Europe’s Dairy Sector Seeks Help to Cope with Russian Food Ban

12:15PM Aug 25, 2014

Situation ‘dire’ for British dairy producers as milk prices drop.

Russia’s ban on food products from several countries is beginning to squeeze the European Union's (EU) dairy industry.

As a result, the European Commission is preparing to provide support to its dairy sector to alleviate the effects of the ban, reports the European Voice.

Russia announced an import ban on food products from the EU, U.S., Norway, Canada and Australia Aug. 7 in response to sanctions imposed on it because of its actions in Ukraine.

The ban is expected to increase competition for sales to other markets, says USDA in its August Livestock, Dairy, and Poultry Outlook. Although U.S. dairy exports to Russia are small, Russia has been a large destination for butterfat exports from the EU and has accounted for nearly a third of EU cheese exports in recent years. Cheese is already being stockpiled in Europe.

Earlier this month, the European Commission announced that it will help farmers affected by the ban with €125 million in funds. The Commission said it will not hesitate to provide support where the impact of the ban seems obvious, specifically mentioning the dairy sector, the European Voice reports.

An EU farmers’ lobby organization, Copa-Cogeca, says more is needed to help the sector, according to the European Voice. Dairy exports accounted for €1.3 billion of the EU’s €11bn in farm exports to Russia in 2013. The revised Common Agricultural Policy (CAP) contains an emergency reserve fund of €420 million to help farmers in the event of market disruption.

In Great Britain, dairy producers are facing a falling market, reports The Independent.

The Russian ban and supermarket wars have resulted in falling milk prices and stockpiled cheese supplies. According to The Independent, Welsh dairy farmer David Handley, chairman of Farmers for Action, said: "We're producing more and more milk on a daily basis and we’ve no market for it. We’ve now reached a point where we're about to fall off the edge of a cliff and the situation is dire.

"By the end of the year, we expect milk prices to fall by as much as 3p per litre, which will have a devastating effect on the whole industry, not only for dairy farmers but for the 25 to 30 areas of business that are directly associated," said Handley.