Brussels, 31/07/2007 (Agence Europe) - On Tuesday 31 July, the European Commission adopted a generally satisfactory report on the long-term national aid scheme for agriculture in Finland. The mainly descriptive report is based on information provided by the Finnish government. The Commission will not make proposals for developing the aid scheme to the northern regions until the autumn. The analysis of how relevant the scheme is will be conducted in the light of the last reforms of Common Agricultural Policy (CAP).
Pursuant to the Act of Accession, the European Commission has authorised Finland to grant long-term national aid in order to maintain agricultural activity in the northern regions of the country. This “Nordic aid” (approved by Commission decision on 4 May 1995) covers the regions north of the 62nd parallel and some adjacent areas south of the parallel affected by comparable climatic conditions rendering agricultural activity particularly difficult. Several factors were taken into consideration when determining the areas (population density, utilised agricultural area, etc.).
Aid disbursed in Finland. At the outset of the period, the Nordic aid granted in Finland increased slightly each year, from €351 million in 2001 to €385 million in 2004 before falling to €328.1 million (given a new national aid scheme for disadvantaged areas introduced in 2005). At the end of the period, the Nordic aid accounted for 34% of total aid to agriculture to these areas. From 2001 to 2005, 74% of the amounts available under Nordic aid were used.
Nordic aid sector by sector went from €285 million in 2001 to €392.5 million in 2005 in the cattle sector (beef, mutton and goat, pork and poultry, reindeer, milk ...). It went from €62.4 million in 2001 to €66.16 million for support linked to surface areas used (sugar beet, starch, cereals and other arable crops, horticulture, outdoor vegetables and apples, storage aid, young farmers, pasture and set-aside).
From 2001 to 2005, the tolerated production ceilings were slightly increased for pork and poultry, as well as for equines in some years. The aid amounts were reduced in consequence. The number of reindeer for which subsidies were paid has fallen due to the introduction of a 50-head limitation per applicant. In total for the period, production has stayed below the permissible volumes in all crop cultivation sectors, but has in some individual years slightly exceeded the thresholds.
Community aid. Agriculture in the northern regions also receives EU funding (direct aid and market subsidies and rural development measures): €650 million in total in 2005 (€254 million direct and market aid, €234 million under the compensatory scheme for disadvantaged regions and €162 million in agri-environmental aid), compared to €565 million in 2001.
Development of main products. The main agricultural sectors in the Finnish northern regions are milk, beef and pigs. Together they account for 72% of the market revenue. The production of milk in the support area represents about 77% of total milk production in Finland. Except for some variation in the volumes between 2000 and 2005, the production volume has decreased by approximately 1.2% (from 1.85 million tonnes in 2001/2002 to 1.83 million tonnes in 2005/2006), though changes vary from one support region to the next. As far as beef is concerned (the support area makes up 77% of total national production), production was up in 2003 and 2004 and fell slightly in 2005. The support area produces 43% of Finnish pig meat. Between 2000 and 2005, pig meat production in the area grew by about 22% (to 88,000 tonnes in 2005), but its share in pig meat production in the whole country has stayed about the same.
Socio-economic effects. The Commission has stressed that long-term aid granted to the northern and eastern areas of the country have to a large extent allowed the decline in agricultural and rural population to be brought under control and to attenuate the adverse consequences of a declining population. The agri-food sector in the support region's economy has, however, lost ground since 1995. In 2003, in the northern parts of Finland, farming employed 61,150 persons and the food industry 13,900. Between 1995 and 2003, the number of farm workers plummeted by over 25%, while the number of food industry employees remained more or less stable, the report states. It points out, moreover, that Finland (which was responsible for controls) did not observe any major irregularity with regard to subsidies. To sum up, the Commission concludes that it is difficult to verify whether an objective has been attained (i.e. to ensure agricultural activity in the region) as the scheme (including payments and designation of sub-regions) has never been verified since it was set in place. That is why another report to be published this autumn will answer questions on the effectiveness and relevance of implementation of the scheme from 1995 to 2005. (lc)