EC introduces private storage aid for pigmeat at last

With prices sticking stubbornly at 20% less than the five-year average as a result of Russian trade embargoes, the European Commission (EC) has at last decided to introduce private storage aids. Digby Scott reports

Brussels is to introduce private storage aid for pigmeat after EU member states voted in favour of adopting the measure.

While far from being a universal panacea for the Continent’s stricken pig farmers, it will help processors remove some of the current glut of pigmeat from the market, until the price sees a seasonal pick-up.

The EC’s department of agriculture has at last decided a storage regime is needed because prices have remained 20% below the European five-year average.

Once private storage aid comes into force, abattoirs will be able to lodge a request with their own country which, once approved, will make them eligible for payment.

If past price crises are anything to go by, the storage period will last from three to five months. It’s a mechanism not used by companies in Britain, but it is used by big exporters such as Denmark, and therefore will have a knock-on beneficial impact on British prices, by reducing the currently unsustainable differential.

British pig-keepers can thank the Danes for this volteface by the EC. They have been over-borrowed and in debt for so long, they’re incapable of withstanding much more market pain.

When addressing the NPA Producer Group recently, AHDB chairman Sir Peter Kendall cited the excellence of the Danish pig sector, compared to the British sector.

But Brussels farms commissioner Phil Hogan, who understands the relative merits of the Danish and British pig sectors, has acknowledged the “precise problem” of the high debt levels faced by Danish farmers as a result of heavy investment.

The lesson for all producers is always to beware siren voices telling you to invest . . . unless, of course, they’re going to help you service your debt.

Brussels has taken the decision to introduce private storage aid following criticism at last week’s farm council meeting from Denmark, Poland, France, Hungary, Belgium and others.

France made particular mention of the problem of “fatty cuts” – those that were previously destined for the Russian market.

The United Kingdom government is resolutely opposed to market interventions such as private storage aid.

Brussels last triggered private storage aid for pigmeat in February 2011. Back then, operators were eligible to receive aid to cover storage costs of pigmeat for periods of 90, 120 or 150 days. A minimum quantity of at least 10,000kg for boned products and 15,000kg for other products was fixed by the EC.

Until last week, EU farm commissioner Phil Hogan had resisted calls from Denmark, France, Belgium and Ireland for private storage aid, saying no intervention measure was currently justified in the sector.

Private storage aid has the potential to undermine on-going price evolution, which could result in a negative impact this summer.

The latest figures from Brussels show that EU prices have now fallen to about 99.77p/kg, from just over 124.17p/kg in mid-July 2014. Prices in Spain are a significant 25.8% less than a year ago, and similar drops have been experienced by producers in Belgium (-22.1%), Latvia (-19.2%) and Greece (-18.1%).

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