BRUSSELS/PARIS (Reuters) - The European Commission called on France to ensure goods could flow freely through Europe on Tuesday after French livestock and dairy farmers this week blocked imports from German and Spanish producers in a growing row over prices.
Separately, the German dairy federation said it complained to the EU about French government moves to head off the dispute with new financial support to the sector and an "eat French" campaign. Spanish farmers' union UPA also warned it could retaliate with a boycott of French food products.
President Francois Hollande's government last week announced plans to raise the price of beef, pork and milk and promised farmers up to 1.1 billion euros (£779 million) in tax rebates, delayed payments and loan guarantees..
French agriculture and economic ministers said banks had agreed on Tuesday to extend or delay struggling farmers' loan payments as part of the government package which includes a guarantee of up to 500 million euros worth of loans for farmers through its public investment bank.
Paris also said last week it would also push for a raise in the price at which surplus milk in Europe is purchased when European Union farm ministers meet in September.
The moves have yet to quell the anger of French farmers, who this week erected blockades on the border with Germany and did spot checks on non-French goods entering France.
"We have asked them (France) to keep us updated as regards to any possible impediment to the free movement of goods," European Commission spokesman Daniel Rosario told a regular news briefing in Brussels.
Farmers continued protests on Tuesday, blocking roads in northeastern France, near the German and Luxembourg borders.
French Farm Minister Stephane Le Foll told reporters in Paris any attempts to block goods transportation throughout Europe "do not reflect the French government position".
"Freedom of circulation is needed for imports but above all because France exports too," he said.
French farmers complain that a fall in prices due to foreign competition and a squeeze in margins by food processors and retailers has put many livestock farmers close to bankruptcy.
Europe's milk market was liberalised in April this year with the removal of 30-year-old quotas, creating growth opportunities for some farmers while threatening the livelihood of others.
Hollande has given personal backing to the creation of a new label intended to encourage French consumers to buy local products and said he would ensure it was applied in public sector canteens - a move Paris says is compatible with EU rules.
However German milk industry federation MIV said it had sent a letter to the European Commission on Monday protesting that the French support contravened those rules.
"If decisions are taken under the auspices of a French minister which are effectively a trade boycott of German goods, that calls into question the basic principles of Europe," MIV executive Eckhard Heuser said in the statement.
In Spain, farmers warned they would push for a boycott of French food and farm products.
"We Spaniards want the same as the French: fair prices for our products," Spanish farm union UPA said in a statement.
(Reporting by Sybille de La Hamaide and Tommaso Mazzanti in Paris, Gilbert Reilhac in Strasbourg, Barbara Lewis in Brussels and Tracy Rucinski in Madrid; Writing by Sybille de la Hamaide; Editing by Mark John and David Evans)
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