Greek Financial Crisis Hits the Food Industry

07 Jul 2015 --- Greece, a nation famous for its olives and feta cheese, among other culinary delights, is facing the biggest financial crisis in a lifetime, and countries who import Greek goods are starting to feel the pressure.

As Europe’s leaders try to negotiate a settlement plan that will suit Greece in the payment of its €1.6bn debt to the Union, consumers are wary of travelling to Greece and industry is being cautious in its business dealings with a nation that could soon have its assets frozen and detained by the International Monetary Fund (IMF).

For the food industry, there could be significant impact, as Greece is one of world biggest exporters of olives and olive oil and its other food products, such a fruit, vegetables, honey, cheese and wine. The industry would be hard-pressed to find some of these highly particular products elsewhere if the economy grinds to a halt in the coming weeks and months.

Food and agriculture make up 3.5% of Greece’s GDP, the majority of it is exported for consumption overseas, in Europe, Russia, the US and further afield. This brings an important revenue stream for the Greek economy and keeps many farmers and food producers afloat.

Food and agriculture exports totalled around €5.5bn last year and are largely made up of olives, olive oil, honey and wine. The US takes a large proportion of Greek food exports. Some 25% of olives grown in Greece end up in the States, making it a hugely important market for Greece.

As the current situation stands, business is becoming increasingly difficult as Greek exporters are requesting cash payments up front and transportation and infrastructure is disrupted due to lack of immediate funds. Goods that support the agriculture sector, such as fertilizers and fuel are restricted because foreign importers can’t find guarantees that they will be paid. This all means that the agriculture sector could gradually grind to a halt.

Some players are painting the picture darker than others. While many importers of Greek products have reported delays and disruptions, there are others who feel their current and future orders are safe. One Greek producer importer, based in the US, was reported in local media as saying that the company has not had any problems with its orders from Greece and that there will be no interruptions to its current orders.

The future still very much hangs in the balance and most players do not want Greece to leave the Euro. However, if that were to happen, and it is not entirely unlikely, there is a strong chance that Greece would be able to export its goods at a much lower price than currently. This could lead to a huge export boom for the country and would greatly benefit companies that buy into Greek products. The disadvantage of course, is that uncertainty surrounding logistics and payments could lead those importing Greek goods to be overly cautious and send Greece further into depression.

What is being speculated on is what is going to happen now that the Greek people have voted No to a bail-out package tabled by the EU. Some analysts forecast that it will be the end of the Euro in Greece and that it will have to revert to the Drachma. With such uncertainty surrounding future deals, it is not surprising that Greek exporters are being made to wait while events unfold.