January 18, 2013 / 5:31 PM / 7 years ago

UPDATE 1-France fears for poultry firms after EU subsidy cut

* France opposed to EU move to halve poultry export subsidy

* Minister says threatens restructuring effort of Doux

* Government wary of any job risks as unemployment climbs (Adds reaction from union official, job estimate from poultry industry lobby, background)

By Gus Trompiz

PARIS, Jan 18 (Reuters) - France will ask the European Union to reconsider a steep cut in poultry export subsidies, the country’s agri-food minister said on Friday, fearing damage to one of its top poultry firms which is trying to emerge from court administration.

The EU’s executive published in its official journal on Friday a regulation halving export subsidies for poultry meat, adopting the measure after EU countries failed to reach agreement at a committee meeting the previous day.

This means the EU has cut the export subsidy by two-thirds since October.

The export subsidies, which are available for certain destinations, notably in the Middle East, represent significant financial support for French group Doux, which is restructuring after filing for administration last June and which received 55 million euros under the scheme in 2011.

“How can you expect companies like Doux, which is fragile and coming out of court administration, or Tilly-Sabco to be able to cope?,” Guillaume Garot told Reuters by telephone.

“We are going to refer this to the European Agriculture Commissioner very quickly,” said Garot, who is a junior minister to Agriculture Minister Stephane Le Foll.

“We are going to argue for adjustments to be made at least until 2015.”

The drop in export aid could directly affect 5,000 jobs, according to France’s poultry industry association.

“This concerns both the employees of the processing companies and the transport firms, farmers and animal-feed suppliers,” Jean-Luc Guillard, CFDT union representative at Doux, said.


After selling its fresh poultry division as part of its restructuring, Doux’s export business is now its main activity. It has about 2,000 workers and Tilly-Sabco more than 300.

Doux’s export subsidies made it the largest individual beneficiary of European farm aid in France in 2011. The other French poultry company to benefit from the export support, Tilly-Sabco, received 19 million euros in the same year.

Export subsidies are controversial in international trade relations and the EU has scrapped them for a number of other agricultural products.

Agricultural subsidies as a whole are a stumbling block in ongoing talks to set the EU’s next long-term budget, with France pushing to retain as much farm spending as possible, as the country that receives the most aid.

Doux’s financial difficulties have been among a series of industrial headaches for the Socialist government elected last year and which is trying to stem layoffs that have brought the number of job seekers to a 15-year high.

In a note on Thursday announcing the decision to adopt the subsidy cut, the European Commission justified the measure by citing “high prices, stable feed costs, producer margins sufficiently healthy and increasing exports without refunds.”

The EU is cutting the subsidy level to 10.85 euros per 100 kilos of poultry meat from 21.70 euros previously. In October, it had lowered the rate from 32.50 euros.

France rejected the arguments behind the decision, which will also anger poultry firms and their farmer suppliers, who have complained about rising animal-feed costs after a surge last summer in the price of grains used in feed.

However, grain prices fell sharply in late 2012.

Officials at the French agriculture ministry held an emergency meeting with representatives of Doux and Tilly-Sabco on Friday to assess the impact of the subsidy cut, Garot said.

The government was considering allowing the firms to benefit early from competitiveness measures announced in November, notably a company tax credit, he added. (Reporting by Gus Trompiz, additional reporting by Pierre-Henri Allain in Rennes; editing by Keiron Henderson)

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