Commission gives go-ahead to Italy’s milk plan, anticipates new EU cap for state aid

Phil Hogan, EU Commissioner for Agriculture and Rural Development. [EPA-EFE/STEPHANIE LECOCQ]

Support measures to help sheep milk prices recover are not state aid, said Italy’s Minister of Agriculture Gian Marco Centinaio after a meeting with Commissioner Phil Hogan, who prepared the ground for increasing the ceilings up to which agriculture state aid can be provided.

Italy’s minister Gian Marco Centinaio, a member of ruling party Lega, met the EU’s agriculture boss on Tuesday afternoon (20 February), under pressure from his party that is seeking to settle a controversy between dairy farmers and the food processors industry over the falling prices of sheep milk.

In the last few weeks, Sardinian shepherds have literally been pouring their milk down the drain rather than sell it at the current low price, which dropped from 85 to 60 euro cents per litre compared to last year, as sales of Pecorino Romano cheese have recently plunged, as demand falls.

Regional elections in Sardinia will take place on Sunday and solving the sheep milk puzzle might grant another electoral success to right-wing Lega, after the one in Abruzzo last week.

Sheep milk prices cause Salvini headache, Italy's agri-boss meets Hogan

Italian interior minister Matteo Salvini has tried to placate Sardinian farmers ahead of regional elections this week, sending Italy’s agriculture minister to Brussels to get the green light to introduce support measures that set a fixed price for sheep milk.

The crucial round table is scheduled on Thursday in Rome, and both the local and central government are working to secure a deal between farmers and industry, proposing supporting measures that include a €49 million of public intervention to remove between 15,000 and 20,000 tons of unsold Pecorino from the market.

This attempt to reduce the oversupply on the market could be classified as Private Storage Aid (PSA), a traditional form of state intervention that needs to be notified above a specified limit.

At the end of a long day in Brussels, Centinaio told the press gathered at the Berlaymont that the Commission made no objections to government’s plan to help stabilise prices.

“There is no state aid,” he stated, without going into the details nor mentioning any specific number, implying that there was an informal outline agreement with the Commission.

New state aid rules

The EU executive did not want to comment on Centinaio’s statement, but understands that Commissioner Hogan is about to announce changes to the de minimis arrangements, which will benefit farmers throughout the EU, including those Sardinian sheep milk producers, by increasing the maximum state aid amount without the need for prior approval.

Last March, the Commission proposed to amend the de minimis arrangements, raising the limit for national intervention to support farmers without the need for prior approval from €15,000 to €25,000 over three years per farm holding.

The de minimis aids are considered a useful tool allowing national authorities to react promptly and effectively in times of crisis, acting in derogation of the general state aid rules.

The new rules will also set national mandatory central registers to keep records of all the de minimis aids granted, in order to simplify the monitoring of the support measures.

During the meeting, Commissioner Hogan expressed confidence about the adoption in the short term of the amendment to the de minimis aid rules, a source informed EURACTIV.

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Promoting fund and FTAs

The Commissioner also reminded Italy’s minister that there are tools available under the Common Agricultural Policy (CAP), which already includes a promotion programme for Pecorino Romano.

Fluctuations in sheep milk prices are heavily linked to the demand for Pecorino Romano cheese, a product with a protected designation of origin (PDO) that accounts for about half the island’s sheep milk production.

The EU quality schemes are open until 16 April for applications and provide a budget of €191 million for promoting good quality EU food products in the EU and across the world.

In a press point with the President of the European Parliament Antonio Tajani, Hogan announced that a group of EU experts will go on a mission to Sardinia in the coming weeks to provide the information and expertise on the programme to potential applicants in Sardinia.

The Commissioner also suggested that the Italian government open new markets taking advantage of the opportunity coming from the FTAs and partnership agreement like the ones with Canada, Singapore, Mexico and Japan.

Both Italy’s ruling parties, the anti-establishment Five Star Movement and the right-wing Lega, have expressed on several occasions their opposition to FTAs and the EU trade policy.

However, yesterday Minister Centinaio appeared to take a new pragmatic approach to trade partnership agreements like CETA; “The government tends to be against the CETA, but if the numbers tell me that it is necessary for Italian companies, I am ready to change my mind,” he said.

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