The European Union imposed a five- year minimum price on Chinese frozen strawberries to protect production jobs mainly in Poland from imports that represent a fifth of the EU market, threatening higher costs for consumers.

The price floor of 684.20 euros ($927.67) a metric ton punishes Chinese exporters for selling the frozen fruit, used in jam and yogurt, in Europe below domestic prices or below the production cost, a practice known as dumping. The trade protection aims to help EU producers that employ about 2,700 people as well as around 80,000 Polish farmers who depend on the berries for their livelihood.

"Measures could have a stabilizing effect," the 27-nation EU said in a decision released today in Brussels. The minimum price, due to take effect after publication in the Official Journal in the coming days, will replace temporary EU duties of as high as 34.2 percent introduced in October after Polish producers demanded protection.

The EU is seeking to counter a rise in China's share of the EU frozen-strawberry market to 20 percent in 2005 from 4 percent in 2002. Morocco and Turkey are the other main foreign suppliers to the EU, with a combined market share in the bloc of about 16 percent two years ago.

Under a minimum-price system, the EU imposes a duty when imports are sold at below the set level. The variable levy is equal to the difference between the EU's minimum price and the lower import price.

Benefits Balance Costs

The benefits for producers will outweigh the costs for users, a "number" of whom face "reduced profitability or even financial losses, some of them heavy," according to the EU decision, which European farm ministers made at a meeting in Luxembourg.

Users include France's Groupe Danone SA, the world's biggest yogurt maker, and German jam producer Schwartauer Werke GmbH, according to the EU. Users will have to absorb the cost increase "at least in the short term" because their contracts with retailers fix prices for six months to a year, according to the bloc, which said losses would be about 5 percent for some jam makers and could be 1 percent for yogurt producers.

The price floor "would have a material impact on users of frozen strawberries, but this impact is likely to be temporary," the EU said. "In contrast, the adverse effects" on European producers and farmers "would be of a substantial and lasting nature should measures not be imposed."

Higher Prices?

Consumer prices may rise once yogurt and jam manufacturers are able to pass on the cost increase resulting from the trade protection, according to the bloc, which said strawberry flavor makes up 20 percent to 30 percent of the yogurt market.

"It cannot be excluded that a price increase could impact consumers, at least in the medium to long term," the EU said. "Fruit preparations, especially yogurts, are part of the staple diet for a large segment of consumers."

The levies against China in force since October followed a 2005 dumping complaint by the Polish Freezing Industry Union and a nine-month inquiry by the European Commission. China, the world's most populous country, faces EU anti-dumping duties on about 40 products in total -- more than any other nation.

Under EU practices, the commission can introduce provisional anti-dumping duties for six months and the bloc's national governments -- acting on a commission proposal -- can impose "definitive" measures for five years or end the protection.

Reimbursement

In the Chinese frozen-strawberry case, the EU will reimburse the provisional duties as part of the decision to impose the five-year minimum price.

The price floor of 684.20 euros a ton includes normal EU customs duties. Without those levies, the minimum price would be 496.80 euros a ton for frozen strawberries "containing added sugar or other sweetening matter with a sugar content exceeding 13 percent by weight," 566.30 euros for strawberries "containing added sugar or other sweetening matter with a sugar content not exceeding 13 percent by weight" and 598 euros a ton for those "not containing added sugar or other sweetening matter."