January 21, 2013

 

France seeks EU's reconsideration on poultry subsidy cut

 

 

Following the damage done to one of its top poultry firms which is trying to emerge from court administration, France will ask the EU to reconsider a steep cut in poultry export subsidies.

 

This is according to France's Agriculture-Food Minister, Stephane Le Foll.

 

The EU's executive published in its official journal on Friday (Jan 11) a regulation halving export subsidies for poultry meat, adopting the measure after EU countries failed to reach agreement at a committee meeting the previous day. This means the EU has cut the export subsidy by two-thirds since October.

 

The export subsidies, which are available for certain destinations, notably in the Middle East, represent significant financial support for French group Doux, which is restructuring after filing for administration last June and which received EUR55 million (US$73 million) under the scheme in 2011.

 

"How can you expect companies like Doux, which is fragile and coming out of court administration, or Tilly-Sabco to be able to cope? We are going to refer this to the European Agriculture Commissioner very quickly. We are going to argue for adjustments to be made at least until 2015," Guillaume Garot, who is a junior minister to Agriculture Minister, said.

 

Doux's export subsidies made it the largest individual beneficiary of European farm aid in France in 2011. The other French poultry company to benefit from the export support, Tilly-Sabco, received EUR19 million (US$25 million) in the same year.

 

Doux's financial difficulties have been among a series of industrial headaches for the Socialist government elected last year and which is trying to stem layoffs that have brought the number of job seekers to a 15-year high. After selling its fresh poultry division as part of its restructuring, Doux's export business is now its main activity. It has about 2,000 workers and Tilly-Sabco more than 300.

 

In a note on Thursday (Jan 17) announcing the decision to adopt the subsidy cut, the European Commission justified the measure by citing "high prices, stable feed costs, producer margins sufficiently healthy and increasing exports without refunds."

 

The EU is cutting the subsidy level to EUR10.85 (US$14.45) per 100 kilogrammes of poultry meat from EUR21.70 (US$29) previously. In October, it had lowered the rate from EUR32.50 (US$43). The move will anger poultry firms and their farmer suppliers, who have complained about rising animal-feed costs after a surge last summer in the price of grains used in feed. However, grain prices fell sharply in late 2012.

 

Officials at the French agriculture ministry held an emergency meeting with representatives of Doux and Tilly-Sabco on Friday to assess the impact of the subsidy cut, Garot said.

 

The government was considering allowing the firms to benefit early from measures in a competitiveness package announced in November, notably a company tax credit, he added.