France's government will have to pay out several hundred million euros to compensate farmers hit by its driest spring in 50 years, chiefly livestock breeders who face high feed costs, the agriculture minister said on Tuesday.
Bruno Le Maire also said that French bank Credit Agricole had agreed to provide 700 mln euros ($1 bln) in loans to boost the liquidity of struggling livestock farmers.
"The situation for French farmers is serious. We wanted to act swiftly and on a large scale," said Le Maire, who held a special meeting of farming and industrial organisations to discuss the drought.
"To think we could get through this with 80 or 100 mln euros would be naive."
The March-May period in France has been the driest in the last 50 years and the hottest since at least 1900, public weather service Meteo France said.
More than half of France's administrative departments have imposed water restrictions, including irrigation curbs in the worst-affected areas, according to environment ministry data.
The aid will be distributed from September 15 through France's agricultural disaster fund, which supports farmers when they face sharp losses compared with an average of the previous years. The fund will be financed from the state budget but the exact mechanisms have yet to be decided, the minister said.
Grain growers do not benefit from this fund as they have a separate insurance scheme.
Le Maire, who had already relaxed rules for livestock farmers on using set-aside land for fodder, dismissed the idea of a tax like one imposed during a severe drought in 1976.
"This has nothing to do with a drought tax," he said.
He also said that help would have to come this time from all involved parties, including insurers, transporters and bankers.
POSSIBLY MORE
Le Maire said Credit Agricole had agreed to grant preferential loans at 2% with 1.5% for young farmers.
"This release of 700 mln euros in loans is immediate, automatic and without conditions for all French breeders," Le Maire said.
France's largest farm union, FNSEA, last week called for banks to offer interest-free loans to give breathing space to cattle breeders until certain European Union subsidies were paid in mid-October — a date already brought forward from December at France's request.
Asked if the government would reimburse farmers for the interest paid on the bank loans, Le Maire said only that the government was studying further aid mechanisms.
"We are working on it, on the express demand of the President of the Republic, and we will see in light of the conditions on the ground if on top of the agricultural disaster fund, extra liquidity aids are necessary," Le Maire said.
"Everything is on the table," he added.
Other measures adopted at the meeting included a commitment by insurers such as Groupama, to widen their guarantees for the transport, storage and use of straw as it can be inflammable and therefore dangerous to handle, Le Maire said.
Le Maire said distress among French breeders was so strong he had sought reinforcement for a special organisation that tries to prevent suicide among farmers.
