France - agricultural aid

Sarkozy announces handouts to struggling French farmers

Article published on the 2009-10-27 Latest update 2009-10-27 18:57 TU

Dairy farmers protest against price drops
(Photo : AFP)

French President Nicolas Sarkozy on Tuesday announced a 650-million-euro aid plan for France's struggling farmers, as well as a billion euros in cheap loans.

"I will not let French agriculture be swept away by the crisis," Sarkozy declared in a speech in Poligny, an eastern town famous for producing Comté cheese.

"I have come to offer you an unprecedented plan of exceptional support for our agriculture, which includes one billion euros in bank loans and 650 million euros of exceptional state aid," he said.

The loans will be offered at a bargain 1.5 per cent interest rate, with an even lower one per cent for young farmers.

Although French agriculture is already highly subsidised, farmers are struggling thanks to a drop in prices of at least 15 per cent over the last year. The crisis has sparked farmers' protests and dissent within  Sarkozy's UMP party.

Sarkozy put the fall at 20 per cent, dubbing it "unacceptable" and adding that prices for the consumer have only fallen one per cent.

France is the EU's biggest agricultural producer and farming employs 770,000 people. Sarkozy put turnover at 163 billion euros, "far ahead of the industrial sector".

The country is the biggest beneficiary of the EU's Common Agricultural Policy, which is bitterly criticised by many poorer countries, receiving ten billion euros last year. It was asked this year to recover some aid handed out in the past.

The largest farming union, the FNSEA, gave the plan a guarded welcome, while small farmers' union, Co-ordination Rurale demanded to know where the money would come from.

The European Commission said that it will wait to see the details of the plan before commenting on it.