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2014 Media Kit
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Extra EU aid comes too late for French meat sector slump

By: | at 02:08 PM | Channel(s): International Trade  

France’s aim to point almost one billion euros in European subsidies at struggling livestock farmers will do little to heal its ailing meat processing sector, with cheaper competitors already eroding its market share.

France is the European Union’s biggest poultry producer and third largest for pork, with its western region hosting the bulk of farmers and others in the supply chain, attracted by easy access to ports to import feed and boost exports.

But its pole position is now under threat as Germany, the Netherlands and Belgium gain market share, even in France, using more efficient plants and cheaper labour.

“In other European countries, they don’t play by the same rules,” said Frederic Bossard, a pork farmer in Lusanger, Western France, adding that many other countries did not have a minimum wage and employed east European workers at lower costs.

In a bid to boost the sector, President Francois Hollande early in October pledged almost one billion euros ($1.4 billion) of mainly EU farm grants to livestock farmers he said faced lower income, higher risks and heavier constraints than other farmers.

But the aid, part of a revamp of the EU’s Common Agriculture Policy (CAP) for 2014-2020, will target farmers, not the industry and only apply from 2015 due to talks delays.

By then, more meat processors may have shut up shop.

Farmers: Cause & Effect

Job cuts have piled up in the remote region of Brittany, triggering violent protests among farmers and agrifood workers. The mood soured further after plans to introduce an “ecotax” on truck traffic, seen as further hurting trade.

Last week poultry processor Tilly-Sabco said it will halt production for its main export business, putting at risk about 1,000 jobs in Brittany. The announcement came only a few weeks after Gad, a pork slaughterhouse and meat packing firm said it would lay off or transfer nearly 900 people.

Industry minister Arnaud Montebourg blamed part of the crisis in the French meat sector on low salaries paid in Germany which he described as “wage dumping”.

France has little means to counter both sectors’ decline.

The CAP forbids output-linked aid for pork and poultry farmers. Controversial export subsidies on frozen chicken, which had supported Tilly-Sabco and fellow Doux, were halted in July after the EU executive said they were unjustified.

Under its new policy, pork and poultry will mainly benefit from an additional 100 million euros a year to modernise production plants. They should also receive some aid redirected to small farms, help for young breeders setting up and to organic livestock producers, a ministry official said.

Farmers welcome the measure, saying modernising plants, along with lower environmental constraints, is key to regaining market shares within and outside France.

However, with CAP reform only starting in Jan. 2015, actual output will not rise for another two years.

“European subsidies will only work if farmers have prospects and regular contracts,” Christian Marinov, head of France’s poultry confederation CFA, said.

Too Late

In the meantime more meat processors may have closed down. Twenty-four shut in the three first quarters of 2013, more than in the whole of 2012, agribusiness lobby Ania said.

French Farm Minister Stephane Le Foll is due in Brittany on Friday to detail a plan to revive the region’s economy, but while French pork output fell 3 percent between 2000 and 2012 it rose 28 percent in Germany, 20 percent in Spain, and 8 percent on average in the EU, data by French producers showed.

The farm ministry sees a new drop of 1.6 percent this year.

This contributed to lower exports out of France when they were rising in all other top 10 producing countries in the EU.

“We fell behind and, at some point, a fall in output is something impossible to bear for a company,” Jean-Michel Serres, the head of French pork producers group FNP said. (Reuters)