Econostrum | Economic News in the Mediterranean

EU to help farmers affected by the consequences of the war in Ukraine

Written by Eric Apim on Wednesday, May 25th 2022 à 11:40 | Read 312 times

Faced with rising input costs, the European Commission will allow Member States to devote 5% of the EAFRD to farmers and SMEs in the sector.

The increase in input costs for farmers will be partly offset by the EAFRD (photo: F.Dubessy)
The increase in input costs for farmers will be partly offset by the EAFRD (photo: F.Dubessy)
EU. European agricultural stakeholders have been faced with rising prices for energy, fertilisers and animal feed since the start of the war in Ukraine. This surge in input costs is causing cash flow problems, especially for farmers and small rural businesses involved in the processing, marketing or development of agricultural products.

In response to this, the European Commission proposed on Friday 20 May 2022 an exceptional measure to allow Member States to "pay a one-off lump sum to farmers and agri-food businesses affected by significant increases in input costs", as stated in a Commission press release. "By directly addressing these cash flow problems and helping them to stay afloat, the support will help to address market disruptions and thus contribute to global food security," the text continues.

The scheme is based on the European Agricultural Fund for Rural Development (EAFRD), a financing instrument of the Common Agricultural Policy (CAP). In concrete terms, it provides for Member States to decide to use up to 5% of their EAFRD budget for the period 2021-2022 for direct income support for the farmers and SMEs concerned. They will have to present an amendment to their sustainable development programme(s) introducing this new measure.

From €15,000 to €100,000 of aid

The overall budget for this new scheme will be up to €1.4 billion. It will be "targeted at beneficiaries most affected by the current crisis, those who promote the circular economy, nutrient management, resource efficiency or environmentally and climate friendly production methods", says the European Commission. They will be able to receive up to €15,000 (farmers) and €100,000 (SMEs). These sums will be paid to them by 15 October 2023 at the latest.

"Farmers, with the support of the Common Agricultural Policy, continue to prove their worth by producing food under difficult conditions. After the Covid-19 pandemic, they are now being hit hard by the consequences of the Russian invasion of Ukraine. The survival of some of them is at stake. With this measure, the latest in a series of CAP measures, we are supporting them so that they can continue to produce the food the world needs, tend to their land and provide for their families," said EU agriculture commissioner Janusz Wojciechowski.

On 23 March 2022, the European Union adopted a package of aid measures for farmers - revealed in a communication entitled "Safeguarding food security and strengthening the resilience of food systems" - totalling €500 million.

On 10 May 2022, the European Commission already approved €400 million in state aid for French farms and fish farms affected by the geopolitical crisis caused by Russia's invasion of Ukraine and related sanctions.

For the same reasons, a few days ago, it also authorised the Italian State to support the agriculture, forestry, fisheries and aquaculture sectors with €1.2 billion.

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