December 17, 2003



EC To Grant Storage Subsidies To Pig Industry


The European Commission announced on Monday a decision to grant storage subsidies to struggling pigmeat producers in the European Union.


Suppliers, facing lowest prices for more than two years welcome the move, which will enter into force on December 22. It aims to help finance the private storage of pigmeat while exporters and producers hunt for buyers and wait for the EU market to regain a better balance between supply and demand.


"The private storage scheme will provide operators who store pig carcasses and cuts at their own expense and risk for a period of their choice with EU support to cover their storage costs," the statement said.


Since early 2001, EU pigmeat prices have fallen by some 40%, when Russia, Japan and South Korea imposed bans on British and French pork imports after the outbreak of foot-and-mouth disease.


"Prices now are really very bad. There is no demand and supply is very high. There is also competition from third countries like Brazil," a Commission official said, adding that pork prices fell by 16% in the last three months.


"The advantage (of private storage aid) is that you can manage it on a weekly or monthly basis. It has been used before, about two years ago," he told reporters.


Spain and Denmark in particular are believed to have particularly high levels of pigmeat supply and have expanded exports to other EU countries to compensate.


The request for EU-level action came from France, which in May asked -- in vain -- for the resumption of export subsidies for fresh, chilled and frozen pigmeat, suspended in June 2000.


However, exports of some processed pigmeat products are still subsidised. As a sector within the EU's Common Agricultural Policy, pigmeat is fairly liberalised and there is no public buying at guaranteed prices into intervention storage.


The cost of the Commission's decision to the EU farm budget -- depending on the length of storage and type of product -- was estimated at around 30 million euros for around 80,000 tons of product, the EU executive said.


Analysts said EU pigmeat exports were suffering due to Russia's imposition of meat import controls this year and the strength of the euro against the dollar, while farmers also faced higher feed costs after a poor cereals crop.