Euro 500mn Farmer Aid Package in EU

EU agriculture ministers have approved a Euro 500 million aid package to be disbursed to the farm sector, following a series of protests staged by thousands of farmers across the bloc against falling dairy and livestock prices.

An extraordinary meeting of the Agriculture Council was convened last week in Brussels to review this package of aid measures, with a subsequent meeting held this past Tuesday to discuss the terms in further detail. The European Commission said the aid was intended to help farmers deal with cash flow difficulties, as well as to stabilise markets and address problems with the functioning of the supply chain.

The decision to distribute aid, said European Commission Vice President Jyrki Katainen, is meant as a “robust and decisive response” to what some farm groups say is a crisis in the industry. The dairy sector is facing a “state of emergency,” the UK’s National Farmers Union has said, after a 20 percent fall in the wholesale price of milk in the past year.

Member states will be able to advance up to 70 percent of direct payments under the terms of the aid package. This would include, officials say, voluntary coupled support – which essentially links subsidies to the type or volume of farm production – as well as young farmers’ payments. Eighty-five percent of area-based rural development payments may now also be advanced.

Under current rules within the EU’s Common Agricultural Policy (CAP), member states would otherwise be limited to advancing a maximum of 50 percent of direct payments and 75 percent of rural development aid.

Dairy Crashes

Global dairy prices have been plummeting for the past several months. On the one hand, supply has been plentiful as a result of good weather boosting production.

At the same time, demand has fallen due to a number of global factors. For example, Russia – one of the EU’s biggest markets for dairy exports has set an embargo on European food products as retaliation for the bloc’s sanctions over the crisis in Ukraine. Meanwhile, a global oversupply of milk, droughts in certain member states, and decreased demand from China have all contributed to create a milk glut, the Commission noted in its market analysis, resulting in difficult conditions for many dairy farmers.