Sarkozy Pledges Aid Package in Unprecedented French Farming Crisis

Facing France's worst agriculture crisis in 30 years, President Nicolas Sarkozy pledged Tuesday to provide $1.5 billion in bank loans for cash-strapped farmers and promised to push the EU to offer more aid.

Sarkozy says the "unprecedented" aid package was in response to an equally unprecedented crisis in French farming, which has seen prices for production shrink 20 percent over the last year as demand decreased amid the global credit crunch.

Sarkozy spoke at a meeting with farmers in the Jura region of eastern France. Besides loans, Sarkozy also pledged $965 million in other aid for the country's farmers, one of the conservative president's core electoral supporters in the last election.

The aid announcement comes after weeks of protests by farmers in France and across Europe, upset at falling prices for milk, cereals and other agricultural commodities that has shrunk their revenue.

France is Europe's largest agricultural producer, with 1.6 million people employed in a sector with annual revenue of $242 billion.

"Agriculture is a strategic sector that is absolutely vital to our national identity," Sarkozy said.

His announcement also has political overtones, since polls show Sarkozy facing falling support ahead of regional elections in March.

The French announcement of more farm aid comes two days before a summit of European Union government leaders in Brussels. Sarkozy said at that meeting he will press the EU Commission to speed up its revamping dairy rules so they are ready early next year.

This fall, protesting grain growers blocked Paris' famed Champs-Elysees Avenue with burning bales of hay to draw attention to their problems and dairy farmers dumped rivers of milk across fields in France, Belgium and other countries to protest collapsing milk prices.

Just last week, the European Union agreed to give the dairy sector an extra $420 million in special aid, caving in to farmers' vocal demands.

In all, the EU farm and rural development budget for next year is $78 billion — the single largest expenditure in its budget.

Starting in the 1990s, the EU has tried to wean itself of farming subsidies so it would not keep overproducing and creating warehouses of butter mountains and lakes of excess milk and wine. The process has had varying success.