27.
12.14
08:20

PLH - requirements for a meaningful action not visible

Private storage aid action (PLH) pork

In the last 15 years a EU-funded storage aid granted at a price level of €1,3 per kg of pork at irregular intervals, to relieve the current pork market. The temporary measure should help that the prices be temporarily stabilized.

The storage aid be granted for storable cuts of pork like belly, fat sections and if necessary. for ham for aging purposes. The shelf life is at least 3 to 6 months depending on the action. The worth carrying fresh meat cuts such as salmon, pork chops are not Commons worthy, because the loss in value between fresh and stock multiples.

The concentration of storage on the less valuable parts of the pig already suggests which limited successes with regard to the impact on price stabilization are to be expected.  Accordingly, sharp criticism of PLH actions is practiced.

(1) the short-term artificial demand may indeed prevent acute more price declines to relatively low extent that but am in no adequate proportion to the consequences.

(2) the publicly known information which will kept quantities only for a certain time from the market, preventing processing plants specifically to apply sufficient stocks at his own expense the necessary assurance.  Thus, the usual demand is reduced during the storage period.  The price level is therefore lower, than would be the case under regular market conditions. The price stabilization effect is effective only to a very limited extent.

(3) during the period of the return swap, the current offer is in addition with the result that a lower price level over a long period of time established itself.

(4) the price reduction effects be larger in sum than the prevented price decline in the short period of oversupply.

For the assessment of the reasonableness of a PLH action it is significantly on the market constellations in the storage and removal time . In the event of a sustained oversaturated market, the PLH action would be counterproductive and leads to a permanent intervention need driving themselves. 

It is however a short-term disorder of otherwise average working supply demand relationor even future tighter market conditions to be expected are the balancing effect between preventing a price lows and a flattening of a (ggfs exaggerated) phase of rising prices might be better. Under such conditions, you can justify the use of public funds.

The current low pig prices in the EU are in 1. Line a series of Russian import lock.  The trigger of the import ban, the AFP and the Ukraine conflict last August 2015, over the intended period of time likely to. Substitute exports have can catch only a fraction of the Russian export loss.

In the meantime, the decay of the Russian currency has assumed proportions that make larger amounts of import of pork from the Western exporters almost priceless.  The income situation in Russia has significantly weakened.   A return to the old level of consumption, with corresponding imports figures is unlikely.

Ultimately lacks the political will, again to allow imports in the old style and scope. The objective pursued for years a high Russian self-sufficiency would be undermined with a unlimited import opening. The financial efforts and initiatives to increase the equity production would be nipped in the bud.

Last not least a conceivable in the Jan.-2015 start of a PLH Action nd so u have to outsource in the preparation time the grill time resultwould further suppress a seasonally normal price recovery in manageable order of magnitude and unnecessarily long keep the courses according to current knowledge, are prerequisites for a successful PLH action cannot be recognized. It must be feared rather the opposite. But be political decisions often shaped by rational moments, but the superficial short-term "political success" is rated higher than medium - and long-term profitability considerations.

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