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28/09/2016

EU stockpiling does little to resolve agricultural crisis

Agriculture & Food

EU stockpiling does little to resolve agricultural crisis

Supply surpluses have pushed down milk and meat prices in France.

[Terinea IT Support/Flickr]

French farming unions want a higher price for pork and milk, but the European Commission is instead exploring new markets to compensate for declining consumption in the EU. EurActiv France reports.

Xavier Beulin, the President of the French National Federation of Agricultural Holders’ Unions (FNSEA), met President François Hollande on 24 August (Monday), to discuss the crisis currently facing French farmers.

Low prices have put thousands of pork and milk businesses at risk of bankruptcy. Farmers’ unions have been calling for specific measures to tackle the crisis, which should be announced on 3 September.

On the same day, 1,000 tractors are expected to block the streets of Paris in protest at the government’s inaction.

Pork and dairy farmers are feeling the effects of the Russian embargo on their products, Moscow’s retaliation against EU sanctions, and are reaching out to Brussels for help.

Milk and pork stockpiles re-opened

In March this year, the European Commission reopened intervention stocks for butter and milk powder, the two mechanisms for aiding struggling dairy markets. These systems help to limit the squeeze on prices by temporarily limiting supply. The Commission pays for butter, milk or pork to be kept off the market in private stockpiles, or buys stocks on a country by country basis.

>>Read: Farmers look to EU food aid to boost meat market

For the FNSEA, prices are still too low compared to the production costs in France.

The EU currently buys milk powder for €1.69 per kilo and butter for €2.22 per kilo. Despite the saturated market, very few countries have had access to the mechanism. Only Belgium, Lithuania, Poland and the United Kingdom have used the system this year.

Similar intervention measures were also launched for the pork sector in March, but without much success.

>>Read: France promises emergency aid to farmers

The subjects of stockpiling pork and milk, and the prices that should be paid for them, will be raised at a summit of European agriculture ministers on 7 September.

According to the European Commission, Europe’s milk producers already receive €820 million in subsidies each year, on top of the €66 million school milk distribution programme.

The FNSEA also hopes the EU ministers will discuss the raising of the Russian embargo. But with the Minsk agreement still being systematically broken, any thawing of EU-Russian relations, and with it the raising of sanctions, seems unlikely.

Changing eating habits

The Russian embargo is just one of a host of problems facing European farmers. Statistics published by FranceAgriMer, France’s national agricultural agency, show a decline in the consumption of meat and milk right across Europe in 2014. For every 100 kilos of pork consumed in the EU in 2008, only 96.5 kilos were consumed in 2014. The statistics for milk consumption are similar.

These trends reflect a shift in consumer habits. A recent petition calling for French school canteens to offer vegetarian alternatives has been very successful, collecting more than 80,000 signatures in less than a week, in the middle of August.

“Eating habits are changing, and it is a question of good sense: policies must take that into account,” said Yves Jégo, the MP for the Paris constituency of Seine et Marne and Mayor of the town of Montereau Fault Yonne, who started the petition.

“Mayors today are left alone to deal with the religious problems that arise from school food. I think we should propose a law that provides a framework under which a vegetarian alternative must be proposed in canteens,” said Jégo, a centrist MP from the Union of Democrats and Independents (UDI).

Vegetarianism and free trade

Jégo’s project has gained support from different political parties, including the Greens. But Stéphane Le Foll, the French government’s spokesperson and Minister of Agriculture, accused the opposition of having no ideas other than vegetarianism for resolving the agricultural crisis.

“Offering a vegetarian alternative does not mean removing anything from the traditional menu. We should start by making sure the meat we serve our children is produced in France,” the UDI MP said.

Beginning 31 August, school canteens in Paris will offer a vegetarian menu once a week.

In Brussels, the European Commission is counting on exports to secure the future of European agriculture. The EU executive has approved 41 programmes of promotion and research into foreign markets over three years, in an effort to increase demand.

“The opening of new markets depends on free trade agreements, it is the third pillar of the Common Agricultural Policy,” according to sources at the Commission.

Background

Russia banned the import of certain foods and drinks originating from the European Union as a response to Western sanctions over Ukraine’s crisis.

The Russian food ban, which took effect in August 2014, forced the European Commission to use agricultural funds to help EU producers hit by the trade restrictions.

Russia is the second most important destination for EU agri-food exports after the United States, representing in total a value of about € 11.8 billion in 2013, or roughly 10% of all EU agri-food exports, according to the Commission. The agri-food products covered by the Russian ban represent a value of € 5.1 billion in 2013 exports, it said in an information note, or 43% of EU agri-food exports to Russia.

Some sectors are affected differently however. Apart from emergency market support measures for the dairy sector, at the beginning of August, the Commission announced roughly €32 million aid for peaches and nectarines, and €125 million for perishable fruits and vegetables.

>> Read: Dairy sector to receive emergency EU funding following Russian trade ban

Timeline

  • 3 September: announcement of special measures to tackle the farming crisis in France
  • 7 September: meeting of European agriculture ministers

Further Reading