INFORMATION NOTE – EU €500M PACKAGE OF MEASURES
Months of falling milk and poor pigmeat prices, as the Russian ban on EU food exports – now a year old – continues to bite, and in light of severe drought in several EU member states, angry national farmer protests in most member states led to an “emergency” meeting of the EU Council of Agriculture Ministers after the Summer break on 7th September last. This was greeted by over 6,000 farmers, including a strong IFA contingent, and 2,000 tractors, in a determined protest on the streets of Brussels.
The EU Commission came forward with a support package worth €500m, targeted to the dairy and pigmeat sector, and to farmers particularly affected by severe drought in some member states. This was adopted in the main by the EU Agriculture Council.
A week on, some additional details have come to light, and this information note outlines these below:
Cash flow measures
o Targeted aid to support dairy and pig farmers
o €420m out of €500m package to be used for targeted aids to farmers(remaining €80m for market supports – see below)
o To be paid through member states (national envelopes)
o Calculation key: 80% of fund based on 2014/15 national milk quotas, 20% to MS where farmers were most severely affected by low milk and pigmeat prices, the Russian ban and drought.
o Ireland’s share of the €420m has been determined to be €13.7m (no indication how much came from the 80%, how much from 20%)
o Member states to get “maximum flexibility” for distribution, to “reflect their specific situation” within legal constraints (State Aid rules)
o Member states to be allowed provide “complementary national aid”, with EU Commission indicating it will consider requests to this effect by MS.
o Advanced direct payments (70% for BPS, 75% for RDP)
Financial instruments through EIB, e.g. repayments vary as per income
Income stabilisation tool through RDP – already available in CAP legislation
Addressing market imbalance – promoting demand, reducing supplies
o SMP APS subsidy doubled and storage time increased to 1 year
o Cheese APS to re-open, with 100,000t maximum intake to be distributed pro-rata MS cheese production, with redistribution of unused allocations after 3 months
o New APS for pigmeat to include fresh lard
o Increased promotion budget for dairy and pigmeat
o Greater info on promotion activity
o Strengthening the Milk Market Observatory
o More bilateral trade agreements
o Tackling non-tariff barriers – including commitment to work on re-opening Russian trade
o Opening new markets
Use RDP to promote quality production and competitiveness to a greater extent
Tackling supply chain challenges
o New High Level Group on risk management (to explore ways of using futures markets to help farmers hedge and manage income volatility)
o Evaluating the milk package and encouraging utilisation of certain measures (using producer organisations to negotiate improved position for farmers in chain)
o Forums to be created to exchange and share experience in areas such as unfair trading practices, risk management, etc.
Tightening link between agriculture and society at large
o Addressing needs of vulnerable groups – e.g. distribution of dairy products to refugees (€30 m fund for this)
o Additional spending on School milk scheme, further school schemes
o State aids – EU commission emphasises a lot can be done under existing state aid rules (total of €15,000 per farmer, total of €200,000 over 3 years for processing and marketing over 3 years) – but offers no relaxation.
• Timing of implementation of above as yet unclear – the value of APS support and targeted cash flow measures is in the speed of implementation.
• Minister Coveney has indicated he would consult with stakeholders on what to do with funds under the targeted aid (€13.7m + any top up (?))
• IFA has strongly requested that Minister mirrors other member states’ actions on the issue of topping up with national funds, to ensure Irish farmers are not left at a disadvantage
• Should the simplest option be taken, to pay the €13.7m as a cheque to every Irish dairy and pig farmer, it would yield a payment, per farmer, of around €765 – a fraction of losses incurred.