Protests by French farmers against low dairy and meat prices are diving Europe. While similar actions are expected in neighboring Belgium, Germany and the Netherlands are irked that the Paris government is enacting protectionist measures in an attempt to quell the unrest.
When French farmers blocked the roads in northwestern Brittany and Normandy last week, the Socialist administration of President François Hollande quickly gave into their demands, canceling around €100 million in taxes and allowing them to defer another €500 million for three to four months. The state also promised €500 million in support to help indebted farmers restructure their loans.
The concessions didn’t stop farmers in Alsace, in the northeast of France, from blocking German trucks carrying agricultural products into the country this weekend.
The French, who are Europe’s largest producers of agricultural products, say beef prices have fallen 13 percent in the last two years while pork producers have been hit by a Russian embargo imposed in retaliation for European sanctions.
Dairy is said to be 12 cents below its break-even price.
Europe liberalized its milk market in April, removing a quota system that had been in place for thirty years. While the reforms have benefited some, especially large agricultural companies, smaller and outdated farms are struggling to make end meets.
French officials estimate that one in ten farms are in financial difficulties while tens of thousands could face bankruptcy.
Belgian farmers have similar laments and are expected to throw up roadblocks of their own on Thursday.
Germany’s agriculture minister, Christian Schmidt, reminded the French government on Wednesday that it must “stick to the rules” of the single market and not stop products from his country being sold in France. “I don’t see French farmers hindering their exports, so imports should not be hindered either,” he said.
In an interview on German radio, Schmidt urged French farmers to consider instead why they had lost competitiveness relative to Germany and other European nations.
French agricultural exports have steadily declined since countries in Central and Eastern Europe joined the European Union. But other Western Europeans have managed to maintain their position.
Open Europe, a British-based think tank, points out that this is despite — “or possibly because of” — France being the single largest recipient of farm subsidies under Europe’s Common Agricultural Policy (CAP). The country is due to receive €62.8 billion in support under the current 2014-2020 budget.
The organization is skeptical of the policy’s effectiveness.
By providing income support irrespective of whether any meaningful economic activity takes place on a farm, direct CAP subsidies often act as an outright disincentive for farmers to modernize, in turn locking in unviable business models and hurting Europe’s competitiveness.
The Dutch, who are the biggest exporters of agricultural products in Europe and advocate reform the subsidies system, are unlikely to protest. But their farmers are disgruntled by the extra help their French competitors are getting.
Pork producers in the Netherlands said on Wednesday, “If Brussels approves the €600 million in support of French farmers, then there is room for our government to restructure pig farms as well.”
German dairy farmers similarly complained to the European Union about the extra support for French farms and a proposed “eat French” campaign. Spanish farmers warned they could retaliate with a boycott of French products.