On 7 August 2014 the Russian government introduced a ban on import of certain products from the Union to Russia, including milk products. The ban has particularly affected the milk and milk products sectors of Estonia, Latvia and Lithuania, which are particularly dependent on exports to Russia. In 2013 those three Member States had more than 15 % of their milk production exported to Russia and exports to Russia from those Member States accounted for more than 60 % of their total exports of dairy products to third countries.

Farm gate milk prices sharply decreased in Estonia, Latvia and Lithuania in August and September, while the Union average stayed relatively stable. Compared to last year, September farm gate milk prices are 26-27 % lower in Estonia and Latvia and 33 % lower in Lithuania, while the Union average is only around 5 % lower. Milk prices in the three Baltic Member States are the closest to intervention levels in the Union.

The fall in farm gate milk prices to unsustainable levels puts in danger the milk production sector in the three Baltic Member States, which in 2014 were in the process of building a sustainable market position. In addition, milk products produced in the Baltic Member States were largely dependent on the Russian market needs and tastes. Time is needed for the sector to find new outlets or to adapt production to new products that could meet demand.

The milk and milk products sector in the three Baltic Member States is mostly oriented to products other than butter and skimmed milk powder and, therefore, those products are not covered by public intervention and aid for private storage.

Therefore, in order to address the existing market disturbance caused by a significant price fall efficiently and effectively, it is appropriate to grant aid to the three Baltic Member States in the form of a one-time financial envelope with a view to supporting milk producers who are affected by the Russian import ban and, as a result, encounter liquidity problems.

The financial envelope available to each Member State concerned should be calculated on the basis of 2013/2014 milk production within national quotas. In order to ensure targeting the support to those producers affected by the ban while taking into account the limited budget resources, the Member States concerned should distribute that national amount on the basis of objective criteria and in a non-discriminatory way, while avoiding any market and competition distortion.

As the financial envelope allocated to each Member State concerned will compensate only a limited portion of the actual loss suffered by the producers, the Member States concerned should be allowed to grant additional support to milk producers, under the same conditions of objectiveness, non-discrimination and non-distortion of competition.

As the financial envelope for each Member State concerned is fixed in euro, it is necessary, in order to ensure a uniform and simultaneous application, to fix a date for the conversion of the amount allocated to Lithuania into its national currency. It is therefore appropriate to determine the operative event for the exchange rate in accordance with Article 106 of Regulation (EU) No 1306/2013. In view of the principle referred to in Article 106(2)(b) of Regulation (EU) No 1306/2013 and the criteria laid down in Article 106(5)(c) of that Regulation, the operative event should be the date of the entry into force of this Regulation.

The aid provided for in this Regulation should be granted as a measure supporting agricultural markets in accordance with Article 4(1)(a) of Regulation (EU) No 1306/2013.

For budgetary reasons, the Union should finance the expenditure incurred by the Member States concerned in relation to the support to milk producers only where such payments are made by a certain deadline.

In order to ensure transparency and the monitoring and proper administration of the amount available to them, the Member States concerned should inform the Commission of the objective criteria used to determine the methods for granting the support and the provisions taken to avoid distortion of competition.

In order to ensure that milk producers receive the aid as soon as possible, the Member States concerned should be enabled to implement this Regulation without delay. Therefore, this Regulation should enter into force on the third day following that of its publication,