4 September 1998

Russian chaos a threat

MONEY market chaos in Russia could hit hard-pressed UK farmers as EU export markets come under threat.

"It is a potential major headache," says NFUs Tony Donaldson. About 40% of EU beef and butter, plus 30% of pork, poultry and cheese were sold to Russia last year.

The cereal market also could be hit, although commodities with no intervention option – such as pigmeat – could be first to suffer.

If trade falls, European countries could focus attention on the UK, bringing further price pressure. "Sterlings strength makes us more attractive as a market," says Mr Donaldson.

"There is a threat," agrees Lesley Green at the Meat and Livestock Commission. Russia bought 341,000t of pigmeat from the EU in 1997. And countries like Denmark, which sent 100,000t there last year, may now target the UK, she says.

Independent dairy consultant Mike Bessey says: "It is difficult to see how they will carry on buying dairy products at the rate they have been." The situation, he says, marks a "double whammy" coming on top of the financial problems in the Far East, which have cut off New Zealand and Australian markets.

"All the major exporters will be chasing around looking for fewer markets," says Mr Bessey. And farmers could soon feel the effects, with milk buyers conscious of the situation and "correspondingly cautious" at this weeks Milk Marque selling round.

The sheep trade has already suffered from the drop in the roubles value, with a reduction in the value of skins from £8 to £6 apiece. Further falls are possible, warns the MLC. &#42