Commission approves €1 billion Italian State aid scheme to support farmers affected by floods and landslides

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

The European Commission has approved, under EU State aid rules, a €1 billion Italian scheme to support farmers affected by flood and landslide events in certain regions of Italy.

The Italian measure

Italy notified the Commission of its plans to introduce a €1 billion scheme to support companies active in the agricultural sector affected by the flood and landslide events that occurred in May 2023 in the regions of Emilia-Romagna, Tuscany and Marche.

The objective of the scheme is to: (i) support investments aimed at restoring the agricultural production potential damaged by floods and landslides, and (ii) compensate companies active in primary agricultural production, processing and marketing of agricultural products for the damages suffered.

The scheme, which is open to companies of all sizes, will run until 1 May 2027. Under the scheme, the aid will take the form of direct grants covering:

•   Up to 100 % of the eligible investment costs, incurred for restoring the agricultural production potential up to the level existing before the natural disasters.
•   Up to 100 % of the damages incurred by companies as a direct consequence of the natural disasters. The eligible costs include compensation for (i) material damage to assets, such as buildings, equipment, machinery, stocks and means of production; (ii) loss of income resulting from the full or partial destruction of the agricultural production and the means of the agricultural production; and (iii) other costs incurred by the beneficiary due to the natural disaster.

The Commission’s assessment

The Commission assessed the scheme under Article 107(2)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), which allows Member States to grant aid to make good the damage caused by natural disasters or exceptional occurrences. In particular, the Commission found that the floods and landside events were classified as a natural disaster and that the scheme serves only to compensate for the damages effectively caused by the natural disasters. Furthermore, it introduces an appropriate mechanism to ensure that there will be no overcompensation.

The Commission also assessed the investment part scheme under Article 107(3)(c) of the TFEU, which enables Member States to grant aid to facilitate the development of certain economic activities under certain conditions, and the 2022 Guidelines for State aid in the agricultural and forestry sectors and in rural areas (‘2022 Agricultural Guidelines’). In particular, the Commission found that:

• The aid facilitates the development of an economic activity, namely primary agricultural production.
• The scheme is necessary and appropriate to ensure that farmers implement measures to immediately restore their agricultural production and resume their activities when they do not have the necessary resources to restore their damaged assets. The scheme supports the objectives of key EU policy initiatives, such as the Common Agricultural Policy.
• The measure will have an ‘incentive effect’, as the beneficiaries would not put these measures in place without the public support.
• The aid is proportionate, as it is limited to the minimum necessary and will have a limited impact on competition and trade between Member States.
• The scheme brings about positive effects that outweigh any potential distortion of competition and trade in the EU.

On this basis, the Commission approved the Italian scheme under EU State aid rules.

Background

The 2022 Agricultural Guidelines provide guidance on how the Commission will assess the compatibility of aid measures in the sector, which are subject to the notification requirement, under Article 107(3)(c) TFEU, as well as under Article 107(2)(b) TFEU. The Guidelines create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support and contribute, among other things, to the objectives of the Common Agricultural Policy. The 2022 Agricultural Guidelines aim to help Member States design national measures and meet national and EU’s goals at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The non-confidential version of the decision will be made available under the case number SA.114194 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

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