Brussels, 26/05/2009 (Agence Europe) - With pressure from member states, led by Germany and France, mounting, and faced with angry demonstrations, including in Brussels, the European Commission was forced on Monday 25 May to agree to grant some, limited, aid to milk and dairy producers. It will not, however, go back on its policy on quotas, which are to rise by 1% annually until they are removed entirely in March 2015.
European farmers, in particular those in the dairy sector, will receive advance payment of direct aid from the EU budget because of the “serious financial and cash flow difficulties (they are facing) as a result of low agricultural prices and high input costs,” said Agriculture Commissioner Mariann Fischer Boel. They could receive up to 70% of production aid (2008-2009 marketing year) as early as 16 October 2009. This aid would normally have been paid out between December 2009 and June 2010.
Fischer Boel's staff point out that, since the start of the year, the aid scheme for the private storage of butter has seen 83,000 tonnes of butter withdrawn from the market, the same amount as in the whole of 2008. Intervention on butter stands at 77,000 tonnes and intervention on skimmed milk powder 161,000 tonnes. Export refunds have been back in place since January, but there is no room for manoeuvre on increasing these refunds, given the international situation, Fischer Boel's staff say. The use of all these measures has stabilised the market, and avoided any further fall in prices, was the substance of what the commissioner said. She conceded that the situation was far from satisfactory and that further measures were required. These are: - a proposal to allow public intervention measures to continue beyond the end of August; - extending the period for the private butter storage (scheduled to expire on 15 August); - extending the school milk programme to other healthy dairy products; - consideration of making cheese eligible for refunds on a quarterly basis, with the Commission providing a market report.
Of the ideas contained in the Franco-German paper (see EUROPE 9907), the Commission has rejected: - introducing aid for skimmed milk powder for animal feeds; - increasing aid for milk consumption in schools (the figure of €18.15/100 kg has been set by the Council); - publishing the report on the developing market situation and conditions for milk quotas withdrawal, scheduled for 31 December 2010 at the latest, “as quickly as possible” (as France and Germany called for) - the Commission says that the 2009-2010 figures will be needed before the report can be published.
German Agriculture Minister Ilse Aigner said that the aid announced by the Commission was “a very good sign”. Her French counterpart Michel Barnier spoke of “a first step which does not meet the difficulties or the challenges being faced by the sector in the medium term”.
The concessions granted by the Commission fall far short of the full review of the milk sector called for by demonstrators. In France, 12,600 producers prevented access to 92 dairies, according to the largest national union, the FNSEA. In Germany, several thousand farmers - 6,500 according to organisers, 3,000 according to police - marched through the centre of Berlin. The government announced shortly afterwards that it was reducing taxes on agricultural fuel.
In Brussels, around 900 European farmers according to police figures, 2,000 according to organisers, gathered together with tractors and cattle outside the EU Council of Ministers building, after breaking through a police barrier. “The priority today is to get milk quotas reduced by at least 5%,” one of the organisers, Erwin Schöpges of the European Milk Board (EMB), told AFP. “Despite the increase in quotas by 2% as of 1 April 2008, actual milk production in the 27 member states has fallen by 0.5% compared to last year, in response to the drop in milk prices to producers and the high operative cost for feed, fuel and fertilisers,” the Commission stated. It said that the difficulties being encountered by the sector were not, therefore, due to the quota increase, but resulted from falling world demand as a result of the crisis.
“The prices of EU dairy products are lower today than in 1997, while costs remain very high. Production costs must come down and we farmers are doing our part towards this end. The current crisis, however, is also caused by a strong decline in EU dairy exports. We therefore need immediate help to stimulate the market”, said Padraig Walsh, the new President of the COPA (Committee of Professional Agricultural Organisations), before the Commission announced its measures. (L.C./transl.rt)