Possibility of the CAP Crisis Reserve being used to support dairy sector

European Agriculture and Rural Development Commissioner Phil Hogan has raised the possibility that the Common Agricultural Policy’s (CAP) Crisis Reserve mechanism may have to be activated to help solve market difficulties in the dairy and pigmeat sectors.

Commissioner Hogan was addressing the European Parliament’s Agriculture Committee this week in advance of a key meeting of European Agriculture Minsters on March 14.

Hogan highlighted that last year the Commission had at its disposal funding from the superlevy to fund dairy sector initiatives a funding source which will not be available this year.

The Commissioner said that this raises more starkly the possibility of activating the Crisis Reserve.

However, he said that this is a road he would prefer not to go down as he said the fund is effectively farmers own money.

This week the Dutch Presidency of the European Council of Agriculture Minister asked Member states if they would be prepared to activate use of the Crisis Reserve to finance measures to solve the market difficulties and which would require additional funding from the European Budget.

Such a move is politically very sensitive with the German Agricultural Minister already coming out against the proposal, it remains to be seen what position the Irish Minister for Agriculture, Simon Coveney will take.

Opposition to the use of the Crisis reserve is likely to centre around the fact that the move can be viewed as Government’s favouring one farming enterprise over another.

The Crisis Reserve was created under the last reform of the CAP.

The new safeguard clause was introduced for all sectors to enable the Commission to take emergency measures to respond to general market disturbances – such as the measures taken during the e-coli crisis in May-July 2011.

Crisis Reserve is financed by annually reducing the direct payments of farmers that are over €2,000. Funds not used for crisis measures will be returned to farmers in the following year.

A crisis reserve is created every year for an amount in the region of €400 million.