Voluntary Report - public distribution

**Date:** 7/19/2004

**GAIN Report Number:** AU4019

AU4019

**Austria**

**Agricultural Situation**

**What\'s New in Central Europe**

**2004**

**Approved by:**

![](media/image1.wmf)Sarah Hanson

U.S. Embassy

**Prepared by:**

Jana Mikulasova

**Report Highlights:**

This newsletter provides an update on upcoming market promotions and an
overview of recent market trends, trade policy issues, and commodity
analyses for the countries of Austria, Bosnia-Herzegovina, Croatia,
Czech Republic, Hungary, Slovenia, and Slovakia.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Vienna \[AU1\]

\[AU\]

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| ![](media/ | ***WHAT'S NEW IN CENTRAL EUROPE***                      |
| image2.png |                                                         |
| ){width="1 | ***AGRICULTURE -- POLICY -- TRADE***                    |
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| *          |                                                         |
| Newsletter |                                                         |
| covers:*   |                                                         |
|            |                                                         |
| * Austria |                                                         |
|  Bosnia   |                                                         |
| --H        |                                                         |
| erzegovina |                                                         |
|  Czech    |                                                         |
| Republic  |                                                         |
| Croatia   |                                                         |
| Hungary   |                                                         |
| Slovakia   |                                                         |
| Slovenia* |                                                         |
|            |                                                         |
| *"YOU DO   |                                                         |
| THE        |                                                         |
| BUSINESS,  |                                                         |
| WE KEEP    |                                                         |
| YOU        |                                                         |
| INFORMED"* |                                                         |
+------------+---------------------------------------------------------+

*News*

* Austria*

**USGC/NCGA Biotech Mission to Austria:** On June 25, the Austrian
journalist Dr. Martin Kugler of "Die Presse" daily newspaper met with
representatives of the U.S. Grains Council and the National Corn Growers
Association during their Biotech Fact Finding Mission to Austria and
Hungary. For a translation of Dr. Kugler's June 28^th^ article, see
GAINS report AU4015.

**Austria's Implementation of EU T&L Regulation:** The Government of
Austria amended the 1975 Austrian Food Law to conform to the new EU
Traceability and Labeling (T&L) regulations. Public enforcement agencies
are planning to carry out inspections to control ingredients and oversee
labeling of possibly affected foodstuffs. Due to widespread public
skepticism towards GMOs, Austrian retailers have informally agreed to
ban all agricultural biotechnology that would have to be labeled. The
food industry will use paper trails and identity preservation (IP)
systems to control and document this policy. (See AU4017)

**Sugar Update:** In 2003, sugar beet acreage amounted to 43,267 ha, a
decrease of 1,197 ha compared to the previous year. The sugar beet
harvest amounted to 2.54 million MT. Yields amounted to 587 MT per ha.
Austria is net exporter of sugar. Major export countries include
Croatia, Romania, Italy, Bosnia-Herzegovina and Macedonia. (See
AU4012[^1])

**Pumpkin Seed Oil-The \"Green Gold of Styria\":** Styrian pumpkin seed
oil is a traditional specialty from the Austrian eastern provinces of
Styria, Burgenland and Lower Austria. Total production of pumpkin seed
oil in 2003 amounted to 1.5 million liters. Major export countries
include Germany and other Western European countries. New target
markets, where promotion activities have already started, are Japan and
the United States. (See AU4011)

* Bosnia --Herzegovina*

**Poultry Market Update:** Bosnian poultry consumption has been
increasing for several years with domestic production growing as well.
At present, there is a shortage of poultry meat for processing, and
Bosnian processors find imported poultry meat cheaper than locally
produced product. Market opportunities for U.S. poultry products are
still somewhat limited because of relatively high protective tariffs and
competition by neighboring suppliers who enjoy free trade agreement
provisions. (See BK4017)

**Establishment of the State Veterinary Border Inspection Service:** The
Bosnia and Herzegovina National Government decided to unify its
veterinary border inspections by bringing the service under the
authority of the State Veterinary Office. Under the previous
establishment, veterinary border inspections were a shared
responsibility by three veterinary departments (two entities and one
district). A single veterinary border inspection service should
contribute to better protection and control of public and animal health,
as well as a more efficient veterinary sector. (See BK4016)

**SVA Study on Animal Genetic Resources:** Bosnia and Herzegovina State
Veterinary Administration (SVA) has completed a study on the country\'s
animal genetic resources. This is the first study done after the
1992-1995 war, which resulted in extensive loses in the livestock sector
and changes in animal genetic resources. The study provides general
information on the country, its agricultural/livestock sector, animal
genetics, and statistics. It also identifies the main problems and
priorities for the livestock sector and reviews the sector\'s
institutions and regulations. (See BK4014)

**Q Fever Outbreak Reported in Banja Luka:** Approximately 100 suspected
cases of human Q fever have been reported in Banja Luka with the
Institute for Health Protection declaring an epidemic. The disease was
likely contracted from nomadic sheep flocks, and the regional veterinary
inspection service is ordering farmers to relocate. The Republika Srpska
Chief Veterinarian stated blood tests would likely confirm Q fever.
Veterinarian officials are working to track and test suspected flocks.
(See BK4012)

**Establishment of State Phytosanitary Administration:** The Bosnia and
Herzegovina Council of Ministers recently established a State
Phytosanitary Administration. The Administration has yet to be organized
and staffed. Once established, it will be in charge of drafting
regulations, improving plant health protection, policy issues, serving
as the enquiry point and representing BiH internationally. The Ministry
of Foreign Trade and Economic Relations will be the umbrella
organization for the Administration. (See BK4011)

**New Animal and Animal Product Import Requirements:** The Government of
Bosnia and Herzegovina (BiH) recently adopted a decision on the
requirements for the import and transit of live animals, animal
products, veterinary medicines, and animal feed and waste. This decision
gives the State Veterinary Office (SVO) responsibility over "prior
import approvals". Entity ministries of agriculture are no longer
involved in the import approval process. Six border crossings have been
designated for the import and transfer of live animals and animal
products. (See BK4010)

**BiH and European Integration:** The European Commission (EC) recently
approved a feasibility study assessing the readiness of Bosnia and
Herzegovina to begin negotiations for a Stabilization and Association
Agreement (SAA) on the condition that BiH makes significant progress in
16 areas identified as priorities for action. The BiH needs to harmonize
its veterinary and phytosanitary legislation to that of the EU before
negotiations commence. BiH is making little progress in meeting the
requirements, and it is unlikely that SAA negotiations will begin in
2004. (See BK4008)

**Requirements for Animal and Animal Product Export Facilities:** Bosnia
and Herzegovina (BiH) is enforcing new requirements for foreign
facilities that export live animals and animal origin food products to
the country. The export facilities must be approved for export to the
European Union or come from countries that have equal or better
veterinary practices than BiH. The U.S. veterinary practices are
recognized as being better than BiH\'s. (See BK4006)

**Bosnia Suspends FTA Implementation**: The Bosnia and Herzegovina (BiH)
Council of Ministers unilaterally suspended implementation of the
Croatia and Serbia and Montenegro FTAs for several agricultural products
until April 1, 2004. It is not known whether the suspension will be
lifted or prolonged. Based on these FTAs, the Government is now focusing
on bilateral veterinary protocols that will include lists of foreign
facilities approved for export between the countries. Increased support
to agricultural producers was also expected but hasn't occurred due to
limited budgets. (See BK4005)

* Czech Republic*

**Wine Market Update:** Exports of U.S. wine to the Czech Republic are
growing rapidly with further increases expected. The Czech Republic
imports about half of its total wine consumption. Wine has partially
replaced traditional Czech beer, and with higher disposable income,
higher quality wines and new world wines are becoming more popular.
After EU accession on May 1, 2004, the import tariff rate for wine
dropped from 35% to 7 to 8% (See EZ4015).

**Czech Authorities Confirm 12th BSE Case:** On June 16, 2004, the State
Veterinary Administration (SVA) confirmed the 12th case of BSE in the
Czech Republic. The cow was born on January 4, 2000 in a cooperative in
Horni Kalna in northeast Bohemia. In the next three months, 241 cows of
cohort will be destroyed and tested. This incident follows recent cases
confirmed on May 11, 2004 and April 22, 2004. Since February 2001, over
600,000 cows have been tested for BSE and 1,653 heads of cohort have
been destroyed. Beef consumption has not decreased as a result of the
BSE findings. (See EZ4014)

**Czech Authorities Confirm 11th BSE Case:** On May 11, 2004, the State
Veterinary Administration (SVA) confirmed the 11th case of BSE in the
Czech Republic. The case occurred in a four-year-old breeding bull. This
incident follows recent cases confirmed on April 22, 2004 and January
23, 2004. (See EZ4013)

**New GMO Law:** In February 2004, the Czech Republic passed law 78/2004
on genetically modified organisms (GMO) replacing law 153/2000. The law
officially came into force on February 25, 2004, and major changes
include an easier approval process for contained use GMOs, as well as
changes for the participation of civic associations in the approval
process. In January 2004, the Ministry of Environment approved
Monsanto's YieldGuard corn (MON810) for release on the market. (See
EZ4011)

**National Biosafety Framework:** In March 2004, the Czech Republic
officially finished its United Nations Environmental Program/Global
Environmental Fund (UNEP/GEF) National Biosafety Framework project. The
Czech Republic joined the project in July 2002. The goal of the project
was to develop conditions for the safe handling of living and
genetically modified organisms (LMO/GMO) and to meet the requirements of
the Cartagena Protocol. The outcome of the project is a detailed report
describing Czech biosafety policy; the regulatory regime; the system of
handling LMO/GMO applications, monitoring and enforcement; and
mechanisms for informing the public. (See EZ4010)

**Oilseeds Update:** In MY 2003/04, total oilseed area increased by 2.8%
to 421,300 hectares, but the composition of plantings changed
dramatically. Due to bad weather (frosts and drought), winter rapeseed
plantings dropped and were replaced with spring sunflower, mustard and
soybean plantings. Due to lower yields, total production decreased by
27% to 600,000 MT. Rapeseed production met domestic demand but exports
disappeared. For MY 2004/05, oilseed plantings should return to normal
with rapeseed production at 630,000 MT, sunflower at 60,000 MT, poppy
seed at 15,000 MT, mustard at 40,000 MT and soybeans at 7,000 MT. (See
EZ4009)

**Czech Organic Production on the Rise:** Organic production in the
Czech Republic is projected to amount to 10% of total acreage by 2010.
At present, domestic production does not meet demand and many products
are imported. U.S. organic fruits, vegetables, and high value products
all have good market prospects. (See EZ4007)

* Croatia*

**HRI Market Update:** Croatia's slowly improving standard of living is
resulting in an increase of foods eaten away from home. In addition,
tourism is growing and accounts for a significant portion of the
economy. Hotel, Restaurant, and Institution (HRI) firms buy most food
ingredients from specialized wholesalers. Most imported items are
shipped from countries in the European Union, which creates
opportunities for U.S. exporters servicing warehouses in Europe. Direct
imports are negligible. U.S. food exports with best sales potential
include dried fruits and nuts, fish and fish products, rice, wine, fresh
fruit, and snack foods. (See HR4012)

**Retail Sector Market Update:** Croatia's supermarket sector has been
growing rapidly with supermarkets representing 50% of total food
retailing in 2002. Foreign chains such as Billa, Kaufland, DM, Ipercoop,
Metro, and Mercator have all invested in this market and are present.
Croatia's supermarket growth represents an opportunity for U.S.
exporters. Best prospects include snack foods, processed fruit, tree
nuts, wine, beer, and pet food. (See HR4009)

**Swine Genetics Market:** Swine genetics in Croatia are improving as
commercial slaughter houses are sourcing meat units and purchasing lower
fat hogs. Lower quality traditional carcasses (the largest share of
production) are being heavily discounted, and these market changes are
creating demand for consistent quality hogs. At present, there is a
shortage of piglets for fattening. Progressive producers are responding
to the new demand and are interested in crossbreeding present breeds and
establishing grandparent stock. This is an opportune time for the
promotion of U.S. swine genetics to Croatia. (See HR4008)

* Hungary*

**Pre-harvest Grain Prospects:** Hungary\'s wheat crop is expected to be
1.5 million MT above the 2003 harvest. At present, the barley crop is
expected to be above 1.1 million MT. High wheat crop forecasts in
Europe, financing, and storage limitations may aggravate crop handling.
Trade sources expect increased wheat exports to other EU countries, as
well as to third countries. (See HU4013)

**1st Quarter Food and Ag Imports Up 30%:** The volume of Hungary's
agricultural and food imports grew 30 percent in the first quarter of
2004. Dairy, pork, and poultry imports were four to nine times higher
than purchases during the same period of 2003. While farm organizations
repeatedly recite the "EU shock" mantra, Hungary's first quarter
agricultural exports grew by an impressive 23 percent. (See HU4012)

**Hungarian Wine Tariffs Drop from 62% to 8%\--Opening Market to U.S.
Wine:** Wine imports to Hungary are currently increasing. The dramatic
drop of wine import tariffs in Hungary provides a unique opportunity for
US wine exporters to position their product in this rapidly expanding
new EU member country. Disposable per capita income is growing and the
Hungarians are ready to spend extra money on good quality wine. US wine
exporters interested in the Hungarian market must position themselves in
the market now before other New World producers dominate the Hungary\'s
import market. (See HU4010)

**Oilseeds and Products -- Annual report:** The 2003 sunflower crop was
the largest in seven years, and farm expectations are high for MY
2004/2005. Weather has been good thus far this year, and oilseed
producers will receive increased direct payments under the EU Common
Agricultural Policy. Stagnating poultry and swine production will limit
the demand for domestic and imported protein meals in the next years.
(See HU4009)

**Higher Wheat and Corn Exports Expected:** After the very low grain
harvest in 2003, Hungary's grain trade is small. The upcoming EU
accession will not result in major changes in the growing pattern.
Normal weather points to an average crop in 2004. Contracting animal
production will result in higher wheat and corn exports in 2004/2005.
Hungary strictly follows EU biotechnology regulations, and it is
expected that biotech varieties will not be introduced in the next few
years. (See HU4007)

**Expected Drop in Swine Production:** The Government of Hungary is
providing extra subsidies to the swine sector to correct market
shortfalls and prepare for EU Accession when the sector will no longer
be subsidized. Other EU-acceding countries, such as Czech Republic and
Poland, are doing likewise. Analysts expect a drop in Hungary's pork
production and export numbers in upcoming years. (See HU4006)

**Sugar Update:** Sugar production was low in 2003, due to drought. The
Government of Hungary is imposing a high supplemental duty on sugar
imports to prevent buildup of speculative stocks. (See HU4005)

* Slovakia*

**Food and Agricultural Import Regulations and Standards:** On May 1,
2004, the Slovak Republic became a member of the European Union (EU),
and all EU food rules, regulations, and laws apply. For information on
the laws and regulations for food, food import rules, and contact
information in Slovakia, see GAINS Report LO4010

**Sugar Update**: In 2003, Slovak sugar factories processed 1.17 million
MT of sugar beets. Although this volume was down by 172,000 MT compared
to 2002, sugar production dropped by only 11,000 MT due to a high
average sugar content of 16.5 %. Slovakia is a net sugar exporter. Major
changes in the Slovak sugar industry are not expected with Slovakia's EU
accession in May 2004. (See LO4008)

**Fresh Deciduous Update:** In 2002, Slovakia's fruit production dropped
by 803 MT (-1 %). Consumption of fruits and fruit products decreased by
5.5 kg (-9.7 %) to 51.3 kg per capita. In 2002, the Slovak Republic
imported 168,451 MT of fresh fruit and exported 14,712 MT. For processed
fruits, the Slovak Republic imported 31,169 MT and exported 9,823 MT.
(See LO4007)

**Slovak Food Industry and EU Accession:** According to the Ministry of
Economy (MoE), the dynamic economic growth of Slovakia's food industry
will slow down during the next decade. The slowdown will be due to sugar
and dairy production quotas in the EU. The MoE also expects increased
concentration in the food-processing sector due to massive foreign
investment. The EU accession should result in increased food consumption
in general. (See LO4006)

* Slovenia*

**Appointment of New Slovenia Agricultural Minister:** On April 20,
2004, Dr. Milan Pogacnik was appointed the Minister of Agriculture,
Forestry and Food, replacing Minister Franc. His background includes 33
years of active participation in the field of education, research and
professional work in veterinary medicine. (See SI4006)

*Calendar of Events in the Region*

*Market Promotions Activities in Austria & Central Europe*

**Austria**

May 2-10 Central European "Organics" Journalist Mission to U.S.

June 11 U.S. Wine and Seafood Promotion, Loipersdorf

**Czech Republic**

June 14 U.S. Wine Festival (19 exhibitors, 60 wineries, 230 US wines).

**Croatia**

June 3-6 KRMIVA Annual Feed Conference & Trade Show, U.S. Livestock
Genetics Export, Inc. speaker and trade show participation.

**Hungary**

Sept. 7-15 Hungarian Wine Festival, Budapest (FAS Office to attend).

**Slovakia**

September Slovak Wine Competition, Bratislava

*Visitors*

**Austria**

April 18-19 Lita Etchiverri, FAS/AGX

June 24-25 Biotech Mission, U.S. Grains Council & National Corn Growers
Assoc.

**Czech Republic**

April 19-21 Lita Etchiverri, FAS/AGX

May 18-June 4 Faizur Choudry, FSIS (routine audit)

June 29 American Farm Bureau Delegation

August 9-11 Bryan Purcell, PECAD

**Croatia**

March 1-20 Aurora Craver, FSIS Inspector (routine audit)

**Hungary**

April 21-25 Lita Etchiverri, FAS/AGX

June 29 American Farm Bureau Delegation

August 16-17 Bryan Purcell, PECAD

**Slovakia**

August 12-13 Bryan Purcell, PECAD

*Holidays and Embassy Closures*

**All Posts**

September 6 Labor Day

**Czech Republic**

September 28 Statehood Day

**Croatia**

August 5 Patriotic Gratitude Day

**Hungary**

August 20 National Day

*Contacts for Additional Info*

#### Austria

#### Office of Agricultural Affairs

#### American Embassy

#### Boltzmanngasse 16

#### A-1090 Vienna Austria

#### Tel: +43-1-31339-2249

#### Fax: +43-1-3108208

#### Email: [**agvienna@usda.gov**](mailto:agvienna@usda.gov)

#### [**http://www.usembassy.at/en/usda**](http://www.usembassy.at/en/usda)

#### Bosnia-Herzegovina 

#### Office of Agricultural Affairs

#### American Embassy

#### U.S. Embassy

#### Ali Pasina 43

#### 71000 Sarajevo, Bosnia-Herzegovina

#### Tel: +387-33-445-700, x 2099

#### Fax: +387-33-212-692

#### E-mail: [**Sanela.Stanojcic-Eminagic@usda.gov**](mailto:Sanela.Stanojcic-Eminagic@usda.gov)

#### Czech Republic

#### Office of Agricultural Affairs

#### American Embassy

#### Triste 15

#### 11801 Prague, Czech Republic

#### Tel: +420-257-531-170

#### Fax: +420-257-531-173

#### Email: [**Petra.Choteborska@usda.gov**](mailto:Petra.Choteborska@usda.gov)

#### Email: [**Jana.Mikulasova@usda.gov**](mailto:Jana.Mikulasova@usda.gov)

#### Croatia Office of Agricultural Affairs U.S. Embassy Thomas Jefferson 2 1010 Zagreb, Croatia Tel: +385-1-611-2467 Fax: +385-1-665-8950 Email: [**amisir@inet.hr**](mailto:amisir@inet.hr)

#### Hungary

#### Office of Agricultural Affairs Bank Center Building Szabadsag Ter 7 H-1054 Budapest, Hungary Tel: +36-1-475-4162 Fax: +36-1-475-4676 Email: [**Ferenc.Nemes@usda.gov**](mailto:Ferenc.Nemes@usda.gov) Email: [**agbudapest@mail.datanet.hu**](mailto:agbudapest@maildatanet.hu)

**Slovakia**

For information about Slovakia, please contact our Austrian or Czech
office.

[^1]: ^\*^ Attaché reports can be found on the Internet at
    <http://www.fas.usda.gov/scriptsw/attacherep/default.asp>