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New Support Package Worth €500 Million For European Farmers

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New Support Package Worth €500 Million For European Farmers

New Support Package Worth €500 Million For European Farmers
July 20
12:30 2016

The European Commission has presented a new package of measures worth €500 million from EU funds to support farmers in the face of ongoing market difficulties, particularly on the dairy market. The package contains three main elements:

* A EU-wide scheme to incentivise a reduction in milk production (€150 million).

* Conditional adjustment aid to be defined and implemented at Member State level out of a menu proposed by the Commission (€350 million that Member States will be allowed to match with national funds, thus potentially doubling the level of support being provided to farmers).

* A range of technical measures to provide flexibility (e.g. on voluntary coupled support), cash-flow relief (e.g. through an increase in the amount of the advances for both direct and area-based rural development payments) and reinforce the safety net instruments (by prolonging intervention and private storage aid for Skimmed Milk Powder).

The precise details of all the different measures will be finalised in the coming weeks, in consultation with Member State experts. The budget implications of the proposed measures will be incorporated in an amending letter to the draft budget 2017 in the autumn.

Incentives to reduce production (€150m): With the most recent meeting of the Milk Market Observatory Economic Board concluding that a correction on the support side of the dairy market is still necessary, the Commission will put forward an EU-wide measure aimed at incentivising a voluntary reduction in production.

Conditional adjustment aid (€350m, plus possible national co-funding up to an equal amount. Such top-ups are not considered a state aid): With the prolonged crisis showing that some farmers maintain or even increase production in order to maintain cash flow, the Commission intends to provide new funds which can be linked to specific commitments while contributing to secure market stability. The financial grant available to each Member State (see Annex) takes into account the main features of its sector including production, market prices and the weight of small farmers. Member States will have flexibility to define the measure or mix of measures they will make available to farmers – such as extensive production methods, support for small farms, cooperation projects, further production reduction support measures, etc. There will also be scope to cover other livestock sectors.

Other technical adjustments: With many Member States providing voluntary coupled support to the dairy sector (often per cow), they will be granted the possibility to derogate from the obligation to maintain the size of the herd in 2017. Moreover, in a repetition of last year’s move, Member States will again be allowed to advance up to 70% of Direct Payments from October 16 and 85% of area-based Rural Development payments without the necessity of completing the on-the-spot checks. On the other hand, the Commission intends to extend the period for public intervention and for private storage for Skimmed Milk Powder beyond the end of September. The Commission will also update the support for withdrawals for fruit & vegetables made by producer organisations.

EuropeanCommissionThe announcement comes in addition to a separate package for 500 million that was presented by the Commission last September and the range of other measures, such as the activation of a clause (Article 222) permitting voluntary agreements among milk producers on planning milk production, which was announced in March.

In terms of additional financial resources, the Commission has, in less than a year, now mobilised in excess of €1 billion in new money to support hard-pressed farmers. At a time of significant budgetary pressures, particularly on the migration front, this is a very robust response on the part of the Commission and is a very strong statement of support for European farmers

July 2016: 7-point Solidarity Package For Agriculture

  1. Milk production reduction scheme

EUR 150 million to support a voluntary reduction of EU milk deliveries. This scheme will operate at EU level so that farmers across the Union have access to it under the same conditions.

  1. Conditional adjustment aid

EUR 350 million to be implemented by measures at Member State level (see below for amounts per Member State). MS may top –up the aid by 100%.

  1. Voluntary Coupled Support

Member States are given the possibility to review their Voluntary Coupled Support (VCS) arrangements for the dairy sector to provide that the payment is decoupled in 2017.

  1. Extension of public intervention for skimmed milk powder (SMP) beyond 30 September

Public intervention for SMP to be extended until end of February 2017, when the standard period resumes. The ceiling up to which SMP is bought-in at fixed price stays at 350 000 t until the end of December 2016.

  1. Extension of the private storage aid schemes for SMP

Both the standard (between 90 and 210 days storage) and the enhanced (365 day storage) SMP schemes to be extended until the end of February 2017.

  1. Advance payments

Advances to 70% for direct payments from 16 October 2016 and 85% for area-based rural development payments, after finalisation of the administrative checks.

  1. Fruits and vegetables

Support updated for withdrawals made by producer organisations in the fruit and vegetables sector.


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