CYPRUS: SCRAPIE THREATENS ISLAND'S ANIMAL HUSBANDRY AND

UNCLAS SECTION 01 OF 03 NICOSIA 000844

SIPDIS

SENSITIVE

AGRICULTURE FOR FAS

BRUSSELS FOR FAS

ATHENS FOR FAS

SIPDIS

E.O. 12958: N/A
TAGS: EAGR ECON ETRD TBIO CY
SUBJECT: CYPRUS: SCRAPIE THREATENS ISLAND'S ANIMAL HUSBANDRY AND
DAIRY INDUSTRIES


(U) This cable is sensitive but unclassified. Please protect
accordingly.


1. Summary. Over the past week, Cypriot media have focused on the
ominous implications for the local animal husbandry and dairy
industry of a recent EU court decision calling for the culling of
all animals infected with scrapie. In Cyprus, this decision may
affect up to 116,000 goats and sheep -- a quarter of Cyprus' animal
population. Cyprus is currently fighting the decision before the EU
and is hoping for a postponement of the decision and a softening of
the blow. This being a pre-election period, this issue also has
political ramifications. Unless action on the court's decision is
delayed or reversed, this problem could take points away from
incumbent President Papadopoulos, who is hoping for re-election in
February 2008. End Summary.


2. On September 28, 2007, the European Court of Justice of the
European Communities, following a French appeal, ordered the mass
culling of up to 116,000 sheep and goats in Cyprus over scrapie
fears. The decision has sent shockwaves through Cyprus,
particularly the farmers involved and the incumbent government,
which is hoping for re-election in the February 2008 Presidential
elections. The GOC has until October 31, 2007 to implement the
court's decision but is trying to appeal and gain more time. If
implemented strictly, this decision would deal a serious blow to
Cypriot agriculture.


3. Scrapie belongs to a family of fatal diseases of the brain known
as transmissible Spongiform Encephalopathies (TSEs),that include
mad cow disease. Scrapie itself is not transmissible to humans.
However, there is strong evidence suggesting that the outbreak of
mad cow disease (which is transmissible to humans) in the UK and
elsewhere several years ago was caused by farmers feeding their
cattle ground up remains of animal carcasses infected with scrapie.
Cypriot cattle farmers, for their part, reportedly make a point of
not engaging in this practice.


4. Scrapie in Cypriot sheep first appeared in the mid-1980s and is
believed to have been contracted through the importation of an
infected flock of sheep from Germany. Cyprus has been combating the
disease since then. Cypriot scientists have identified the gene
type susceptible to the disease, using this information to breed
sheep that are resistant to the disease. In a pioneering program,
Cypriot animal health authorities have managed to reduce
dramatically the rate of scrapie infection in Cypriot flocks of
sheep, from almost 100 percent in the late Eighties to around 10
percent currently.


5. Scrapie in goats, however, is a different problem. It has been
around in Cyprus for only about five or six years and, so far, there
is no scientific method of telling apart sick animals from healthy
ones nor differentiating susceptibility by genotype. Contacts tell
us that Cypriot animal health authorities have strong hopes of soon
replicating their success in fighting this disease in goats as they
have done with sheep.

Impact on Agriculture and Economy
--------------


6. If the court decision is implemented strictly, there is no doubt
that Cypriot agriculture would suffer a serious blow. To keep
things in perspective, it should be noted that the overall impact on
the economy at large is not likely to be catastrophic, especially
since Cyprus is a services-based economy. In 2006, the agricultural
sector contributed 2.6 percent to GDP (about CP 217.7 million, USD
530 million) and employed 6.5 percent of the economically active
population (some 23,870 people). Animal husbandry and the dairy
industry are important sub-sectors of agriculture.


7. The 116,000 animals (83,000 goats and 33,000 sheep) that would
have to be slaughtered make up about a quarter of the population of
these animals in the government-controlled area (around 430,000
animals). Correspondingly, about 700 herds of goats and sheep would
have to be culled out of a total of 3,500 flocks.


8. In strictly monetary terms, it is estimated that it will cost
the government about CP 11.8 million (USD 28.7 million) to
confiscate these 116,000 animals, and compensate farmers for their
loss of income for up to five years and help them get back on their
feet. (Minister Photiou has already announced plans to offer
immediate assistance of CP 900,000 and officials here assume that

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the EU will offer generous subsidies to compensate Cyprus.)
However, this is only the tip of the iceberg. A mass culling of
this scale would cause practical problems in terms of properly
disposing of the carcasses of the dead animals, estimated to
generate 6,500 tons of waste.


9. Perhaps most importantly, though, such a massive culling would
put out of business around 700 farmers for at least two years (the
time it takes to import new animals and rebuild the industry). This
would seriously disrupt the future development of animal husbandry
on the island, since many farmers might choose another line of
business in the meantime, never to come back to animal husbandry.
Consequently, the disruption to the island's dairy industry for the
domestic market as well as for exports would be enormous. Sheep and
goat milk are the main ingredients for making halloumi, Cyprus' most
famous patented product. Exports of halloumi have been thriving in
recent years, reaching CP 17 million (USD 41.4 million) in 2006, and
making up 6.5 percent of Cyprus' total exports. Additional export
sales have been limtied only because of lack of production capacity
due to a lack of raw milk.

Negotiations to Soften Blow Under Way
--------------


10. Several other EU countries (including Italy, Greece, Spain, the
UK and Ireland) are also affected by scrapie, although not to the
same extent as Cyprus, due to the island's high proportion of goat
and sheep farms. However, what really sets Cyprus apart from the
other countries with the same problem is that Cyprus has had
considerable success in dealing with this problem in sheep over the
years.


11. The GOC is trying to use this argument to convince the EU
authorities to soften the blow on Cyprus. Cyprus is seeking delays
in implementing the decision, and also to restrict any culling to
only infected animals, as opposed to entire flocks comprised of both
healthy and sick animals. The GOC will also argue that, despite the
prevalence of scrapie in Cyprus for the last 20 years, no humans --
or animals other than goats and sheep -- have ever been affected.
Local representatives of the dairy industry have told us that they
are optimistic about the outcome of these negotiations.


12. GOC Veterinary Services have been following very strict
procedures for slaughtering goats and sheep since July 1, 2007,
which are even stricter than those prescribed by the Commission.
Specifically, (a) all goats and sheep older than 12 months, even
those without any clinical symptoms of scrapie, are tested before
offered for public consumption. High risk parts of the animals
(heads, spleen, spine and intestines are removed before leaving the
slaughterhouse). (b) Animals younger than 12 months without
clinical symptoms are allowed for consumption without prior testing
but after the removal of the spleen.


13. Cypriot officials, led by Agriculture Minister Photiou, are
currently negotiating intensively with EU authorities on
ameliorating the impact on Cyprus. There are reports that the
European Commission is planning to appeal against the decision of
the European Court of Justice of the European Communities. On
October 18, local media also reported that Marcos Kyprianou, the EU
Health Commissioner (and by chance a Cypriot),had prepared an
urgent regulation to postpone for five years the culling of sheep
and goats flocks suffering from scrapie in all affected countries.
The new regulation will be tabled before the Commission's Food
Experts Committee, which has representatives from all 27 countries,
and can be passed as early as this December.


14. Comment: The conspiracy-minded in Cyprus believe there are
ulterior motives behind France's move to seek strict enforcement of
the court decision. This theory contends that this is France's way
of promoting the interests of French cheese producers, at the
expense of up-and-coming rivals from southern Europe, mainly Greece
and its ability to use "feta" as a geographic indicator for brined
white cheese. According to one source, "the French think they will
get back the market by denying Greeks access to any milk."


15. Comment continued: The meat and milk of sheep/goats may be a
relatively minor factor from a macroeconomic view. But for Cypriots,
the Sunday "souvla" (lamb roast) and halloumi cheese for breakfast,
lunch or appetizer are cultural icons on par with hot dogs and apple
pie for the average American. If the price of the Cypriot cultural
identifiers goes too high, it would be a major risk for any

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government here regardless of the underlying cause. This is
especially true with Presidential elections only a few months away.


SCHLICHER