With banks closed, unsold eggs point to deeper woes
avlona, greece — The morning’s fresh eggs were loaded and ready to ship when chicken farmer Angelos Kalyvas slid open the side door on one of his half-empty delivery vans.
“Not good,” said the 52-yearold, surveying the interior. On one side, eggs in cartons were piled high. On the other, nothing. “Orders are going down. Down. Down. Down.”
In a country in the midst of a new and ugly phase in its 51/ 2- yearlong debt crisis, Kalyvas Estate eggs have become an unlikely barometer of life in a nonfunctional economy.
Since Greek banks were shuttered June 29, the second-generation egg farmer has seen business drop by 30 percent. He’s still selling out of his own hens’ daily production of 5,000 eggs but has cut back on reselling from wholesalers, some of whom are racing to find buyers before stocks go bad.
Cash- and credit-starved supermarkets, he said, are reducing
their inventories. “If they run out of eggs, they run out of eggs.” For some troubled bakeries, it’s now either eggs or flour. “And they’re going to go with flour,” he said.
Just as problematic is a crisis in payments. With tight controls on financial transactions, Kalyvas has to cover his daily costs in hard-to-find cash, leading him to demand payments in cash, too. It’s money that many of his clients simply don’t have.
“If we don’t get a deal with Europe . . . Greece is doomed,” Kalyvas said. “But even if we do, things are not going to get better fast.”
Greece and its European creditors failed to agree Saturday on a plan aimed at winning this nation its third bailout package since 2010, with the region deeply divided over a rescue and several nations calling for more efforts by Athens before final negotiations can begin. Any agreement will mean years more of painful austerity, but failure to reach one soon could be worse — triggering a quick collapse of the Greek financial system and its likely exit from the 19-member euro currency union.
Yet even if a deal is struck, Greece could, for a period, remain something akin to a financial zombie state. Already, Greeks cannot download certain cellphone apps or buy songs on Apple’s iTunes, because the capital controls imposed two weeks ago bar international transactions via Greek banks.
As of last week, 29 international airlines stopped accepting reservations from Greek travel agencies because of doubts they could cover the costs of booked tickets. Pantelis Avramidis, chief executive of premier beer maker Elixis, said he is stuck with 1,381 gallons of beer in vats on his factory floor because he cannot transfer money to his Italian bottle supplier. In two weeks the batch will spoil.
“I’m 50. I’ve worked all my life. I’m a self-made entrepreneur,” Avramidis said. “I’m running out of time to start over, and I’m afraid I’m running out of cash as well.”
If Greece’s creditors do not open the door to a new bailout this weekend, the big question remains whether the European Central Bank will agree to increase liquidity for Greek banks Monday. If it does, banks here could reopen as soon as Tuesday, potentially allowing limited financial transactions to restart. If it doesn’t, capital controls could be tightened rather than loosened in a bid to prevent Greek banks from collapsing.
Yet even if a bailout deal comes together and the ECB jumps in to aid Greece, some limits on bank withdrawals and transfers are likely to remain in place for at least two months, Greece’s economy minister, George Stathakis, told local television on Saturday. Some analysts predict such controls could linger even longer, citing the recent banking crisis in nearby Cyprus that saw such measures extended for two years.
“The question is how long it takes to restore confidence in the banking system,” said a senior Greek banking official, who spoke on the condition of anonymity, given the sensitivity of the issue.
Faced with extreme uncertainty, the economy here has gone topsy-turvy. Greeks are limited to ATM withdrawals of 60 euros — about $66 — a day. But they can use their bank debit cards to spend more, up to their daily limit, at stores that accept them. Some Greeks fear that the money in their accounts could be seized and devalued into a new currency if no deal is reached with Europe, so they are rushing to spend what’s there. That means a buying spree of big-ticket, imported items such as washing machines, computers, even Chanel bags.
But Greeks are largely forgoing more run-of-the-mill purchases— leaving stores such as Paul Papanikolaou’s bedding shop in central Athens battling sales drops of 90 percent since the capital controls hit. Just as well, because without the ability to make international bank transfers, he said, he is unable to bring in fresh stocks of sheets and towels from his suppliers in China and Pakistan.
“Everyone is trying to figure out how long they can last under these conditions,” he said. “It depends on when banks really open fully again. A week? Two weeks? Without some kind of normal system, some businesses won’t last a month.”
Most painful for businesses such as Kalyvas Estate is that after years of setbacks, things had finally begun looking up before this latest crisis.
Founded by his father, the company went from tiny pens of handfed chickens in the 1950s to a mechanized egg farm in the 1980s. After Greece adopted the euro in 1999 and credit became more accessible, Kalyvas made further investments, installing a refrigerated room by his ivy-covered henhouse to keep eggs fresh longer.
After Greece slipped into its debt crisis in 2010, business fell 50 percent, he said, as supermarkets consolidated and other clients turned to far cheaper eggs from neighboring Bulgaria. But last year, as Greece’s economy found a pulse, so did his business. He felt confident enough to invest in a $350,000 expansion that would have boosted his production by a third.
“Things were getting better,” he said, looking at the empty row of henhouses he had installed two weeks before the bank closures. He canceled his order for the chickens to fill them after capital controls went into effect.
“These kindergartners running the country really messed things up,” he said.
The challenge now is how to carry on with normal business in a nonfunctioning financial system. On Friday, Kalyvas chainsmoked and nursed a Coke as his sales assistant worked the phones.
“I’m calling this client, because I know he pays in cash,” said the assistant, Anastasia Berdoli, 46. But after a brief exchange, it’s no sale. The client hadn’t sold all the eggs he ordered earlier in the week.
Greeks are allowed to make domestic online bank transfers. But many businesses here never set up Internet banking accounts, and others don’t trust them, seeing the money locked up in their accounts now as being of dubious worth. So while cash is at a premium in Greece, it is also king.
Doesn’t Kalyvas know it. For months, he and his 46-year-old wife had been paying a doctor for fertility treatments as they tried to have a baby. But the doctor is demanding cash, so they have, for now, suspended the sessions. Kalyvas has enough feed — largely soy and corn imported from the United States— to feed the chickens through the end of the month. But his supplier is demanding cash for next month’s supply. If they can’t reach “an arrangement,” Kalyvas said, he may be forced to slaughter some of the chickens to sell as meat.
Yet amid the crazy insecurity of Greece right now, he said, he could understand the desire to be paid in something you can hold in your hand. He’s selling to some old clients on account, hoping they can pay him when the banks reopen. But he has cut off some clients who can’t pay in cash. “There is only so much risk you can take,” he said.
An hour after his assistant finished her sales calls, she came to Kalyvas with good news: a Monday order for 3,000 eggs on the Greek island of Crete. It was more eggs than he had on hand, so Kalyvas rang up a supplier in Athens, an hour’s drive south.
“I need eggs,” he told the wholesaler. “Can I transfer the money into your account? Any bank you wish.” No, he is told. Cash only. “Okay, okay,” Kalyvas said reluctantly. “Cash.”
TOP: Since Greek banks were shuttered June 29, second-generation egg farmer Angelos Kalyvas, 52, has seen business drop by 30 percent. He’s still selling out of his hens’ daily production of 5,000 eggs but has cut back on reselling from wholesalers. MIDDLE: Kalyvas has enough feed for his chickens through July. But his supplier is demanding cash for next month’s supply, and Kalyvas may be forced to slaughter some of the chickens to sell as meat. ABOVE: A local resident buys eggs at Kalyvas Estate.