This follows rising financial losses due to European Union (EU)-Russia trade sanctions over the conflict in Ukraine.
Under the new initiative, the ministry is hoping to fund the planned support programme using a mix of supplementary government financing and partial funding from the EU. The ministry is looking to establish the fund by mid-December.
The loss of the Russian market to Denmark’s export-focused pigmeat sector has produced a surplus of pork products on the domestic market. The glut has resulted in a lowering of prices paid to producers by between 5% to 10%, while the retail price of pork products has fallen between by 4% to 6% to around DKK50 (US$8.41) per kilo, since 1 August.
"We are in dialogue with the European Union at Commissioner for Agriculture level. The goal here is to assemble a temporary emergency funding arrangement that allows farmers to operate normally, find markets for their products and receive additional support," said Danish food, agriculture and fisheries’ minister Dan Jørgensen in a statement to the Folketing (national parliament) on 10 November.
According to his ministry’s estimates, which are based on figures collated by the meat industry, the impact of EU-Russian trade sanctions will lose the Danish meat industry more than DKK4bn (US$673m) in lost sales for the Danish meat industry in 2014.
"Russian consumption of pork meat is running at normal levels. The sanctions mean we do not have access to that market at this time. This is causing Danish producers to cut prices to move product," said Jørgensen. The emergency support programme is not expected to continue beyond six months, said the minister.
The financial cost to the Danish meat industry, due to the fallout from the Ukraine conflict, could exceed DKK4bn, according to Thomas Søby, chief economist at the Danish Agriculture and Food Council (Landbrug & Fødevarer), an industry group.
"Latest data from Statistics Denmark show that food exports were down by 0.2% in August-September, while total Danish exports declined by 0.6% in the same period. Total food exports have fallen by 3% in the past three months. The decrease is primarily due to the Russian ban on imports, which means Danish exports to Russia fell by 24.3%, year-on-year, in September. This is dramatic," said Søby.