RESPONSE: IMPACT OF RISING FOOD/AGRICULTURAL

UNCLAS LJUBLJANA 000195 SIPDIS SIPDIS EEB/TPP/ABT/ATP JANET SPECK, EUR/NCE TOM YEAGER E.O. 12958: N/A TAGS: EAGR EAID ETRD ECON PGOV PREL SI SUBJECT: RESPONSE: IMPACT OF RISING FOOD/AGRICULTURAL COMMODITY PRICES - SLOVENIA REF: A. SECSTATE 39410 ¶B. LJUBLJANA 71 Minor Political/Economic/Environmental Impact -------------- ¶1. (U) Slovenia is an EU and eurozone member with a high level of political and economic stability. Rising food prices have not yet had any environmental impact in Slovenia. The main political and economic impact of increases in consumer food prices in Slovenia is in regards to inflation. Slovenia's inflation currently stands at 6.5 percent and the sharp rise in food prices has contributed to Slovenia inflation rate, the highest of all the eurozone countries. Food prices in Slovenia went up 13 percent from October 2006 to October 2007 and is on the rise. This rise in food prices and inflation spurred several public protests in March and April by Slovene trade unions for higher wages in line with inflation. With parliamentary elections approaching this fall, higher food prices might become even more of a prominent political issue. Although commodity prices are also increasing, the Government of Slovenia attributes the rise in its inflation to the retail sector. Thus far, there has been no impact on public attitudes toward agricultural biotechnology or biofuels. Steady Supply and Demand -------------- ¶2. (U) Slovenia's demand and supply of food has not changed. Slovenia's agriculture sector contributes less than 2 percent to the gross domestic product (GDP). Slovenia is a net importer of food. While Slovenia produces potato, meat, fruit, vegetables and some grain for domestic use, it imports rice, soy, and most grains from Eastern Europe and Asia. So far, this country of 2 million has been able to maintain its level of food imports. Policies Remain the Same -------------- ¶3. (U) As an EU member state and a part of the eurozone, Slovenia's political and economic policies are harmonized with the EU's. Slovenia has not made any domestic changes in policy in response to food prices. Post has not been involved in food issues in Slovenia and has no concrete suggestions for policy changes. SHELTON