EU countries determined to strengthen tools to prevent, manage agricultural crisis

At the Agrifish Council on Monday (27 May), the European Union’s agriculture ministers announced their desire to strengthen crisis management tools, calling for more budgets and greater flexibility.

Ministers also pledged a safety net to protect farmers from climatic, economic and geopolitical risks.

“The member states agreed on the need to put in place flexible, resilient and more far-sighted crisis management [system], in which research and innovation play a major role”, announced Belgian Agricultural Minister David Clarinval at the press conference.

The Common Agricultural Policy provides already a number of tools to help farmers and sectors in the event of a crisis: support for diversification, derogation to competition rules, mutual funds and insurance support, public intervention on the market and an annual €450 million crisis reserve.

While a European Commission report published on 22 January 2024 assessed that those tools are effective, calls to strengthen support mechanisms are multiplying.

“It became clear that there is a need to evaluate and, where necessary, adapt this toolbox, both inside and outside the CAP, of crisis measures to respond to future challenges,” emphasised the Belgian presidency note which was the starting point of the ministers’ debate.

While ministers were discussing, the European Milk Board protested in Brussels, calling for a permanent crisis mechanism to encourage a reduction in milk production in the event of oversupply, tracing on the temporary measures adopted by the EU in 2016-2017 dairy crisis.

Increase the budget

“We need more flexibility, more budget in the current mechanisms,” as in the debate member states have expressed the need for “more appropriate funding,” Clarinval told journalists.

The €450 million crisis reserve providing financial support for farmers in difficulty – activated for the first time in 2022 following Russia’s aggression against Ukraine – “probaly” needs a “significant budget increase” Clarinval added.

Member states are also pushing for an increase in ‘de minimis’ aid for the agricultural sector, i.e. small-scale subsidies that the countries can grant to farmers without informing the Commission.

Currently, the amount of ‘de minimis’ aid that can be granted to a company is limited to €20,000 over a three-year period.

“A large majority of countries want to raise the ceiling on de minimis aid,” Clarinval said. This request had already been made at the last Agrifish Council on 29 April, and countries called to raise the ceiling to €50,000 per farm over three years.

EU agriculture ministers push for raising 'de minimis' state aid for farmers

A coalition of 15 EU countries is set to demand an increase of “de minimis” state aid for the agricultural sector, according to a note circulated among member states that will be discussed in a ministerial meeting on Monday (29 April).

“The accumulation of crises means that this ceiling is being reached very quickly, and all the measures that can be implemented are very quickly rendered ineffective by this rule,” said French Minister Marc Fesneau on his arrival at the Council.

Fesneau also told that he had brought up the subject of the insurance system for states. Under the Marrakesh agreements establishing the World Trade Organisation, yields loss for compensation must be calculated on the mechanism of the olympic average, i.e. cutting the highest and the lowest numbers.

So, a five-year olympic average means the average of three years.

“The five-year Olympic average means that when there are three or four climatic events, compensation is lower, which makes the insurance system less powerful,” said Fesneau.

Italian minister Francesco Lollobrigida said that almost all the EU countries want to reinforce the crisis management framework, calling for more “flexibility to spend” at national level.

The Commission calls for ‘proactive’ action

Christiane Lambert, president of Copa Cogeca, the main farmers’ union in Europe, welcomed the Council’s approach to strengthening the crisis reserve and increasing de minimis aid, both of which are “likely to consolidate farms and provide visibility and sustainability”.

While the European Commission recently announced that it would be launching a review of the de minimis regulation for agriculture, another option would be to create a special European fund as a third pillar of the CAP, to be used specifically for crisis support, as called for by Commissioner Wojciechowski in November 2023.

The European Commissioner Mairead McGuinness, representing the EU’s executive at the meeting welcomed the initiative of the Council, at a time when crises “are set to int,ensify”. But also recommended “to act proactively, to prepare and not just react”.

[Edited by Angelo Di Mambro/Alice Taylor ]

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