How Europe’s counter-Putin policy could go terribly pear-shaped

BOMBARRAL, Portugal — The Rocha pear makes an unlikely weapon, but these juicy yellow bundles of sweetness are now a useful addition to Vladimir Putin's arsenal as he battles to undermine Western resolve over Ukraine.

Exports of apples and pears are key to the local economy in territory around this western Portuguese town. Russia was a key market — until Putin banned European agricultural products in retaliation for Western sanctions.

Now prices have plummeted and farmers' livelihoods are at risk.

"Most of them can't meet their loan payments to the banks, they can't buy fertilizer or fuel. The situation is desperate, people are without hope," says Antonio Maria Martins, manager of Bombarral's agricultural cooperative.

"They're asking themselves, how can this be happening because of something that's going on so far away in Russia?"

Farmers across Europe are posing the same question.

European Union headquarters in Brussels, Belgium estimates that the ban on EU food imports that Putin imposed in early August could cost European farmers $6.5 billion.

The boycott also hit farm goods from the United States, Canada, Norway and Australia, but the tit-for-tat sanctions are hurting the EU farmers most — almost three-quarters of the banned products come from the 28 EU nations.

"This affects millions of farmers across the European Union," EU Agriculture Commissioner Dacian Ciolos said during an emergency debate in the European Parliament last week. "We are faced with a European crisis."

The ban is stoking rancor within the EU, with countries arguing over the share-out of compensation money. Some politicians complain farmers are paying the price for their government unwisely provoking Putin through the EU sanctions slapped on Russia's financial, energy and defense sectors in response to Moscow's military intervention in eastern Ukraine.

"The EU's foreign policy can't gamble with the interests of European farmers, who deserve a peaceful and responsible relationship with Russia," Pablo Iglesias, leader of Spain's fast-growing far-left We Can party, told the European Parliament.

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In the fruit-growing region around Bombarral about half of the pear crop is exported. Portugal's crisp, Rocha variety is highly priced in Brazil, Britain and France — the main foreign markets. Last year about 10 percent also headed to Russia, says Martins, from the farmers' cooperative there.

"The problem is not just that we're banned from Russia," he explains during a lunch break in the co-op's vast fruit-packing warehouse. "Everybody else is banned, so we've got pears from Belgium and the Netherlands that normally go to Russia flooding our markets in Europe. It's driving down everybody's prices. The same thing is happening with apples from Poland."

He says Portuguese farmers are currently getting less than 9 cents per pound for their pears, down from 15 cents last year. Adding to the pain, the Russian lockout follows tough years due to poor crops and Portugal's long economic recession.

"People are angry, they've been caught in the middle of this," says Davide Cordeiro of Frutalvor, a growers co-op in nearby Caldas da Rainha, which was exporting to Russia before the ban.

"It's not easy, to be growing something and suddenly you find you can't do anything with your produce," he says. "This is a very complicated situation and it’s affecting the whole sector."

It’s not just the exporters who are suffering. Erizete Gameiro is a smallholder farmer who sells her homegrown pears, strawberries and sweet Muscat grapes in the market in Torres Vedras, a few miles to the south.

Erizete Gameiro sits behind her fruit stand in Torres Vedras, Portugal. (Paul Ames/GlobalPost)

"Look, I'm selling for 50 cents," she says. "Last year I was getting double that. Look how good they are, but even at this price I can't sell them."

In response to Putin's embargo, EU headquarters responded quickly by setting up a $161 million fund to help the worst affected fruit and vegetable farmers. Ciolos was forced to suspend payments, however, after a surge of claims from Polish farmers, which officials in Brussels said went beyond the level of damages.

Portuguese fruit farmers around here say they've received nothing in compensation so far.

The country's exports of the banned food products to Russia last year are estimated at $16 million. While that's having a major impact locally, it's dwarfed by the $1.3 billion that Lithuania is losing or the $1.1 billion that Putin's ban is costing Polish farmers.

Ciolos has also set aside $30 million from EU funds to help European exporters divert fruit from Russia to other international markets, but with so much excess fruit out there, exporters aren't optimistic.

"We have to find new markets, but it's not easy," says Cordeiro. "Everybody is trying to do the same thing and there's too much fruit out there. We're looking at the United States, but it's really not easy."

In fact, other countries are rushing to take advantage of Europe's exclusion to slip their produce into Russian markets. Nations as diverse as Brazil, Morocco and Pakistan are pitching their goods as alternatives for Russian consumers.

Turkey, a candidate for EU membership and NATO ally, has irked many in Brussels after officials said the country could double last year's $1.68 billion in food sales by substituting European exports.

That opportunism is adding to fears among European farmers that the Kremlin's boycott could have a long-term impact, making it difficult for them to regain lost market share.

Ciolos has said he will seek support from EU governments to boost emergency funding for the hardest-hit farmers. “We’ll spend 2 billion or 3 billion euros ($2.3 billion or $3.4 billion) if the member states give the money," he told the EU parliament in Strasbourg, France.

Cast-strapped treasuries are reluctant to pay up. But unless they stem the growing rural discontent, Europe's governments may find public support for sanctions on Russia going pear-shaped.