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How the EU Private Storage Aid Schemes Will Operate

The European Commission will this week publish the required regulations to activate aid schemes for the private storage of butter, SMP and cheeses.

A vote was held by Member States to approve the regulations on Monday, 27th April, and it is now expected to be published in the Official EU Journal on 30 April.

The scheme will run from 7th May to 30th June (at the latest). ICOS has challenged this very short time frame, as it is very uncertain whether there will be any market improvements by the end of June, with the date for the reopening of the food service industry, i.e. restaurants and catering services, and conditions they will operate under, still very much unknown. In addition, at the end of June, Ireland will be just coming off peak production and will still be producing, and therefore likely need to store, a significant volume of product. The Commission’s decision to end the scheme on 30th June (with the possibility of 6-month storage from then) is due to budgetary limitations- the schemes cannot continue into 2021, as no EU budget has yet been agreed for next year.

Under the schemes, operators are required to store product for a minimum of 90 days and a maximum of 210 days. A minimum quantity of 10 tonnes applies for SMP and butter.

While neither the budget limit for these schemes nor the total quantities available are referenced in the regulation, they are estimated to be as follows:

SMP:                     €6m for 90,000 tonnes

Butter:                  €14m for 140,000 tonnes

Cheese:                €10m for 100,000 tonnes

When the accumulated volumes applied for approach or reach the budget limits, the scheme will be immediately suspended by the Commission. Therefore, 30 June is the latest possible date the scheme will be open until- however it could close earlier should demand match the available funding sooner. 

In a change from previous schemes in recent years, an application can only be submitted for aid once the product has already been placed into storage. This means that product already in storage on the 7th May, but also future production, is eligible for aid, provided that it has been placed in storage by the 29th June at the latest and an application submitted by the 30th June (provided that the scheme is still operating).

The aid rates are as follows:

SMP Aid Rates:

€5.11/tonne for fixed storage costs

€0.13/tonne per day of contractual storage

Butter Aid Rates:

€9.83/tonne for fixed storage costs

€0.43/tonne per day of contractual storage

Cheese Aid Rates:

€15,57/ tonne of storage for fixed storage costs

€0,40/ tonne per day of contractual storage.

For butter and SMP the rates are entirely inadequate. The fixed storage element has been halved in comparison 2014 levels and there has been a 19% reduction in the daily storage aid rate for SMP, despite the substantial increase in the cost of storage since then.

Aid rates for cheese storage however have remained stable in comparison to 2014 levels. Disappointingly though, Ireland will be unable to make use of this to any great extent, as for the cheese scheme each member state has been given a national volume quota. Ireland’s proposed quota is just 2.1% of the overall availability, at 2,180 tonnes. ICOS has criticised this unfair allocation and sought an immediate review. The allocation system used by the Commission, which was based on all cheese production, not just eligible, i.e. storable, cheeses has provided certain EU countries with a disproportionally large allocation in comparison with their production of eligible cheese types and left countries like Ireland, where our production of cheddar is very suited to storage, with a disproportionately low allocation. Unfortunately, no review appears to be forthcoming.

For those producing on an all-Ireland basis, it has been confirmed that UK product, and therefore Northern Irish product is eligible to participate in the scheme up until 15th October.

Alison Graham – European Affairs Executive