Policy Markets Processing

Russian Ban Forces European Market Action

EU - The European Commission responded to Russian import sanctions with Private Storage Aid (PSA) for Butter, Skimmed Milk Powder and certain cheeses after producer calls for market intervention intensified this week.

29 August 2014

2 minute read

The decision will alleviate market pressure stemming from Russia’s considerable dairy imports being lost, the Commission explained yesterday.

This was accompanied with news of the public intervention period for butter and SMP being extended until the year end.

Farmers around Europe have welcomed the announcement, although stress it must be seen as the ‘first step’.

Market monitoring and support from non-Common Agricultural Policy (CAP) funded routes must follow, they insisted.

European Farm Body Copa-Cogeca led demands for action this week, following European Milk Board suggestions of a supply regulating instrument to curb production earlier this month.

They warned of rock bottom prices if action was not forthcoming.

Spanish and French groups described Russia’s effect on agricultural prices as ‘a crisis farmers have not caused but are paying for’.

This has worsened an already grim dairy market, according to Fredrik von Unge, a director at the Federation of the Swedish Farmers.

"It is good that the Commission has realized how serious the situation is for European dairy farmers,” said Mr von Unge.

“The milk market was weak even before the Russian import ban and the situation is serious.”

Mr von Unge joined others in urging agricultural ministers to aid the farming sector.

Financial assistance is being requested from Spanish unions, while Irish Farmers Association dairy chair Sean O’Leary said the Commission must look for other export destinations.

He added: “The Russian ban has clearly had a particular short term effect on market sentiment, buyer behaviour and therefore prices.

“However, Russian consumers will need supplies during their harsh autumn and winter months in particular, and buyers will start importing product from other parts of the world, which ought to help rebalance markets.”

He said that PSA was ‘helpful’ and called for a vigilant approach must be taken but that support funds must not come from the CAP.

The Commission rules on PSA dictate 90 to 120 days, which is to extend to certain protected cheese.

This is key for the UK dairy industry and allows time for the market to adapt, said DairyUK’s chief executive Dr Judith Bryans.

“Cheddar is one of the most widely internationally traded cheeses and its exclusion from PSA would be detrimental to the UK dairy industry. We will be lobbying the Commission to argue for such an extension.”