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Further EU aid package for dairy farmers?

June 21st, 2016 8:05 AM

By Southern Star Team

Rose O'Donovan - Letter From Brussels

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EU Farm Commissioner Phil Hogan is expected to table a further aid package to assist dairy farmers at next month’s Agriculture Council (July 18th), once he has a clearer idea of the unspent margins available in the 2016 EU budget. 

The compensation package is understood to be comparable to the previous one from September 2015 – around €500 million – with strict conditions attached to payments i.e. milk production limits. Ministers from across Europe will meet in Luxembourg at the end of June (27th and 28th), but the Kilkenny man has been clear that this two-day gathering would involve a full evaluation of the market situation, rather than further financial support. 

As dairy supply continues to outstrip demand following the end of quotas on April 1st, 2015, a slump in demand from China and the ongoing Russian embargo, the idea of on-farm production limits seems to be gaining traction. Latest Commission figures indicate that April 2016 EU raw milk prices were 13% lower than in April 2015 and 19% lower than the average of the last five years, with Irish dairy farmers the worst hit (-22%) as prices decline to 23.25c/kg. 

Producers in the UK, Hungary and Czech Republic are receiving 18% less for raw milk, while Finnish farmers appear to be bucking the trend with a 3% increase. 

 

Output curbs

Farm ministers from Poland, Germany and France called on the Commission to introduce further financial support targeted at dairy farmers that voluntarily curb output in a bid to restore market balance. Gathering in Warsaw on June 9th, the so-called Weimar Triangle – a loose grouping of the three countries – backed the idea of incentivising farmers ‘at an individual or collective level’ that limit milk production and control volumes to address the current glut. 

In a four-page common declaration, signed by Ministers Krzysztof Jurgiel (Poland), Christian Schmidt (Germany) and Stéphane Le Foll (France), they put forward fourteen concrete proposals on how to deal with the farm crisis and future CAP. Some key suggestions include temporary financial support conditional on production limits to ease on-farm liquidity and the establishment of a high level group on dairy. 

They urge the EU’s executive to combat unfair trading practices and draw up a legal framework ‘for the fair distribution of added value of production and trade.’ 

 

Unfair trading

The incoming Slovak presidency – due to take over the EU’s rotating presidency on July 1 – will closely monitor the ongoing farm crisis and put unfair trading practices in the food chain and CAP simplification at the top of its agenda during its mandate in the second half of the year, Farm Minister Gabriela Matečná stated this week. 

Speaking to reporters, she pledged to push for greater simplification of farm policy rules and promote forestry (forests cover two million hectares or 40% of the country’s territory). Commenting more broadly on the current agricultural crisis, she said Slovakia supported further targeted aid: ‘The price of milk is very low – between 20 and 21c/litre – cheaper than mineral water,’ she stated. 

The incoming presidency plans to host a high-level meeting in Bratislava on June 30th and July 1st to discuss unfair business practices and ways to strengthen farmers’ position vis-à-vis retailers.

 • Rose O’Donovan is the Editor-in-Chief of the Brussels-based publication AGRA FACTS .

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