Brussels, May 25 - Europe's farm chief yielded some ground on Monday to demands for aid to help the European Union's dairy sector cope with low prices and poor exports, offering to advance EU subsidy payments to all eligible farmers.
France, backed by Austria and Germany, had tabled a series of requests mostly involving increases in EU aid to the dairy sector. These countries say their producers are badly hit by the weaker market and want firm action to bolster farmer incomes.
Dairy farmers have protested in several EU countries about low milk prices, putting pressure on their governments to help.
About 800 farmers, mostly from France and Germany, demonstrated outside the executive European Commission in Brussels on Monday ahead of a meeting of EU farm ministers, police said. The protesters, who had a live cow with them and tractors to block roads, shouted: "Fair prices for milk."
"I do take it seriously that our dairy sector is in an unprecedently difficult situation with extremely low prices," EU Agriculture Commissioner Mariann Fischer Boel told a news conference after a meeting of EU farm ministers.
"I did go out there and talk to them (demonstrators). I am not scared ... although I did have the impression that some of them had definitely not only been drinking milk," she said.
In Germany's capital, Berlin, around 6,500 farmers from across the country rallied to protest low milk prices, as well as high diesel prices, organisers said.
Addressing the farm ministers, Fischer Boel said she would propose that all eligible EU farmers -- not just in the dairy sector -- be able to receive much of their subsidy payments two months earlier than usual.
"We will be ... able to make it possible for member states to pay 70 percent of the direct payment from October 16 to alleviate the difficult economic situation that some farmers are facing," she said.
The Commission has already taken a string of measures to shore up dairy markets, including reinstating export subsidies and private storage. It has also raised ceilings on volumes of butter and skimmed milk powder that can be bought into public intervention stores, to remove supply from the market.
SUBSIDIES
Fischer Boel agreed to the countries' request to extend an end-August deadline for EU public intervention buying of butter and skimmed milk powder, although she pointed out that there might be some legal problems in doing this.
Subsidies for private storage of butter might also be extended beyond a mid-August cut-off date, she said. On dairy export subsidies, for which France had wanted guarantees that subsidy levels would not decline in between the EU's regular tenders, Fischer Boel said it was important to monitor the international market and make sure the EU did not disrupt it.
In a note read to ministers, France said EU cheese exports fell 10 percent in the first quarter and butter exports by 3 percent. It called for cheese export subsidies to be raised "significantly."
Fischer Boel said she would study the idea.
But she rejected a demand that the EU subsidise skim milk powder for use in animal feed, saying it would be expensive and not add a significant market outlet to absorb dairy product supply.
It would be difficult, she said, for Commission experts to compile a report on the EU dairy sector before the end of 2010, the date scheduled, but quarterly market updates could be given.
HEALTH CHECK
Over the last few months, at least five countries have demanded urgent action and delays to annual rises in EU milk quotas, agreed in November under the "health check" -- or mini-reform -- of EU farm policy, to allow prices to recover.
Fischer Boel has rejected any suspension of the 1 percent quota rises, saying she will not reopen the health check deal and insisting that quotas are not to blame for low prices.
"It's simply a question of lower demand. What farmers need to do is to produce less, only produce less," she told reporters. "Consumers are not buying high-quality milk products they used to buy before the financial downturn."
Fischer Boel has said EU milk production should total between 4 and 5 percent below the maximum quota quantities this marketing year, with the same undershoot in 2009/10.
Dairy prices have roughly halved in the last few months, with analysts saying that although markets may now be close to their lowest point, a significant rebound in demand is needed to regain an upward trend.