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Federal Action Plan to Combat Crisis

25 November 2009

GERMANY - The agricultural sector is benefiting from a support programme worth €750 million through a swift implementation of the measures provided for in the coalition agreement.

"With its special programme for agriculture totalling € 750 million, the Federal Government is supporting agricultural holdings which are experiencing liquidity bottlenecks, in particular due to collapsing milk prices", said the Federal Minister of Agriculture, Ilse Aigner.

The central element of the special programme is the € 500 million grassland milk package. It comprises a grassland payment of approx. € 37 per hectare and a cow premium of approx. € 20 per cow for the years 2010 and 2011. Federal Minister Aigner described the purpose of the programme as follows: "This programme helps dairy farms which are encountering difficulties to make it through these difficult times and promotes specifically the use of grassland for our cultural landscape. At the same time, we give dairy farmers improved prospects for continuing to preserve and sustainably use meadows, grazing land and pastures which act as significant carbon stocks for the benefit of climate protection".

The remaining funds from the grassland milk package will be used to reduce the contributions towards the agricultural accident insurance scheme, thus easing the financial burden on all holdings. This will be of particular benefit to dairy farms, due to the comparatively high insurance premiums they pay at present. This programme means that we are going beyond the amount of € 200 million agreed upon in the coalition agreement and are reducing the financial burden on holdings by an additional € 114 million in 2010 and 2011.

The new crisis liquidity programme totalling € 50 million is intended to follow on as smoothly as possible from the Federal Government’s highly successful liquidity programme run by the Landwirtschaftliche Rentenbank (central refinancing institution for agriculture and the food industry), which in 2009 already has a volume of € 25 million.

In addition, the 2009 single farm payments are being brought forward by one month to 1 December. The tax relief on agricultural diesel, which has so far been available for a limited period, will now become permanent. Moreover, we are using € 57 million from the EU milk programme. Further funds include money from the EU milk fund which is set to increase to € 300 million per year from 2010 to 2013. Countries have the option of spending these funds specifically on dairy farmers.

With this overall package, the Federal Government has immediately and resolutely bundled the available possibilities in order to react to the current problems experienced by the German agricultural sector and in particular by milk producers and to secure their liquidity. Additionally, it preserves ecologically valuable areas as grassland for the benefit of climate, biodiversity and attractive holiday landscapes. "I am certain that this support programme will make an important contribution to overcoming this crisis and allow families working in the agricultural sector to regain their optimism for the future", Federal Minister Aigner said.

On further prospects, Aigner said: "It is important to understand that this is a two-track approach: On the one hand, there are the short-term measures presented today, which are designed to provide security and support in the current crisis. On the other hand we have previously introduced measures aimed at strengthening competitiveness in the medium-term."

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