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EU Dairy Industry Joins Farm Producers Aided Due to Russian Ban

11:03AM Aug 28, 2014

The European Commission will subsidize the private storage of butter, skimmed milk powder and some cheeses to help its dairy sector adapt to the loss of the Russian market.

The European Union dairy industry became the latest recipient of emergency EU farm aid as the impact of a Russian import ban spreads.

The European Commission said it would subsidize the private storage of butter, skimmed milk powder and some cheeses. The commission, the 28-nation EU’s regulatory arm, also extended the period for possible public purchases of butter and skimmed milk powder by three months until the end of the year.

"Price signals on the European dairy market show that the Russian ban is starting to hit this sector," EU Agriculture Commissioner Dacian Ciolos said in a statement today in Brussels. "In a number of member states, export earnings are being lost and new outlets need to be found. The European dairy sector needs time and help to adapt."

A Russian prohibition announced three weeks ago on imports of EU farm goods as retaliation for European sanctions against Russia over its encroachment in Ukraine has cut off about 5 billion euros ($6.6 billion) of annual trade and left the bloc scrambling to help its producers. EU dairy exports to Russia last year totaled 2.3 billion euros, of which cheese accounted for almost 1 billion euros.

Earlier this month, the EU announced aid of 33 million euros for growers of peaches and nectarines and 125 million euros for producers of other perishable fruit and vegetables. That money came from an emergency European farm fund of 423 million euros this year.

Dairy-Market Support

The cost of the dairy-market support will depend on the industry’s demand for private-storage aid and any offers to sell butter and skimmed milk powder into public storage during the prolonged period. The money could be covered by the current EU farm budget or the emergency fund, said Roger Waite, the commission’s agriculture spokesman.

The aid for private storage of butter, skimmed milk powder and cheese will be offered until the end of 2014 and cover the daily costs of storing these goods for three to seven months. The eligible cheeses, which have yet to be determined, will likely include Dutch Gouda and Edam, according to Waite.

The Viola cheese brand from Finland, a country that normally sends 90 percent of its cheese exports to Russia, won’t be eligible because it’s a soft type that isn’t suitable for storage, Waite said.

The Netherlands and Finland are among the EU’s main cheese exporters to Russia, according to a commission statement that also listed Lithuania, Poland, Denmark, Germany, Italy, France and Latvia in the group.