EU 'mulling storage aid' for Russia-hit milk firms

The European Union, adding dairy to agriculture sectors which could receive support after Russia's ban on Western food import, may open up private storage aid for milk products affected, has learned.

European Commission officials on Friday, at a meeting which fleshed out support for producers of peach, nectarines and other perishable fruits and vegetables, said they may extend assistance to dairy exporters too.

"The commission… will not hesitate take any further emergency market support measures if necessary, notably for certain dairy products where the impact of the Russian ban seems obvious," the commission said in a statement.

Support for dairy groups, some of which have seen the prices of their products tumble after being denied access to the Russian market, will be discussed at a meeting of agriculture experts on August 28.

'Short-term problem'

The support could include opening up private storage aid to exporters affected, allowing an alternative to selling off product at low prices, and disrupting local markets, a Brussels source told

"That would be a way to deal with a short-term problem," the source said.

"I don't think it is clear how the programme would operate. It might just be limited to the worst affected areas, which appear to the Finland and the Baltic states, and maybe the Netherlands, although that is not clear yet."

It may also be limited to butter and skim milk powder.

"But it would allow breathing space to find alternative markets for dairy products which in the short term is not possible."

'Safety net'

Roger Waite, spokesman for agriculture and rural development at the commission, said he could not comment further on "where we are" as regards progressing dairy support.

However, he said that private storage aid had proven itself an "effective means of dealing with oversupply" situations.

The commission lists private storage aid, in which it offers financial support for warehousing product, among measures "which work as a safety net in case of serious imbalance in the market".

This support - which has historically been applied in particular to butter, for which production sees swings in tune with the seasonal cycle in milk output -  "helps producers to take product temporarily off the market, as an alternative to 'public intervention'."

Biggest exporters

The impact of Russia's food import ban has been seen in European dairy has been particularly evident in Finland, where Valio, the country's biggest dairy producer, says it stands to lose E240m in exports.

Valio is redirecting large quantities of Oltermanni, one of Finland's most popular cheeses, on the local market, where it is being sold at roughly price, and being dubbed "Putin cheese".

However, Finland was actually in 2013 only the third-largest EU cheese exporter to Russia, after the Netherlands and Germany.

Finland was the top EU exporter of butter to Russia, ahead of France, and the fourth biggest from the bloc on skim milk shipments, behind France, Poland and Belgium.

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