OREANDA-NEWS. August 03, 2015.  Safety net measures for the European dairy, fruit and vegetables sectors will be extended into 2016. The European Commission is currently finalising the last details with a view to formally adopting the relevant legal decisions in the coming weeks as a matter of formality.

The European Commission is aware of the challenges faced by European producers and to support them. For the fruit and vegetables sector, the foreseen measures may enter into force as of next week, while for the dairy sector they will be in place as of 1 October. The intention to prolong some of the existing measures was first announced by Commissioner Phil Hogan, responsible for Agriculture and Rural Development, during the most recent Council of Agriculture Ministers on 13 July. Today, Commissioner Hogan said:

"The significant actions taken to date by the European Union have demonstrated the solidarity of the EU with farmers most affected by the Russian ban. These actions also played an important part in mitigating the effects of the ban. Now, almost a year later, with the ban prolonged, we need to continue to provide a safety net in order to give security to producers who continue to face difficulties in relation to the ban."

For the dairy sector, the measures consist of public buying-in (intervention) and private storage aid (PSA) for both butter and skimmed milk powder (SMP). These measures are currently in place and without such an extension would come to an end on 30 September 2015.

Intervention will be prolonged from 1 October 2015 to 29 February 2016 in order to avoid any discontinuation in its operation (for dairy products, intervention is systematically open every year from 1 March to 30 September). Private storage (for which no automatic opening applies) will also be prolonged until 29 February 2016.

For fruit and vegetables, the Commission proposes to extend until 30 June 2016 the measures that ended on 30 June 2015, covering the main groups of fruit and vegetables (including peaches and nectarines) affected by the Russia ban. These measures consist in withdrawals of produce for free distribution of fruit and vegetables to charitable organisations and withdrawals of products for other purposes (such as animal feed, composting, distillation), as well as the so called 'non-harvesting' and ' green harvesting' measures.

Quantities will be allocated to the Member States that have exported significant quantities to Russia over the past three years. Besides this, an additional quantity not exceeding 3,000 tonnes may be withdrawn from the market in all Member States in order to further stabilise the market.

Global demand for milk and dairy products has deteriorated throughout 2014 and the first half of 2015 notably due to the slowdown in imports from China. In addition, the Russian government announced the prolongation for another year of the unjustified and illegal ban on imports of agricultural products from the European Union until August 2016. As a consequence, existing pressure on milk and dairy product prices is expected to remain in the months to come. As for fruit and vegetables, the extension of the Russian ban means that an important export market continues to be unavailable to European producers and this could cause significant price falls.

Background

Dairy sector

In the case of intervention, public authorities buy the quantities offered by private operators at a fixed price for a maximum quantity of 109,000 tonnes for SMP and 50,000 tonnes for butter, and as long as the offered goods comply with certain quality requirements. Once these volumes are exhausted, intervention continues with a tendering system. Butter and SMP bought-in are subsequently sold on the free market by the public authorities once prices have recovered.

In the case of private storage, the ownership of the goods remains with the private operator, which commits itself through a contract to withdraw the goods from the market for a certain period of time. In exchange for this, an aid is granted to cover part of the storage costs.

The legal drafts for the extension of these tools were already discussed by the Commission with representatives of Member States. The corresponding legal texts should be published and be in force before the end of September.

To date, some 108,652 tonnes of butter and 40,045 tonnes of SMP have been offered to private storage since the start of the scheme in September 2014. 1,176 tonnes of SMP have been offered to intervention.

Fruit and Vegetables

The legal drafts for the extension of these tools have already been discussed by the Commission with a group of experts appointed by Member States for the extension of the exceptional support measures. The publication and entry into force of this measure is expected by the end of next week.

Under the exceptional support measures implemented up to 30 June 2015, around 770,000 tonnes were withdrawn from the markets with a support of around EUR 155 million.