Poultry meat and eggs are piling up in storage across the EU after consumer demand plummeted due outbreaks of bird flu across Europe.
The glut has led to falling prices for poultry and egg supplies, and additional costs for storage. Cutting back on production could make prices stabilise or even rebound.
"The dramatic decline in poultry consumption and prices earlier this year was an extraordinary situation which required extraordinary measures," said Mariann Fischer Boel, the commissioner for agriculture and rural development. "I believe our proposals will give farmers the flexibility to adjust their production to the market situation without prolonging market imbalances unnecessarily. I am against aid for private storage and the destruction of stocks of meat. Thanks to the recent improvement in the market situation, the industry should be able to use existing stocks."
Between €50m to €65m will be channelled to farmers and other suppliers for programmes that include cuts in production. The EU money will provide 50 per cent of the aid payments, matching funds provided by individual governments to their poultry sectors.
The Commission said yesterday that Czech Republic, Germany, Greece, Spain, France, Ireland, Italy, Cyprus, Hungary, the Netherlands, Austria, Poland, Portugal and Slovakia had applied for aid.
The aid programme focuses on what the Commission describes as "upstream" measures, those that aim to temporarily reduce production, such as the destruction of hatching eggs. It sets a maximum level of compensation per unit destroyed as well as the maximum number of units per member state and the time period covered by each measure.
EU aid will also go to the destruction of chicken, guinea fowl, duck, turkey and goose chicks, the early slaughter of some breeding flock and laying pullets and voluntary reductions in output.
The Commission does not propose co-financing for "downstream" measures, such as aid for private storage or the destruction of existing stocks of poultry meat.
At the height of the recent avian flu crisis, consumption of poultry and eggs fell dramatically in some member states, leading to a sharp reduction in prices. Previously, the regulations governing the eggs and poultry market allowed the EU to co-finance compensation measures only in cases where there was a case of avian flu on a farm or where farmers were prevented from moving their poultry because of restrictions imposed on veterinary orders.
There was no possibility to provide EU aid to take account of market problems linked to a fall in sales caused by a loss of consumer confidence in the poultry supply, the Commission explained in a statement.
The aid proposal was adopted by the European Council on 25 April, after which the 14 member states submitted their requests for the money.
Last week Hungary became the latest EU member to confirmed it has found the avian influenza virus in a domestic flock.
Outbreaks of avian influenza or bird flu have served to alarm consumers. Food processors have seen sales of poultry products plummet in some countries as avian influenza slowly crept into the block, brought by wild birds and in some cases infecting domesticated poultry stocks. In some countries, such as Italy, demand has fallen by up to 70 per cent, drastically lowering poultry farmers' incomes.
Consumption of poultry meat has dropped by more than half in some EU states, with 300,000 tonnes and more in storage across the bloc, according to previous EU estimates.
The continuing fight against the spread of avian influenza throughout Europe has focused on preventing the spread of the disease to domestic flocks from wild birds.
Supplies from other countries have also been restricted. Last week the Commission banned the import of all poultry and poultry products from Romania, for example.
The confirmed outbreak in domestic geese in Hungary was situated in a region where cases of highly pathogenic avian influenza occurred in wild birds earlier this year. It marked the fifth outbreak of high pathogenic H5N1 avian influenza in domestic poultry in an EU member state.
Previous outbreaks have occurred in domestic poultry in France, Sweden, Germany and Denmark. Cases of avian influenza H5N1 have occurred in wild birds in thirteen member states of the EU to date.
A survey of wild birds, published from data collected by the EU's designated reference laboratory in Weybridge, the UK found that between February 2006 and 21 May 2006, 741 cases of highly pathogenic avian influenza , most of them confirmed as the deadly H5N1 strain, have been detected in wild birds in 13 member states - Greece, Italy, Slovenia, Hungary, Austria, Germany, France, Slovakia, Sweden, Poland, Denmark, Czech Republic and UK.
No human case of the H5N1 virus has occurred in the EU.
Following the major geographical spread of the H5N1 avian influenza virus from South-East Asia in 2005, the EU intensified its programmes for the surveillance and early detection of avian influenza, both in wild birds and poultry.
The bloc has released €2.9m to co-finance member states' surveillance programmes until December 2006. Guidelines on beefed up surveillance for avian influenza in wild birds were also issued by the Standing Committee on the Food Chain and Animal Health.
A total of 57 countries around the world have so far reported detecting the avian influenza strain, either in wild birds or domestic poultry.
Bird flu has killed 64 percent of those people known to be infected with the virus this year, according to World Health Organization statistics. There were 217 cases of infection and 123 deaths worldwide. Most of the deaths occurred in Asia. Earlier this year four died in Turkey.
Scientists worldwide are worried that the H5N1 form of the virus, which can be transmitted from poultry to humans, may mutate so that it can be transmitted from human to human and start a influenza pandemic.
The UN Food and Agriculture Organisation (FAO) reported that recent avian influenza outbreaks in Europe, the Middle East and Africa have caused dramatic swings in poultry consumption, increased trade bans and sharp price declines. The UN agency expects poultry consumption shocks this year in many countries.
"A steady erosion of previously expected gains in per caput poultry consumption will likely push down global poultry consumption in 2006, currently estimated at 81.8 million tonnes, nearly three million tonnes lower than the previous 2006 estimate of 84.6 million tonnes," stated FAO commodity specialist Nancy Morgan.
According to the FAO report consumption shocks are ranging from a dramatic 70 per cent decline in Italy in mid-February to 20 per cent in France and 10 per cent in northern Europe.
The crisis has also affected the $42 billion dollar feed sector in Europe, with demand losses estimated at up to 40 per cent in some countries, the FAO stated.