WASHINGTON, Sept. 16, 2015 - European Union agriculture ministers have been meeting this week to complete a plan to distribute some 500 million euros ($565 million) to hard-squeezed dairy and pork producers facing surplus production and collapsing prices.

Although details of the aid package have not been ironed out, it’s expected to be split among advancing direct payments scheduled for subsequent years, increasing promotion funds for agricultural commodities in 2016, and higher payments for privately-owned storage of surplus dairy products and pork.

The European Commission, the executive body that initiated the program in response to rising political pressure from farmers and farm organizations, has resisted demands that it reinstate milk production quotas that were abandoned this year in a sweeping reform of the EU Common Agricultural Policy, or that it increase the “intervention” price paid to store surplus products.

Although farm groups and some ministers said the proposed relief package is inadequate in the face of a “farm crisis,” analysts said that the commission has resisted more dramatic solutions that likely would create problems in future years. The farmers’ demand for higher support prices would, according to market analysts in London, make dairy products more expensive and less competitive on export markets but without increasing the prices farmers receive.

The proposal is said to have support from older EU country members such as the United Kingdom, France, Ireland, Germany, Denmark, Italy and Spain, but newer members such as the Czech Republic and Slovakia say it’s inadequate. The main farmer federation, COPA-COGECA, said the plan was “far from sufficient to have any noticeable impact.”

In a report, USDA staff at the U.S. mission to the EU in Brussels said the “pork crisis” arose in part from the Russian import ban that began in January 2014 but also from large increases in pork production in countries such as Spain, Poland, the Netherlands and Germany during a period of shaken consumer confidence arising from the Greek financial crisis.

Another USDA report from Brussels points out that EU milk production margins turned negative as farmers increased output following the end of the EU dairy quota system in April in the face of weaker world dairy demand. The 2014 Russian embargo on EU agricultural products added downward pressure on dairy markets.

The “perfect storm” of larger production and declining export markets has led farmers to start blocking roads and retail distribution centers and supermarkets in protest. French pig farmers last month tried to block pork imports from Germany and Spain, Irish farmers protested in Dublin and more than 1,500 tractors drove through Paris in a protest earlier this month. Farmers from France, Belgium and the U.K. converged on Brussels last week during meetings of EU officials and returned this week to Luxembourg where ministers hashed out details of the aid program. A Belgian farmers union offered free train tickets to members to join the protest.

One of the challenges facing ministers is allocation of assistance payments among the 28 EU member states because the impacts on farmers vary by country. Finland, Estonia, Latvia and Lithuania were hit hardest by the Russian embargo because their dairy exports were almost exclusively oriented to the Russian market, USDA said. The impact of depressed pork prices also varied widely. EU-wide pork prices are down 15 percent from last year but prices in Belgium and the Netherlands are down 20 percent while prices in Sweden fell only 4 percent.


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