eu-countries-divided-over-funding-aid-to-struggling-farmers

European farming ministers are still torn on whether is more appropriate to use the EU budget or state aid to bail out farmers facing increased prices of inputs such as fertilisers.

At their monthly meeting on Monday (21 November), EU-27 agriculture ministers discussed the recent European Commission communication setting out a broad game plan for strengthening the EU’s fertiliser industry, alongside reducing farmers’ dependence on them.

Although welcoming the general content of the communication, ministers expected a different range of swift action, particularly when it comes to supporting the increased costs that farmers have to bear.

In a document presented on the sidelines of the meeting, a coalition of 16 member states led by Spain called for more short-term solutions to the fertiliser crisis.

In a press conference after the EU Council, EU agriculture Commissioner Janusz Wojciechowski listed the three possible sources of financing aid with which member states can reduce farmers’ burden.

One is state aid – money allocated by each member state – which “should be used on an exceptional basis” as it is technically not allowed in the EU.

At the end of October, the Commission temporarily amended the EU’s antitrust rules until December 2023, allowing countries to support farmers and fertiliser producers to a maximum amount of €150 million per rescue package with a ceiling for individual aid increased to a record amount of €250,000.

Another source is the agricultural crisis reserve – a fund included in the Common Agricultural Policy (CAP) scheme that can be used to finance exceptional measures to counteract market disruptions affecting production or distribution. The fund was triggered for the first time ever in April.

Activating the crisis reserve next year would need the agreement of all EU agriculture ministers but, as Wojciechowski recalled after the meeting, “we are not taking any initiative in this direction [at the moment].”

The last financing source is the solidarity levy – a windfall tax imposed by EU countries on energy companies that made excessive profits during the crisis. This money “can be redirected to those companies that have incurred extraordinary losses”.

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Ministers split over state aid

Considering the lack of fresh money in the Commission’s fertiliser plan, state aid becomes quite an attractive option for member states, considering that not only was the ceiling for state aid increased but the criteria for granting the state aid rule exemptions also simplified.

However, many EU ministers have warned the Commission that a higher state aid ceiling cannot be the solution to every crisis and that additional funding solutions must be put on the table.

For Spanish agriculture minister Luis Planas, for instance, using state aid to tackle the fertiliser crisis “should be the exception and not the norm”.

He also warned that this could be “altering the conditions of competition within the union”.

Ireland, Portugal, Poland, Latvia, Slovakia and Greece are among the countries backing Spain’s document calling for more short-term solutions and were urging the Agriculture Commissioner to look beyond state aid.

They stressed that support measures should be European rather than national, since not every member state has the same possibilities.

Although sharing the concerns of those ministers, Wojciechowski told the press that “we are resorting to the public support [namely state aid] because the Commission doesn’t have any other instruments to be used directly to support the farmers or fertiliser producers.” 

Czech minister and current chair of the Agriculture EU Council Zdeněk Nekula also expressed concern over a situation that could create competition among budgets of different member states.

“I don’t think this would be a good solution where national budgets compete how much they set aside,” he said.

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Agrifood Brief: Gold on the ceiling

It’s not in the Common Agricultural Policy (CAP) subsidies or any other EU budget outlays but struggling farmers can find a real treasure in the increased ceiling for agriculture state aid.

Ministers also discussed the possibility to use the agricultural crisis reserve to support farmers and fertiliser producers.

However, many of them shared the view that the pool of money available – roughly €450 million – would not be big enough to solve the crisis.

For many countries, activating the agricultural crisis reserve is one solution.

In response, Commissioner Wojciechowski acknowledged ‘scepticism’ from EU countries “as to whether the actions proposed by the Commission will suffice to solve all the problems”.

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[Edited by Nathalie Weatherald]

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