Brussels, 05/09/2014 (Agence Europe) - The texts that will mean that milk and dairy products producers can apply for market measure assistance following the Russian embargo were published in the Official Journal of the EU on Friday 5 September.
On 7 August 2015, the Russian government imposed a ban on the import of certain products into Russia. These included milk and dairy products. “This ban has resulted in a threat of market disturbances with the potential for significant price falls due to the fact that an important export market has suddenly become unavailable”, says the Commission in the texts.
The measures taken in the milk and dairy products sector are contained in the following documents: - an implementing regulation opening private storage for butter; - an implementing regulation opening private storage for skimmed milk powder; - a delegated regulation laying down temporary exceptional measures for the milk and milk product sector (extension of the public intervention period for butter and skimmed milk powder); - a delegated regulation opening a temporary exceptional private storage scheme for certain cheeses.
Cheeses. The milk products most affected by the embargo are cheeses, as exports to Russia represent 33% of total EU cheese exports. Russia is the sole export partner for cheese for Finland and the Baltic States and imports a significant amount of cheese from other member states, such as Germany, the Netherlands and Poland. The EU exported over 250,000 tonnes of cheese to Russia in 2013, an amount that will have largely to be absorbed by the internal market, leading to market disturbance and downward pressure on prices. “The threat of a serious imbalance in the cheese market might be mitigated or eliminated by storage. It is therefore appropriate to grant aid for private storage of cheese and to fix the amount of aid in advance”, states the Commission in the regulation.
Granting private storage aid for cheeses which are protected by designation of origin or by geographical indication is allowed under common agricultural policy (CAP) rules. Protected geographical indication cheeses are affected by the Russian ban but account only for a tiny part of all the cheeses exported to Russia. The EU wanted, therefore, to put in place a single private storage aid scheme for all types of cheeses. Soft cheeses, which do not lend themselves to storage, have been excluded from private storage aid. However, frozen curds are included on the list of products eligible for aid. Aid for cheeses can only be granted if the contractual storage period is for 60 to 120 days. The rate of aid payable has been set at €15.57 per tonne of storage for fixed storage costs plus €0.40 per tonnes per day of contractual storage. The member states will be required regularly to inform the Commission of the quantities for which contracts have been concluded, broken down per storage period, and the quantities of products for which aid applications have been made. This aid has been capped at 155,000 tonnes of cheese.
Butter. The aid payable for butter is 18.93€/tonne of storage for fixed storage costs, plus 0.28€/tonne per day of contractual storage for a period of 90-210 days. The final date for submission of applications is 31 December 2014.
Skimmed milk powder. The aid for skimmed milk powder is €8.86 per tonne of storage for fixed storage costs, plus 0.16€/tonne per day of contractual storage for a period of 90-210 days.
The aid for dairy products could cost between €10 and €25 million.
Other measures already agreed. The commission announced on 3 September that it intended to make available a further sum of €30 million for the promotion of EU agricultural products in third countries and in the internal market in 2015, in order to combat the ban. Since this measure is co-funded, €60 million will go to the sector (50% from the EU and the remaining 50% from producer organisations, joint-trade organisations and the member states). The goal of Agriculture Commissioner Dacian Ciolos is to redirect European production towards other markets and buyers - principally the Arab countries. This aid is in addition to the €60 million to support promotion initiatives already provided for in the 2015 CAP budget. In August, the Commission also put in place emergency measures for the perishable fruit and vegetable sector (€125 million) and the peach and nectarine sector (€37.5 million).
The Commission is considering whether to implement targeted aid for the producers most severely affected by the embargo. These initiatives (state aid, coupled aid, rural development measures) and the scale of them will depend on the talks among EU agriculture ministers (see related article). Payment of direct compensation to the worst affected producers is also under consideration but a measure such as this would have to comply with the EU's commitments to the WTO. It could also mean a reduction in direct payments to farmers. (LC)