France's president Nicolas Sarkozy has unveiled what he called an "unprecedented" package of aid for the farming sector.

The aid comprises EUR1bn (US$1.48bn) of  low-interest bank loans and EUR650m of state support in the form of tax breaks and reduced business costs - such as the exemption of employers' contributions when hiring seasonal workers.

Sarkozy said the plan will allow farmers in difficulty to improve their cash-flows and invest for the forthcoming growing season, adding that it was "unacceptable" that farm-gate prices had fallen 20% between September 2008 and September 2009 compared to a 1% decline in consumer prices.

It remains to be seen whether the aid package will be enough to calm farmers' anger which reached a pitch earlier this month with demonstrations all over France.

"It's is a step in the right direction but it will never replace a pricing policy which guarantees an income for farmers," said FNSEA president Jean-Michel Lemétayer.