EC announces emergency support for Russian embargo hit dairy sector

27-Aug-2014 - Last updated on 28-Aug-2014 at 14:27 GMT

The European Commission (EC) will provide Private Storage Aid (PSA) for butter, skimmed milk powder (SMP), and certain cheeses to "alleviate" the impact of the Russian embargo on European Union (EU) food imports.

In a statement issued earlier today, Brussels said it would open PSA, a measure available under the existing Common Agricultural Policy (CAP), for butter and SMP for between three and seven months.

Under the CAP, the EC helps finance the daily cost of temporary storage for butter, SMP, and cheese registered under the EU protected designation of origin (PDO) and protected geographical indication (PGI) schemes for between 90 and 210 days.

Given the value of EU cheese shipments to Russia, the EC said "exceptional measures will have to be mobilized to cover the variety of cheese exported to Russia."

It also plans to table an extension of the intervention period from the maximum 210 days until the end of the one-year Russian embargo.

The EC hopes these measures will help "alleviate the impact of Russian restrictions on imports of EU dairy products and to limit the negative effects on the internal market.”

Lost earnings

On August 7 2014, Russian Prime Minister Dmitry Medvedev announced a one-year ban on the import of beef, pork, poultry, fruit, vegetables, cheese, and milk from the EU, US, Australia, Canada, and Norway.

Lactose-free milk, lactose-free dairy products, and protein concentrates were among several items removed from the blacklist two weeks later.

Dairies across Europe, including Finnish firm Valio and Dutch company FrieslandCampina, have been forced to implement measures to counter the effect of the embargo.

Announcing the emergency support measures today, Dacian Ciolos, EU Agriculture and Rural Development Commissioner, acknowledged the impact of the Russian sanctions on the region's dairy sector stakeholders.

"Price signals on the European dairy market show that the Russian ban is starting to hit this sector," said Ciolos.

"In a number of Member States export earnings are being lost and new outlets need to be found. The European dairy sector needs time to help to adapt so I am announcing today targeted market support, focusing on milk powder, butter and exported cheese."

"If needed, further measures will follow," he added.

Prevent oversupply

British dairy sector organization, Dairy UK, welcomed the emergency measures, but urged the addition of cheddar cheese to the PSA measure.

"We welcome the European Commission's decision to open Private Science Aid for dairy products affected by the Russian ban. This measure will help prevent an oversupply of dairy products in the EU and stabilise the market. It will also give more time for the global dairy market to adapt to recent developments and absorb the impact of the ban," said Judith Bryans, CEO, Dairy UK.

"We also welcome the Commission's willingness to extend PSA to non PDO/PGI cheese and we will strongly argue for the need to include cheddar in any PSA measure."

"We are lobbying the Commission to argue for such an extension," said Bryans.

COPA-COGENCA, which represents the interests of farmers and cooperatives in the EU, branded the EC support "a step in the right direction" but said "further measures are crucial."

"We welcome the Commissions swift action to help deal with the impact of the ban on the dairy sector. It's important to stabilize markets. But the move does not go far enough. Milk prices in some cases are going down by as much as 30%. Further action is crucial. We also need to work hard to find new market outlets for our produce and speed up promotion campaigns to stimulate new demand," said COPA-COGENCA secretary general, Pekka Pesonen.