(1)

The Covid-19 pandemic, its impact on food supply chains, and the surge in the prices of energy and agricultural inputs since autumn 2021 have been putting the agricultural sector under pressure. Input prices have increased significantly in all agricultural sectors. Energy and fertiliser costs have surged due to the geo-political and geo-economic developments even before Russia’s war of aggression against Ukraine which aggravated the situation and had a further markedly negative impact on market expectations.

(2)

As a result, the share of energy and fertilisers costs in total intermediate consumption had increased significantly in 2022, with the largest increase being observed for field crops and permanent crops farms, in both cases because of their exposure to fertiliser costs. Fertiliser prices are still at historically very high levels. Data suggests that farmers have reacted by reducing their use of fertilisers with, as of yet, uncertain negative consequences on yields and the quality of food and feed products.

(3)

The prices of other inputs for farmers and food chain operators such as for example plant protection products and animal health treatments, machinery and packaging have increased in line with the general inflation.

(4)

Agricultural product prices had also increased in 2022 against the backdrop of the recovery from the Covid-19 pandemic and concerns about sufficient global supplies in the aftermath of Russia’s attack on Ukraine. And yet, in certain sectors such as the dairy, wine or fruit and vegetables sectors, these high prices had not been able to compensate for worsening business outcomes due to the higher input costs.

(5)

Recently, prices for most agricultural products such as cereals, oilseeds, dairy products or wine have been falling significantly. In certain Member States and regions, the situation has become particularly difficult as the ratio between input prices and agricultural product prices has deteriorated.

(6)

The increased costs for producers have fuelled high consumer prices for food products across the Union, which has had consequences for the affordability of food. The most recent figures show a persistently high food price inflation for consumers of over 15 % across the Union. In certain Member States, the values reach almost 40 %. There is evidence that high prices have been affecting the level of consumption in certain food sectors, such as meat, wine or fruit and vegetables. Consumers have been shifting demand to less expensive food and away from food such as organic food, wine and food protected by designations of origin and geographical indications. Such demand shifts are liable to negatively impact returns on investment accruing to producers.

(7)

In certain agricultural sectors and in certain Member States this overall scenario of economic difficulty has been compounded by urgent sector-specific challenges.

(8)

Recent exceptional regional adverse meteorological events such as drought (Spain, Italy and Portugal) and floods (Italy) have caused significant damage to agricultural producers which endangers their economic viability. While there are indications that such events occur in an overall context of increasing climate-change related risks to agriculture, the intensity of those events has been extraordinary.

(9)

As regards the cereals and oilseeds sector, the extreme weather events hitting various Union producing regions are seriously compromising spring and summer crops, in terms of volume and quality. The sector faces decreasing prices. Compared to last year, cereal prices dropped by about 40 %. This creates problems for farmers, as many had purchased expensive inputs in the recent months and now face market prices for their products that hardly, or in some cases do not, cover their costs. Furthermore, some farmers could not sow their fields due to the low levels of soil-humidity and low availabilities of water for irrigation, which will lead to a drop in production and yields. This is particularly the case in Czechia, Denmark, Ireland, Spain, France, Cyprus, Latvia, Austria, Portugal, Slovenia and Sweden.

(10)

The market situation in the fruit and vegetables sector is very difficult, due to the high inflation affecting consumption, which is estimated to have dropped by at least 10 %, compounded by high energy cost. Energy is an important cost factor in glasshouse production and in the post-harvest logistics. As a result, producers continue to face pressure concerning their margins despite the increase in agricultural prices. The hops sector faces similar challenges. The situation is affecting several Member States, in particular Belgium, Czechia, Germany, Estonia, Ireland, Greece, Croatia, Italy, Cyprus, Latvia, the Netherlands, Slovenia and Finland.

(11)

In the animal sector, the high prices of feed combined with the price of energy and general inflation are causing serious difficulties for producers. Despite overall favourable price levels for beef, pig-meat and poultry, producers face problems in covering their production costs. These are even more pronounced in the dairy sector, since prices have started to decrease significantly from their highs at the end of 2022. Moreover, consumer prices for food products affect consumer demand for quality products, that constitute a large share of the income of farmers in those sectors. The dairy sector in Latvia and Lithuania is in a particularly challenging situation as national milk prices have decreased more than in other Member States. But also in Belgium, Czechia, Germany, Estonia, Greece, Spain, France, Croatia, Italy, Cyprus, Luxembourg, Malta, Austria, Slovenia and Finland, the livestock sectors find themselves in the above-mentioned difficulties.

(12)

The contraction of demand due to inflation, including in export markets, combined with high levels of supply, affect in particular the wine sector in certain regions, especially as regards red and rosé wines. Uncertainty on the wine market has also been fuelled by increased input costs and irregular weather events. Germany, Spain, France, Italy and Portugal are particularly affected by this development.

(13)

It is possible that the temporary crisis distillation measure introduced in Article 2 of Commission Delegated Regulation (EU) 2023/1225 (2) allowing Member States to introduce national support programmes in the wine sector will not suffice to address the situation due to the financial limitation of the programmes. Therefore, Member States should be allowed to use further financial resources to reinforce their budget allocations for the national support programmes in the wine sector with a view to financing further distillation operations subject to the same eligibility requirements and support conditions, with the exception of the implementation deadline which should be adapted for the operations financed under this Regulation. If a Member States chooses to avail of this possibility, the Union financial contribution provided by this Regulation should be available in addition to the financial allocations laid down in Annex VII to Regulation (EU) 2021/2115 of the European Parliament and of the Council (3) for the financial years 2023 and 2024.

(14)

The still very high input prices, the fall in prices for agricultural products, as well as the problems affecting certain sectors and Members States are liable to cause liquidity problems for agricultural producers. Member States have been resorting to state aid measures under Union state aid rules to try to tackle the situation.

(15)

The Commission decided upon two agricultural emergency support packages benefitting certain Member States to compensate farmers in the most affected sectors of cereals and oilseeds: Commission Implementing Regulations (EU) 2023/739 (4) and (EU) 2023/1343 (5) aimed at addressing the negative effects caused by the pressure on prices in the said sectors. The present third emergency support package concerns farmers in other Member States who suffer from specific problems impacting on the viability of agricultural production.

(16)

An exceptional measure should therefore be adopted to contribute to addressing the specific problems identified and to forestalling a rapid deterioration of production in those Member States that have not been beneficiaries of the two recent agricultural support packages laid down by Implementing Regulations (EU) 2023/739 and (EU) 2023/1343.

(17)

The difficulties mentioned constitute specific problems within the meaning of Article 221 of Regulation (EU) No 1308/2013. They cannot be readily addressed by measures taken pursuant to Articles 219 or 220 of that Regulation. The situation is not specifically linked to an existing particular market disturbance or a precise threat thereof. It is not linked either to measures that would combat the spread of animal diseases or the loss of consumer confidence due to public, animal or plant health risks.

(18)

The amounts available to the beneficiary Member States should be determined, taking into account in particular their respective weight in the Union’s agricultural sector, on the basis of the net ceilings for direct payments set out in Annex III to Regulation (EU) No 1307/2013 of the European Parliament and of the Council (6). The amounts for Spain, Italy and Portugal should take into account that these countries are the main Member States affected by the exceptional adverse meteorological events. The amounts for Latvia and Lithuania should take into account that these countries face a particularly challenging situation in the dairy sector.

(19)

The beneficiary Member States should distribute the aid through the most effective channels on the basis of objective and non-discriminatory criteria that take account of the extent of the difficulties and economic damages faced by the farmers concerned. They should ensure that farmers are the ultimate beneficiaries of the aid and avoid any distortions of the market or of competition.

(20)

As the amounts allocated to the beneficiary Member States would address the economic difficulties faced by farmers only partially, these Member States should be allowed to grant additional national support to producers, under the conditions and within the time limits set by this Regulation.

(21)

In order to give the beneficiary Member States the flexibility to distribute the aid as circumstances of the farmers concerned require, they should be allowed to cumulate it with other support financed by the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development without overcompensating the farmers.

(22)

In order to avoid overcompensation, the beneficiary Member States should take into account the support granted under other national or Union support instruments or private schemes to respond to the economic losses concerned.

(23)

As the Union aid is fixed in euro, it is necessary, in order to ensure a uniform and simultaneous application, to fix a date for the conversion of the amount allocated to Member States not having adopted the euro as their national currencies, as it is the case for Czechia, Denmark and Sweden. Since this Regulation does not provide for a deadline for the submission of the applications for aid, it is appropriate to consider, for the purposes of Article 30(3) of Commission Delegated Regulation (EU) 2022/127 (7), the date of entry into force of this Regulation as the operative event for the exchange rate regarding the amounts set out in this Regulation.

(24)

For budgetary reasons, the Union should finance the expenditure incurred by the beneficiary Member States only where such expenditure is made by a certain eligibility date. The support for this exceptional measure should therefore be paid by 31 January 2024.

(25)

The beneficiary Member States should communicate to the Commission detailed information about the implementation of this Regulation, to enable the Union to monitor the efficiency of the measure introduced by this Regulation.

(26)

In order to ensure that farmers receive aid as soon as possible, the beneficiary Member States should be enabled to implement this Regulation without delay. Therefore, this Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union.

(27)

The measure provided for in this Regulation is in accordance with the opinion of the Committee for the Common Organisation of the Agricultural Markets,