MercoPress. South Atlantic News Agency

EU support for dairy farmers to alleviate Russian restrictions on imports

The Private Storage Aid for butter and SMP covers daily costs of storing these products for 3-7 months. The support is until the market improves.

The European Commission opened Private Storage Aid for butter, Skimmed Milk Powder (SMP) and certain cheeses in order to alleviate the impact of Russian restrictions on imports of EU dairy products and to limit the negative effects on the internal market.

 The EC also confirmed that the period for public intervention of butter and SMP will be extended until the end of the year.

The Commission's move, which had been widely expected, will provide Private Storage Aid for butter and SMP to cover the daily costs of storing these products for 3-7 months. The scheme essentially pays support for the storage of suitable products until the market improves.

Russia is a hugely important market for Europe; 33% of European cheese exports and 28% of butter exports went to Russia in 2013. Since the Russian ban on food imports from Europe was announced on 8 August, the price quoted for butter by the Dutch Dairy Board has fallen by 11%; from €3,420 to €3,050 per ton. The timing for European producers has been particularly bad, as world markets were already under significant price pressure due to a global over supply of milk.

EU Agriculture & Rural Development Commissioner Dacian Ciolos explained the background to the move:

“Price signals on the European dairy market show that the Russian ban is starting to hit this sector. In a number of Member States export earnings are being lost and new outlets need to be found. The European dairy sector needs time and help to adapt so I am announcing today targeted market support, focusing on milk powder, butter and exported cheeses If needed, further measures will follow.”

He added that in the coming days he will also present to Member States and the European Parliament a first full analysis of the short and medium term impact of this Russian ban on all major European agri-food sectors, together with an overview of the policy options.

”Again, my message to EU producers today is clear: Where material risks of market destabilization appear, I will continue to use the new CAP to act preemptively to stabilize the market.”

Ireland's Minister for Agriculture Simon Coveney said that his Department had been working through the Commission’s Management Committee to ensure that the tools available under the CAP were utilized to stabilize markets affected by the Russian ban: “Over the last few weeks, my Department has been working with the Commission and other Member States to monitor market developments, and calling for the utilization of the appropriate market support instruments to alleviate the impact of the Russian ban. EU Agriculture Ministers will meet late next week at an Extraordinary Council to consider the issues”.

Given the importance of certain cheeses in the value of EU exports to Russia (worth close to €1 billion in 2013), the Commission wants to extend this measure to cheese. The rules on PSA for cheese and the extension of the intervention period will be regulated by a Delegated Act which the Commission will table in the near future under the emergency market rules established in last year's CAP reform.

Private Storage Aid is a measure foreseen for butter and SMP under existing Common Agricultural Policy (CAP) market rules whereby the Commission helps finance the cost of temporary storage of for at least 90 days – and not more than 210 days. The CAP finances part of the cost of this temporary storage (comprising a fixed rate per ton, plus a set daily amount per ton). The products concerned remain the property of the operators, who are then responsible for selling it when it comes out of storage.