Brussels, 08/02/2006 (Agence Europe) - As announced (EUROPE 9126), the European Commission adopted, on 8 February, a proposal for updating the 2004 regulation that allows Member States not to have to notify a number of State aid schemes granted to small and medium-sized companies in the agricultural sector. After consulting with Member States and interested parties, the Commission plans to implement the regulation as of January 2007. The future regulation will only apply to aid granted to farms (farmers) and no longer to aid for processing and marketing.
Mariann Fischer Boel, Commissioner for Agriculture and Rural Development, explains in a press release that “exempting from prior authorisation State aid for the effects of bad weather and animal and plant disease would greatly accelerate payment to farmers in situations of real need”. The Commission also hopes with this proposal to “encourage farmers to take up bad weather insurance and improve water management - two components of good risk management”.
The main elements of the Commission's proposal are:
Significant extension of the scope: The Commission suggests that the regulation should also cover disease and bad weather compensation. This should lead to a significant reduction of notifications, the Commission says, pointing out that, between 2000 and 2005, 309 new measures in this field were notified by the 15 older Member States.
Significant simplification of rules: The Commission foresees the suppression of many conditions and limits to allow aid to enter the scope of the regulation. It thus suggests suppressing the: - requirement of a market outlet test for investment aid; - limitation of investment aid to capacity increases of 20%; - current limitations on use of second-hand machinery; - obligation to verify that farmers receiving investment aid must have the necessary skills, meet all environmental and animal welfare requirements, etc.; - overall aid limit of EUR 100,000 for various types of technical support (currently this limit makes it compulsory for Member State to oversee the combined amount resulting from different aid categories, as for the replacement of a farmer in case of sickness and for training); - and the criterion that service providers used must be chosen through tender procedures (Member States should naturally continue to comply with the public procurement rules). Furthermore, the Commission also hopes to change the support for the start-up of producer groups from degressive payments to a lump sum payment of up to EUR 400,000.
Less and better target aid: For investment aid of an intensity above 15%, a call for interest will be required. Member States will thus be compelled to accept, as a priority, the low aid intensity projects. Only the remaining budget may be allocated to projects for which larger support will have been requested. The Commission thus hopes to create conditions for a better breakdown of public aid (job creation and growth in rural areas).
The Commission also suggests that, as of 2010, aid intended for bad weather loss compensation will only be exempted (from the notification obligation) if the farmer has taken out 50% insurance cover at least on his average annual production. This amendment will encourage farmers to set up and take out insurance policies. Furthermore, aid in favour of insurance premium payments will be possible for stand-alone insurance against animal or plant diseases.
From 2010, compensation for drought will only be exempted in Member States that fully apply the framework directive on water in the agricultural sector. The directive provides for complete recovery of the costs linked to the use of water provided to agriculture. Investment aid for irrigation equipment, greenhouses and drainage works that does not lead to significant water savings of at least 25% shall be excluded from the exemption regulation. Finally the Commission suggests introducing a limit of EUR 400,000 for investment aid that a farmer may receive over three years (EUR 500,000 in disadvantaged areas), to ensure that big aid amounts going to intensive large scale farming are not exempted.