€430 million of EU funds to support the EU agricultural sector

This article is brought to you in association with the European Commission.

The Commission proposes to mobilise additional EU funding for EU farmers impacted by adverse climatic events, high input costs, and diverse market and trade related issues. The new support package will consist of €330 million for 22 Member States. In addition, Member States today approved the €100 million support package for farmers in Bulgaria, Hungary, Poland, Romania and Slovakia presented on 3 May. Several other measures, including a possibility of higher advance payments should support farmers affected by adverse climatic events.

EU farmers from Belgium, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Austria, Portugal, Slovenia, Finland, and Sweden will benefit from this exceptional support of €330 million from the CAP budget. The countries may complement this EU support up to 200% with national funds. Member States had shared with the Commission assessments of the difficulties faced by their respective agricultural sectors. The measure will be voted by Member States at a next meeting of the committee meeting for the common organisation of agricultural markets.

The national authorities will distribute the aid directly to farmers to compensate them for the economic losses due to the market disturbances, the consequences of high input prices and rapidly falling agricultural product prices and, where relevant, for the damage caused by the recent climate events, particularly acute in the Iberian peninsula and Italy. The aid can also fund distillation of wine to avoid further market deterioration in the sector.

The €100 million support package for farmers in Bulgaria, Hungary, Poland, Romania and Slovakia approved today by Member States will allocate €9.77 million to Bulgaria, €15.93 to Hungary, €39.33 million to Poland, €29.73 to Romania and €5.24 to Slovakia. Farmers from these five Member States are facing issues related to logistical bottlenecks following large imports of certain agri-food products from Ukraine. Exceptional and temporary preventive measures on imports of a limited number of products from Ukraine entered into force on 2 May and will be phased out by 15 September 2023. A Joint Coordination Platform is also working on improving the flow of trade between the European Union and Ukraine via the Solidarity Lanes.

Payments for both support packages should be made by 31 December 2023. The Member States covered will have to notify the Commission about the details of the measures’ implementation, notably the criteria used to calculate the aid, the intended impact of the measure, its evaluation, and the actions taken to avoid distortion of competition and overcompensation.

In addition to this direct financial support, the Commission is proposing to allow higher advance payments of CAP funds. Up to 70% of their direct payments and 85% of rural development payments related to area and animals could be available to farmers as of mid-October to improve their cash-flow situation. Member States will also have the possibility to amend their CAP Strategic Plans to redirect CAP funds towards investments that re-establish production potential following destroyed crops, loss of farm animals, and damaged buildings, machinery and infrastructure due to adverse climate events. The amendments introduced by national governments within that framework would not be counted in the maximum number of amendments allowed. Similarly, flexibility in the implementation of the sectorial programmes for wine and fruit and vegetables is also granted. This allows beneficiaries to better attune their measures to the current market situation.

Background

The agricultural sector has been under pressure since the Covid-19 pandemic and the surge in prices of energy and agricultural inputs, like fertilisers, following the Russian aggression of Ukraine. The European Commission had already adopted a €500 million support package in March 2022, as well as listed a wide range of actions to ensure the availability and affordability of fertilisers in November 2022. Rapidly decreasing agricultural product prices over the last year against the backdrop of still high input costs decreasing less rapidly – is causing liquidity problems for farmers, notably in the cereals and oilseeds, dairy and other livestock, wine or fruit and vegetable sectors. As a result of food inflation, consumer demand shifted away from certain products, like wine, fruit and vegetables, or organic products, creating further difficulties for producers.

In addition to this general adverse economic development, the Iberian Peninsula has been suffering from drought while certain Italian regions were affected by exceptionally severe floods. These extreme meteorological events are causing damage to local agricultural production and infrastructure. The Commission analysed the requests for aid sent by Member States which justify today’s large support package.