Voluntary Report - public distribution

**Date:** 7/14/2006

**GAIN Report Number:** E36106

E36106

**EU-25**

**Poultry and Products**

**EC market support measures in the poultry sector**

**2006**

**Approved by:**

![](media/image1.wmf)Norval Francis

U.S. Mission to the European Union

**Prepared by:**

Bob Flach

**Report Highlights:**

On July 3, 2006, details of the compensation to the poultry sector for
the avian influenza crisis were laid down in Commission Regulation
1010/2006. The European Commission expects the maximum support at about
Euro 75 million. The poultry sector expects that in practice only half
of this amount will be allocated.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Brussels USEU \[BE2\]

\[E3\]

This report is the result of collaboration with the following FAS
colleagues:

Xavier Audran from FAS Paris covering France

Petra Choteborska from FAS Prague covering the Czech Republic

Bob Flach from FAS The Hague covering the Benelux

Steve Knight from FAS London covering the United Kingdom

Hasse Kristensen from FAS Copenhagen covering Denmark

Asa Lexmon from FAS Stockholm covering Estonia, Finland, Latvia and
Sweden

Sabine Lieberz from FAS Berlin covering Germany

Ferenc Nemes from FAS Budapest covering Hungary

Yvan Polet from FAS Brussels U.S. Mission to the EU

Piotr Rucinski from FAS Warsaw covering Lithuania and Poland

Since the beginning of the avian flu crisis, consumption of poultry and
eggs had fallen dramatically in some European Union (EU) Member States,
leading to a sharp reduction in prices (see GAIN Report E36038 and
E36055). Up to now, the regulations governing the eggs and poultry
market allowed the European Commission (EC) to co-finance compensation
measures only in cases where there was a case of avian flu on a farm or
where farmers were prevented from moving their poultry because of
restrictions imposed on veterinary orders. There was no possibility to
provide aid to take account of market problems linked to a fall in sales
caused by a loss of consumer confidence. In the past, the only market
support tool available for poultry was export subsidies. The EC had
already increased export support on several occasions but this had
proven to be ineffective under current market circumstances.

On April 25, 2006, the European Agricultural Ministers approved a
European Commission proposal for EC financial aid for the European
poultry and egg sector (see GAIN Report E36070). The measure, Council
Regulation 679/2006, is intended to counter balance the negative market
impact of the avian flu crisis in the EU. On July 3, 2006, the details
of the market support measures were laid down in Commission Regulation
1010/2006 and published in the Official Journal of the European
Commission. The Regulation describes the maximum levels of compensation
for destruction and depopulation. The Commission Regulation can be
downloaded from the website:

<http://europa.eu.int/eur-lex/lex/JOIndex.do?ihmlang=en>, Official
Journal L180.

In most Member States, the support will be co-financed by the
governments on a 50-50 percent basis, putting in half of the support.
The EC reportedly calculated the maximum level of support at about Euro
75 million. The sector expects, however, that in practice only about
half of this amount will be allocated. This is due to restrictions laid
down in Regulation 1010/2006, in particular setting the minimum time
span for advancing the slaughtering of the breeding flock at least six
weeks before the standard date of slaughtering (Article 4 of 1010/2006).
Most support is reserved for the destruction of hatching eggs and
breeding birds. There is no budget allocated for promotion campaigns or
the storage or destruction of poultry meat. Belgium and Hungary
reportedly asked for compensation for a communication campaign to gain
back trust of consumers. This could reportedly be paid from the general
fund of the EC for promotion of agricultural products on the domestic
market.

On July 12, 2006, the EC amended some details in Regulation 1010/2006.
Within two weeks, these amendments are expected to be made public in the
Official Journal of the EC.