Brussels, 04/09/2015 (Agence Europe) - In Brussels on Monday 7 September, the European agriculture ministers will seek to agree on the adoption of a number of short-term measures designed to support farmers angry about collapsing prices and loss of income.
The Agriculture Council specifically dedicated to the crisis in the farming sector is not, however, expected to come up with any radical decisions. The most significant provisions for dairy products, for instance, could be increasing the intervention price for butter and skimmed milk powder. However, several so-called 'liberal' countries, and the European Commissioner forAgriculture, Phil Hogan, are opposed to the idea of increasing the intervention price (which allows public purchases to be made once the minimum price has been reached).
For pork meat, the Council is expected to call on the Commission to step up negotiations to obtain more outlets in third countries, particularly the Russian market for products not subject to the political embargo. It is unlikely that the ministers will support the idea of bringing back private storage aid for pork meat, as this has previously proved ineffective.
In order to reduce farmers' cash flow problems, advances on the direct payments could be agreed (payment of 50% of the aid on 16 October, instead of in December).
“Coming on top of the extended Russian embargo, slowing growth in China, as well as other detrimental factors such as the prolonged drought this summer, the slump in prices reflecting supply-demand gap in certain sectors has hit hard on the European farmers putting severe pressure on farm incomes”, the Luxembourg Presidency of the Council of the EU recognises, in its preparatory note ahead of the Council (see EUROPE 11379).
At the meeting, the member states will submit their proposals and requests, and some of them will have agreed these with each other in advance. Poland and Romania also intend to bring up the consequences of the drought for their producers.
Phil Hogan, who has held preparatory bilateral meetings with a number of ministers, will present a package of measures, but will seek to avoid any demands he feels are counter-productive or would weigh too heavily on the European purse. However, he feels that the Baltic states and a number of central and Eastern European countries have experienced the most problematic situation, as they have been the hardest hit by the Russian ban, which has been extended until 5 August 2016.
Bringing forward the direct payments. In order to “ease farmers' short-term liquidity difficulties”, the Luxembourg Presidency suggests “anticipating direct payments from December to the autumn and exploiting all the flexibility available to do so”. The Spanish, French, Italian and Portuguese agriculture ministers, who met in Madrid on 28 August, are calling for the proportion of the direct payment which can be paid in advance from mid-October to be increased by 50%. Instead of a maximum of 50%, this would give an advance payment of up to 70-75%. Ireland is also calling for advances of up to 70% of the direct payments to be made available from 16 October.
The Presidency also refers to the option of granting payments under the European Fund for Strategic Investments, the financial arm of the Juncker plan, notably to modernise the agriculture sector and to improve energy efficiency.
Promotion and sanitary barriers. The programmes to promote EU agricultural products should be reinforced, according to the Luxembourg Presidency, in particular in order to tackle sanitary and phytosanitary restrictions and other non-tariff barriers in place, particularly on European pork meat, by third countries such as Russia, Belarus and Japan, and by countries with which the Union has signed free-trade agreements, such as the one recently concluded with Vietnam (see EUROPE 11372), or other agreements (Mexico for example). Internally, the Presidency calls for a swift agreement on the aid regime for the distribution of milk, fruit and vegetables in schools, with an appropriate budget.
Stepping up promotion campaigns co-financed by the EU has also been called for by Spain, France, Italy and Portugal, and by Ireland, particularly the dairy products and pork meat on third-country markets.
Raising intervention price and extending storage aid. The Luxembourg Presidency proposes a “temporary” increase in the intervention price and dairy products. Spain, France, Italy and Portugal are also calling for a temporary increase in the intervention price, with the quantities withdrawn from the market to benefit people living in poverty in the EU. Similarly, Ireland is calling for the intervention price to be raised.
As for Phil Hogan, he has extremely mixed feelings about such a measure, as he feels that it would undermine the market orientation of the CAP and efforts to seek new outlets.
The Presidency also suggests a further extension of the period for which private storage aid can be granted, which the Commission has already extended for milk powder and butter from the end of September to the end of February 2016, in parallel to the extension of automatic intervention, which will now run until the end of September 2016.
Spain, France, Italy and Portugal are also calling on the Commission to authorise storage aid for cheese again, as is Ireland.
Superlevy. The Luxembourg Presidency takes the view that “at least some” of the dairy superlevy 2014/2015 should be fed back into the sector, given the “constraints” on the European budget. Ireland, notably, shares this view.
The Agriculture Commissioner stresses that the revenue from the dairy superlevy cannot be put into a fund specifically destined for this sector, but will go some way to financing the CAP in general and will help it to obtain resources from the Commission to take short-term measures. For quota overruns in 2014/2015, this revenue could reach around €860 million.
Pork meat. Ireland is calling for the resumption of private storage aid for pork, which was granted earlier this year but then withdrawn, as the country feels that this measure played a major part in stabilising prices. It was not one of the options put forward by the Luxembourg Presidency in its document of 31 August.
For his part, Phil Hogan argues that the private storage aid scheme set in place in the spring of this year did not really help to “adapt prices”.
The European Livestock and Meat Trades Union (UECBV) believes that “while further market supports, such as aids to private storage, may be required, in the absence of some market recovery, the priority for the moment and the most sustainable long-term solution is progress in removing technical barriers facing pork exports to Russia and other destinations”. It argues that the EU should therefore “intensify technical negotiations” with Russia to remove the sanitary restrictions imposed on EU pork for products that do not fall under the scope of the political embargo, such as pork fat and offal, products which Canada and the United States are already authorised to export to this market. The EU, the organisation reiterates, exported around 350,000 tonnes of pork fat and offal to Russia before the sanitary embargo.
Fruit and vegetables. The Presidency of the Council suggests further extending the application period for support measures granted to producers of fruit and vegetables hit by the Russian ban, which the Commission has already extended by one year, to run until 30 June 2016. This support is available for the purposes of free distribution in schools, composting, green harvesting and non-harvesting.
Medium term. In addition to the provisions it is suggesting for the immediate future, the Luxembourg Presidency recommends that the Council start a reflection on the medium term, particularly on the following issues: - the dairy sector, the future role of the Market Observatory and the futures market; - transparency and fairness along the supply chain, with the Commission urged to speed up work underway on sharing added value, from production to distribution; - simplification of the CAP, with emphasis on the implementation of provisions with the most direct impact on production costs. The European Commissioner also agrees that changes within the food supply chain are necessary to “alleviate the pressure brought to bear by distributors and others” on producers. Lastly, a number of ministers are expected to stress the need for a reflection on a system to manage supply in dairy production, following the end of the quota system. This is a highly controversial issue at the Council.
Demonstrations. “In response to the deplorable situation affecting European producers of milk, pork meat, fruit and vegetables and beef meat”, the agricultural organisations and cooperatives of the EU, within the framework of Copa-Cogeca, have announced a demonstration between 12 p.m. and 3 p.m. in Brussels on 7 September, outside the Council of the EU building, featuring 4,000 to 5,000 farmers and 1,000 tractors.
African swine fever. Estonia, flanked by Lithuania, Latvia and Poland, will present a report on the situation of the African swine fever epidemic and will call for a long-term strategy to fight the disease. This epidemic, discovered on EU soil in early 2014, led Russia to set in place a ban on pork-based food products from the EU. The four countries affected by African swine fever are calling on the Commission to clarify the definition of the issue of regionalisation. They also want greater flexibility and, in particular, to be able to move piglets from farms in which bio-security can be demonstrated to accredited fattening units throughout the territory. (Lionel Changeur)