GAZA, Nov 28 (Reuters) - Surrounded by the fragrance of millions of packed strawberries, Gaza farm workers rose at dawn on Sunday to witness the start of exports to Europe that they hope will herald a wider expansion of trade.

Strawberries. Fraises. Erdbeeren. said the labels in English, French and German on stacks of boxes of tenderly packed berries in punnets of 250 grams (8.8 oz). The Gaza farmers hope to send 1,000 tonnes to Europe through a partly eased Israeli blockade in the coming week.

On Sunday, we are exporting two truckloads of strawberries as a trial and then the number will rise to 10 trucks a day until they are all shipped out, said Raed Fattouh, Palestinian coordinator of supply from Israel to Gaza.

Officials confirmed that two truckloads indeed crossed into Israel en route to Europe on Sunday.

Ahmed Al-Shafai, one of the biggest farm entrepreneurs in the small enclave framed by Israel, Egypt and the Mediterranean, said the Palestinian produce would first arrive in the Netherlands and then go on to Belgium and France.

We are ready. Our products meet the standards of Global Gap, he said. The Global Gap Project aims to improve farmers' ability to grow produce according to international standards.

Israel has blockaded the Gaza Strip since 2007 to cripple the Islamist movement Hamas, which seized control of the territory three years ago from the Palestinian Authority of President Mahmoud Abbas.

STOP-START TRADE

This is not the first time Israel has permitted exports of Palestinian strawberries and flowers from Gaza. But it coincides with the enlargement of a logistics hub at the Kerem Shalom crossing point in the south, for what Gaza business hopes will be a revival of wider trade next year.

To begin with, Israel, the Palestinian Authority (PA) and the European Union agreed to deploy PA staff at Kerem Shalom. Hamas is left out of the equation but tacitly permits it.

An Israeli official said Kerem Shalom's capacity will double to 300 trucks a day by the end of this year and to 400 in 2011. We will have the capacity, he said. But security arrangements were paramount for Israel and it was too soon to speak of a change in policy. Only after we resolve this can we start talking about (a wide range of) exports, he said.

Exports have been seen by Israel as highly suspect since March 2004, when two Palestinian teenagers infiltrated the Israeli port of Ashdod by hiding in a shipping container. They blew themselves up, killing 10 people.

Israeli forces smashed Gaza in a three-week assault in early 2009 to force Hamas to stop firing rockets into its southern towns. It has restricted imports to stop arms reaching Hamas and to weaken its hold on Gaza's 1.5 million inhabitants.

But after an international outcry in June, when Israeli naval commandos killed nine Turkish pro-Palestinian activists aboard a flotilla trying to breach the blockade, Israel eased rules on what Gaza could import.

Today the shops are full of consumer goods that were not available half a year ago, says the European Union representative to Palestine, Christian Berger. But this is not enough to change lives significantly.

EURO MILLIONS

The 27-nation European Union spends millions to support the private sector in Gaza via the United Nations Relief and Works Agency (UNRWA) and the Palestinian Authority. But ultimately, the EU says, Gaza must export in order to achieve greater economic independence.

Berger said peppers and tomatoes may join this year's planned exports of berries and flowers. But to restore trade in manufactured goods, Palestinian businesses will need the right mix of imports, including new machinery.

They will also need to restore their contacts and make known they can deliver with predictability, says Berger.

Before the Israeli blockade, about 60 percent of what Gazans produced was exported, he said. Some 40,000 Palestinians crossed into Israel daily to go to their jobs there.

Reviving exports could partly redress the economic reverses, creating new employment for up to 40,000 in the enclave, provided long-delayed reconstruction can commence.

More than half the population currently relies on U.N. food aid. Gaza also gets a regular supply of foreign-financed heavy fuel oil via a pipeline from Israel for its power generator, plus shipments of cooking gas and gasoline.

DELAYED HOPES

Israel withdrew from Gaza in 2005. Before Hamas launched its violent takeover from Fatah in 2007, the enclave had a new international airport that now lies in ruins and plans for its own sea port.

There is no disease raging and no starvation in the streets, Berger said. But in terms of indicators such as medical care, employment, water, education, and poverty there is a constant deterioration in the humanitarian situation.

Last year, Gaza flower and berry growers suffered big losses when Israel delayed export permission by two months.

Hopes are high that this time the shipments will move on time. Emad Abu Samra, a 40-year-old father of 11, was hired along with one of his sons to pack the strawberries at a special export-season rate of 50 shekels (10 euros) a day. We've been promised that the strawberries will be exported, he said. We are hoping this will be a better year, God willing, he said.

Rafiq Abu Samra, among 25 farmers accepted as exporters under the scheme, has much riding on the shipments. He leased land to grow the crop, to be exported by Israel's Agrexco under the name Coral that marks a Palestinian product.

The price of strawberries is currently good. There are no strawberries arriving in Europe at this time but ours, he said.

If all goes well, Gaza also hopes to send 30 million flowers to the Netherlands in December at 8 euro cents per bloom. They will be shipped from Israel's Ben Gurion international airport to Amsterdam for sale at auction.

Gaza also hopes this may be the start of greater exploits.

The Palestinian Bureau of Statistics (PBS) says the enclave's exports in 2005 were worth $41 million. The figure plummeted to $30,000 in 2006 and $20,000 in 2007 and there was no significant export trade in 2008.

There were 6,000 workers in the furniture business before the blockade. That has dropped by half, said Ashraf Murtaja, head of the wood industry association. Furniture exports used to bring in about $30 million dollars a year, he said.

Gaza factories ran out of raw materials, then electricity and finally a market, Murtaja said. Workshops relied on wood smuggled expensively from Egypt through tunnels.

Now that Israel allows the import of wood, the market is heading back towards stability. It is always better when things are done the legal way, Murtaja said. (Additional reporting, writing by Douglas Hamilton; editing by Mark Trevelyan)