EU approves new pigmeat storage system
The system was proposed by the European Commission and allows producers to apply for temporary storage aid for six categories of pigmeat products, when market prices are too low.
EU agriculture commissioner Phil Hogan said later: "I believe private storage aid is the most effective tool available to us to address the difficult market situation. This measure will remove a considerable volume of product from the market, which should have the effect of putting a floor under the market, stabilising the financial situation of farmers and should enable the market to recover by stimulating the fragile recovery in prices."
EU pigmeat prices have been hit hard by Russia’s import barriers and a parallel production increase. And while there has been a recent slight recovery, EU pigmeat prices are still 20% below the average for the past five years, said a Commission note. Gross margins are more than 15% below the historical average: "With many producers having been in a situation of negative revenue for a number of months, farmers are facing serious problems of liquidity," said the note.
The scheme involves the Commission financing basic storage costs for 90, 120 or 150 day periods. Rates vary according to the product category and the time of storage:
*Half carcases without the forefoot, tail, kidney, thin skirt and spinal cord (including Wiltshire sides): 90 days – Euro €230/tonne (t); 120 days – €243/t; 150 days – €257/t;
*Hams, shoulders, fore-ends, loins: 90 days – €254/t; 120 days – €266/t; 150 days – €278/t;
*Boned legs, shoulders, fore-ends, loins: 90 days – €281/t; 120 days – €293/t; 150 days – €305/t;
*Rectangular cut bellies with rind and ribs: 90 days – €210/t; 120 days – €221/t; 150 days – €233/t;
*Rectangular cut bellies without rind and ribs: 90 days – €226/t; 120 days – €238/t; 150 days – €254/t; and
*Boned middle cuts: 90 days – €228/t; 120 days – €241/t; 150 days – €254/t.
The system is likely to come into force by the end of next week, once the Commission has drafted a detailed implementation regulation, using its powers under the EU’s common market organisation regulation 1308/2013. The last time the Commission funded pigmeat storage aid was in February 2011. Its note added that these rates were "lower than on previous occasions, reflecting lower interest rates and energy costs".
Pigmeat has been especially hard hit by Russian import bans, as EU exports have been blocked since swine fever was discovered in Lithuania last January (2014). The EU is contesting the ban at the World Trade Organisation (WTO), claiming it is an overreaction based on poor science. The Commission’s move follows a meeting in Sunday between Hogan and EU pig farmers at the Paris International Agricultural Show.
