Commission proposes ‘flexible’ use of new agriculture aid

Phil Hogan caressing a calf. [European Commission]

The European Commission announced the details of a “flexible” €500 million agriculture aid package on Tuesday (15 September), in an effort to tackle the food crisis EU farmers are facing.

Following a massive demonstration in Brussels last week (7 September), the executive decided to provide aid to farmers severely hit by falling dairy prices.

>>Read: EU throws lifeline to farmers as protests bring Brussels to a standstill

The lifting of EU milk quotas in March, combined with declining Chinese demand, changing dietary habits, and a Russian embargo on Western food products, have combined to push down the prices of beef, pork and milk.

“Flexible” use of funds

€420 million will be allocated for farmers, 80% of which will be on the basis of member states’ milk quotas in the last quota year.

The remaining 20% is allocated on the basis of criteria that ensure additional assistance for farmers in those member states which have been particularly hit by the fall in pigmeat prices, the impact of the Russian ban, declining milk prices and this summer’s drought.

Among the biggest beneficiaries are Germany, with (€69.2mil), France (€62.9mil), and the UK (€36.1mil), while the smallest portions will be distributed between Malta (€0.1mil), Cyprus (€0.4mil) and Luxembourg (€0.7mil).

“This is a comprehensive, decisive and robust support package. It is a significant statement of support by the Commission for European agriculture. It reflects in a very concrete way the comment of President Juncker in his State of the Union speech last week, when he described himself as a ‘strong supporter of the CAP'”, said the Commissioner for Agriculture and Rural Development, Phil Hogan.

The EU executive also decided to provide “maximum flexibility”.

“I am ready to allow Member States the maximum flexibility to target aid for appropriate measures to address the negative market impact on farmers, including those farmers impacted by falling dairy and pigmeat prices or which have been affected by drought,” emphasised Hogan.

In addition, the Commission will allow member states to provide supplementary national aid to increase support for the measures taken under the targeted aid envelopes.

Part of the “flexible” additional aid is also the provision of advanced payments.

Hogan decided to allow member states to advance direct payments up to 70 percent from 16 October.

“Member states may pay 70%t of advances after the administrative controls have been completed and without the need to complete the on-the-spot checks,” he noted.

“This derogation is a significant concession, bearing in mind the possible financial risk and is proposed as an absolutely exceptional measure and it is at the absolute limit of the flexibility that the Commission can offer in the context of protecting the EU budget,” he added.

Markets’ stabilization

In an effort to stabilize the markets, the new plan provides two new private storage schemes. One will be for skimmed milk powder and cheese, and another one for pigmeat.

An EU official said last week that in order for the market to stabilize, the oversupply of milk should be dealt with.

“There is too much milk in the EU. Combining that with the Russian ban [last year] the prices were fallen”, he said.

>>Read: Commission targets new Asian markets for EU dairy exports

The EU 28 produces 151 million tones milk per year, with 90% of it consumed within the bloc.

The Commission decided to increase the aid rate for skimmed milk powder by over 100%, and fix the storage period for a year.

“The Commission is acting to stabilise the markets in the most effective way, both by increasing the attractiveness of the scheme and keeping product off the market long enough to allow a recovery,” the Agriculture Commissioner said.

Regarding cheese, the new scheme will provide for a total amount of 100,000 tonnes to be broken down by member states, based on their respective output.

As far as the private storage aid for pigmeat is concerned, which is severely hit by the Russian food ban, its scheme will be extended to fresh lard, responding to the proposal that some of the so-called ‘fifth-quarter cuts’ should be included.

Addressing the refugee crisis

A remarkable part of the aid package will be used to address the unfolding refugee crisis.

According to the package, €30 million will be used for ensuring that EU milk will made available for the nutritional needs of refugees, in particular those displaced in difficult conditions in our neighbouring countries.

“We cannot ignore the impact of this unprecedented humanitarian challenge, and we must see how our actions to stabilise the market can contribute to our solidary efforts,” Hogan stressed. 

Belgian NGO Centre national de coopération au développement said in a statement that no amount of aid would solve the root cause of the crisis, which in the case of milk was created by oversupply on the market.

“The only option is to regulate production levels depending on the offer. No public funding will compensate the current losses for dairy producers,” it noted.

"It is not aid that we want, it’s a regulation of production,” the European Milk Board underlined. 

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