Brussels, 08/09/2015 (Agence Europe) - Despite some disagreement over increasing the intervention price in the milk sector, EU agriculture ministers generally welcomed the package of anti-crisis measures put forward by the European Commission on Monday 7 September to help farmers through this period of great difficulty (see EUROPE 11383).
The most controversial issue remains increasing the intervention price in the milk sector. It is difficult to ascertain at this time whether a proposal to raise the price will be brought forward. The Commission is fiercely opposed to any such move.
In order to make progress on implementing the anti-crisis package, the Special Committee on Agriculture (SCA) will meet on Friday 11 September. The matter will also be discussed at the informal meeting of European agriculture ministers in Luxembourg on Monday 14 and Tuesday 15 September.
The Council welcomed the support package presented by the Commission. Luxembourg Agriculture Minister Fernand Etgen said on Monday evening that €500 million would be made available immediately to farmers. Of the proposals tabled, he highlighted: - the increase in the percentage of the direct payments that can be paid out early, from 16 October; - new private storage scheme for the dairy sector; - the re-opening of private storage for pigmeat; - additional funding for promotion; - further efforts to remove non-tariff barriers (health and veterinary); - an enhancement of the role of the European Milk Market Observatory; - the creation of an observatory for pigmeat; - the establishment of a high-level group to improve the way the food chain works for producers; - and better use to be made of the milk package (the report on how the milk package is working will be published in 2016).
Etgen stated that several countries had called for: - intensification of talks with Russia on removing the non-tariff barriers on pigmeat not covered by the political embargo; - the establishment of a high-level group on the future of the milk and dairy sector; - simplification to reduce farmers' costs; - closer cooperation with producer organisations; - mechanisms to reduce price volatility.
Discord over intervention price. Etgen said there had been a degree of interest expressed within Council on a temporary increase in the intervention price for dairy products (principally, skimmed milk powder). He acknowledged, however, that not everyone had been behind this call. France, Spain, Portugal, Belgium, Austria and the Czech Republic, inter alia, had called for a rise in the intervention price for powdered milk, to send a message to the market. Ireland suggested that a temporary increase in the intervention price would be more effective than private storage aid for dairy products. According to a French source, a temporary increase from 22 cents to 26 cents for 109,000 tonnes of skimmed milk powder (10% of EU production) would cost only €10 million. Other countries, such as the United Kingdom and the Netherlands, opposed the idea, refusing to send out what they consider to be a wrong signal.
Private storage. To ease market pressure, the Commission has already extended the private storage aid and public intervention periods for butter and skimmed milk powder until 2016. The Commission is now working on an enhanced scheme for skimmed milk powder, with higher aid levels and an extended storage period (9-12 months), with the aim of making the mechanism more attractive. The Commission will also review private storage for cheese, drawing the lessons of the past, when 90% of the aid went to only one country: Italy.
The Commission will also bring forward a new private storage scheme for pigmeat. The idea is to increase the level of aid and to include products that form part of the Russian health embargo, such as pork fat.
Financing. Things are not entirely clear on how the €500 million promised to farmers will be financed. Commissioner Jyrki Katainen said simply that the agricultural crisis reserve would not be raided, that most of the funding would come in the form of national envelopes and that these would be more than the €330 million paid out in 2009 during the previous dairy crisis. He called on the individual member states to find the most effective way to spend the money, as the situation differs from country to country. Exactly how this money will be shared out (several countries, including Germany, asked the question of the Commission) is still under discussion, the commissioner said, stressing that it concerned all 28 member states. A European source revealed that the money generated by the super-levy (fines for exceeding milk quotas) is expected to top €810 million and that the Commission has built €441 million into its 2016 budget. The Commission will, therefore, have €369 million available from the super-levy to part-fund the €500 million. For the remainder, the Commission is looking to additional income or lower spending in some sectors. This is expected to be included in the autumn letter of amendment which provides an annual updating of agricultural expenditure.
Dairy market. Poland stated that 25% of its farms could go to the wall as a result of the difficulties on the dairy market. Austria highlighted the 25% drop in prices in mountain areas.
Early payment of direct aid. Under the terms of the Commission proposal, countries would be authorised to make early payment (on 16 October rather than in December) of up to 70% of direct payments (including optional coupled aid and aid to young farmers) and up to 85% of rural development programme payments. Current rules allow early payment of a maximum of 50% of direct aid and 75% of rural development support. In Council, a number of countries, among them Poland, France, Austria, Italy and the Netherlands, argued that, along with these new rules on early payments, should come a reduction in prior checks (or flexibility in checking) so that the early payments were effective.
Member states generally welcomed the measures proposed on the functioning of the food chain and promotion of agricultural products (France was unhappy that the increase in funding for promotion would only come in next year, 2016, and argued that action should be taken as quickly as possible).
The special meeting of the European Parliament agriculture committee on anti-crisis measures has been cancelled. Committee members are keen to discuss the issues with Agriculture Commissioner Phil Hogan, who is still unwell.
Lastly, the Council took note of the requests by Poland and Romania on the drought affecting these countries. (Lionel Changeur)