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CTA. 2002. BSE compensation. Agritrade, June 2002. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52750
The European Commission has allowed the ...
The European Commission has allowed the authorities in Nordrhein Westphalia to extend aid to beef farmers to compensate for income losses arising from the BSE crisis. Normally such income aid is not allowed under EU rules. However it was felt that the exceptional circumstances created as a result of the BSE crisis justified such aid payments. While the total payment announced on March 12th was relatively small (Euro 1 million), this was followed on April 3rd by the approval of a similar national aid programme for French beef farmers totalling Euro 75.5 million and the approval on April 12th of a similar Euro 4.8 million programme for Luxembourg beef farmers. Comment: Since 2000, EU beef prices have fallen by 20%. The Commission has estimated that two-thirds of these price declines were the result of the reduction in the beef intervention price introduced as part of the reform of the beef sector. EU beef farmers were compensated for these price declines by increased direct aid payments. One-third of the price declines however were a consequence of the BSE and FMD crisis, for which no compensation payments had until recently been made. This situation has now been changed with the various national schemes for which the Commission has given exceptional approval. The situation of EU beef farmers is in stark contrast to that of ACP beef suppliers who have seen their hard currency earnings on exports to the EU falling between 28% and 30% depending on the meat cuts exported. In the case of Namibia, the decline in the earnings in 2001, compared to the pre-CAP reform period, led to income losses of around N$ 60 million. This has led southern African beef exporters to call for the introduction of a series of compensatory trade measures including: abolition of the remaining 8% agricultural levy charged on ACP beef exports, which currently costs ACP beef exporters around Euro 0.1 per kg of exported beef; a broadening of the beef product range which can be exported within the scope of the beef protocol, allowing the export of higher value products and reducing dependence on declining commodity markets; reform of the licensing arrangements to allow greater flexibility to respond to market signals. These are the kind of issues which could usefully be taken up by the ACP group with the European Commission in order to ensure that ACP countries retain benefits from their preferential trade relationship with the EU despite reform of the CAP which is eroding the market value of existing trade preferences.