EU Announces Support Measures for Milk Sector Following Russian Trade Ban

29 Aug 2014 --- The European Commission has announced today that it will open 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 Commission has also confirmed that the period for public intervention of butter & SMP will be extended until the end of the year.

EU Agriculture & Rural Development Commissioner Dacian Ciolo? explained: “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.”

The Commissioner went on to say: “In the coming days I 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 destabilisation appear, I will continue to use the new CAP to act pre-emptively to stabilise the market.”

The Commission will provide Private Storage Aid for butter and SMP to cover the daily costs of storing these products for 3-7 months. A draft implementing Act will be presented to the Committee next week for a formal vote.

Given the importance of certain cheeses in the value of EU exports to Russia (worth close to 1 billion € in 2013), the Commission is wanting to extend this measure to cheeses. 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 tonne, plus a set daily amount per tonne). The products concerned remain the property of the operators, who are then responsible for selling it when it comes out of storage.

Given the importance of certain cheeses in the value of EU exports to Russia (worth close to 1 billion € on 2013), the Commission is wanting to extend this measure to cheeses. Since existing market rules under the CAP solely foresee the paying of PSA for butter, SMP and PDO/PGI cheeses, exceptional measures will have to be mobilised to cover the variety of cheeses exported to Russia.

EU dairy exports to Russia last year were worth €2.3 billion, notably in the form of cheese: €1.0 bn, but also for food preparations (CN 2106 90): €0.47 bn; butter-butteroil: €0.14 bn; fresh milk products: €0.10 bn; finished products (1901 90): €0.09 bn; SMP: 0.07 bn; and whey powder: €0.03 bn; 25 Member States exported cheese to Russia in 2013, but the main EU cheese exporters to Russia are the NL, LT, FI, PL, DK, DE, IT, FR and LV.

These measures for the dairy sector come in addition to emergency market support measures already announced for peaches and nectarines on August 11 (worth 32.7m€) and perishable fruits and vegetables (125m €) on August 25.