June 8, 2013

France's poultry exporter seeks for alternative EU aid

In order to help the country's producers to compete with cheaper Brazilian suppliers, French poultry company Tilly-Sabco has called on the EU to replace controversial export subsidies with a development fund.

Tilly-Sabco and fellow French firm Doux are the main beneficiaries of the EU's poultry export aid, which has been worth €80 million (US$105 million) a year to the companies and has supported their expansion in Middle Eastern markets.

Export subsidies are contentious in international trade relations and the EU has already reduced sharply the support for poultry exporters in recent months, causing concern in the French sector at a time when Doux is trying to emerge from administration.

Tilly-Sabco said it accepted that export subsidies were doomed and it is now seeking funding to modernise and match Brazilian production costs by 2020.

"It will take an effort to move from a subsidised model to a self-sufficient one," Daniel Sauvaget, Tilly-Sabco's chief executive and sole shareholder, told reporters on Thursday. "Simply to scrap the export subsidies is, in a way, denying economic reality."

The French firm estimates that Brazilian exporters have production costs of €350 (US$. a tonne, 10-15 %, below its own.

Even allowing for cost inflation in Brazil, Tilly-Sabco forecasts that it will need to cut the cost gap by €250 (US$331) a tonne by 2020 and proposes that the burden be shared by the exporters, upstream suppliers and public authorities.

Tilly-Sabco is pushing for the revamped aid scheme to be included in a reform of the EU's common farm policy, which could be decided this month.

The French Ministry of Agriculture declined to comment on Tilly-Sabco's proposal, but in April it raised the possibility of using EU farm subsidies in a plan to revive the poultry sector.