saying. Prime Minister Vladimir Putin said today he won’t “poison people” to satisfy WTO rules.
“Russia is really overreacting to the situation,” Binard said. “The ban applies to all EU countries and to all vegetables, when we know the problem seems to be very isolated to some parts of Germany.”
Spain’s agriculture industry is losing 200 million euros a week and German farmers are losing about 1 million euros a day, said Amanda Cheesley, a spokeswoman for Copa-Cogeca. That should decline after cucumbers from the southwestern European country were ruled out as the source of the bacteria, she said. None tested positive for the type causing the outbreak, the EU said in a statement.
“The Spanish were the most hard hit so they’re quite angry,” Cheesley said. “When you have an announcement like that, consumption falls for all cucumbers in all member states. In Belgium on Tuesday, cucumber sales were 25 percent for 25 percent of the price. In Spain, nothing sold. Hopefully it will pick up a bit now that they’ve cleared Spanish cucumbers.”
Farmers in Italy, the biggest European vegetable producer, harvested 13.65 million metric tons in 2009, the most recent data from the United Nations’ Food and Agriculture Organization show. Spain was the second-biggest with 13.63 million tons. China is the world’s biggest vegetable producer followed by India, according to the UN.
Italian cucumbers sold for 15 cents (22 U.S. cents) a kilogram (2.2 pounds) as of May 29, compared with 70 cents at the end of April, according to data from Instituto di Servizi per il Merca.
“This is impacting the whole supply chain,” Binard said. “The producer is obviously the first to be affected. Behind him are the people who are packing and shipping and the importers and the wholesalers and the retailers are all being affected. A lot of transport is being canceled and it’s not just in Germany, it’s a situation affecting the whole of Europe.”
Spanish Prime Minister Jose Luis Rodriguez Zapatero and German Chancellor Angela Merkel spoke by telephone yesterday and agreed that the two countries will try to get aid for European farmers affected, according to an e-mailed statement from the press office of the German government.
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