Details of European Commission aid package for farmers finalized

By Jim Cornall contact

- Last updated on GMT

Details of the European Commission's €500m package to support farmers has been announced.
Details of the European Commission's €500m package to support farmers has been announced.

Related tags: Member states, European union, Dairy farmers

The precise details of the European Commission’s €500m ($559m) aid package for the dairy sector announced by Commissioner Phil Hogan in July have been finalized in agreement with Member States.

The most significant elements are a €350m ($391m) support package (with allocations already previously set for Member States), a new EU-wide €150m ($168m) aid for milk production reduction, and extending public intervention as well as private storage aid for Skimmed Milk Powder (SMP) until the end of February 2017.

Hogan said he was confident the measures would contribute to improving the market and be reflected in improved prices for European dairy producers.

The €150m scheme is a new policy response to the market situation, with discussions since July to finalize the details.

The scheme will be EU-wide, so it will be up to individual dairy farmers to decide whether or not to participate – with the prospect of a payment for reducing production in the period from October to December, relative to the same period last year.

The Commission says it will accept all bids notified by the relevant Member States by the agreed deadline – unless the claims exceed the volume (1.07m tonnes) corresponding to the available budget, in which case a reduction coefficient will be applied.

Technical details include:

  • maximum claim (50% of production in the reference period)
  • penalties for failing to reduce production for the full amount offered
  • deadlines
  • administrative and control rules

Further periods (for November-January, December-February, and January-March) will follow until the budget volume is reached. Once the period is over, farmers will have 45 days to provide the proof that they have reduced production – following which the aid can be paid.

EMB responds to measures

Romuald Schaber, president of the European Milk Board (EMB), welcomed the measures and said he was relieved that, with the restraint on supply, EU policy-makers have finally given dairy farmers a potential instrument.

Although the concrete drafting of the measures could be improved, they do represent a step forwards for dairy farmers, he said.

However, Schaber added that one stumbling block is that the production volumes of all EU Member States are not capped during the reduction period, and that the compensation payments are very low.

“It is now even more important for the Member States to also apply the funds from the €350m package for additional reductions in volume, so as to enable an impact on the milk market,” he said.

Related topics: Markets, Fresh Milk, Pricing Pressures

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