Guidelines for State aid in the agricultural and forestry sectors and in rural areas

SUMMARY OF:

Commission communication – Guidelines for State aid in the agricultural and forestry sectors and in rural areas

WHAT IS THE AIM OF THE GUIDELINES?

They lay down the criteria the European Commission applies when assessing whether State aid in the agricultural and forestry sectors and in rural areas meets the conditions of Article 107(3) of the Treaty on the Functioning of the European Union and can be considered compatible with the internal market.
They also set out when aid to make good damage from natural disasters or exceptional events is judged to be compatible with the internal market in accordance with Article 107(2)(b) of the treaty.

KEY POINTS

The Commission:

applies the guidelines to:
- aid schemes and individual aid,
- State aid for primary agricultural production and the processing and marketing of agricultural products,
- aid to small and medium-sized enterprises and in principle to large companies, but notes that the latter are less affected by market failures;
takes account of broader common agricultural policy (CAP) rules when applying the guidelines.

The guidelines cover:

national support for the agricultural sector for:
- rural development-like measures,
- measures for risk and crisis management, the livestock sector and promotional activities;
support for the forestry sector:
- granted as part of a CAP strategic plan or as additional national financing for such rural development measures,
- for national support financed exclusively from national budgets;
support for rural areas granted as part of a CAP strategic plan or as additional national aid.

In order to be compatible with the internal market, aid must satisfy two main criteria:

it must support the development of an economic activity by:
- changing the behaviour of aid beneficiaries, so that they do more than they would have done without aid,
- complying with European Union (EU) law, especially rules on common market organisations;
it must not unduly affect trade contrary to the common interest, by demonstrating that it:
- brings material improvement that the market cannot deliver by itself,
- is the appropriate policy instrument to address the pursued policy objective,
- is proportionate, i.e. limited to the minimum aid necessary (‘proportionality’),
- is transparent, i.e. all relevant information is made available to EU Member States, the Commission, economic operators and the public,
- avoids distortions to trade and competition, which is determined by a Commission ‘balancing test’ that evaluates the positive and negative effects the aid could have on competition and trading conditions between Member States.

The guidelines cover the following aid categories, stipulating specific criteria – including eligibility conditions, maximum aid amounts or aid intensity and eligible costs – for each category:

Agriculture

Undertakings active in the primary production, processing and marketing of agricultural products:

investment for:
- agricultural holdings,
- conservation of cultural and natural heritage located on farms,
- processing and marketing of agricultural products;
start-ups for young farmers and agricultural activities;
start-ups for agricultural producer groups and organisations;
agri-environmental-climate commitments;
animal welfare;
areas with specific disadvantages because of certain mandatory requirements;
areas facing natural or other area-specific constraints;
organic farming;
participation of producers in quality schemes;
technical support;
knowledge exchange and information;
advisory services;
farm replacement services;
cooperation in the agricultural sector.

Risk and crisis management:

compensation for damage to agricultural production caused by natural disasters or exceptional events;
compensation for damage caused by adverse climatic conditions, such as storms or severe drought, with can be assimilated to a natural disaster;
costs of prevention, control and eradication of animal diseases, plant pests and infestation by invasive alien species and to make good the damage caused;
fallen stock*;
compensation for damage by protected animals*;
payment of insurance premiums and contribution to mutual funds.

Other agricultural aid:

closure of capacity;
farming relocation;
livestock sector;
promotion of agricultural products;
outermost regions and the smaller Aegean Islands;
agricultural land consolidation;
research and development.

Forestry

Area development and improved viability:

establishing and creating woodland;
establishing, regenerating or renovating agro-forestry systems;
preventing, and restoring, damage to forests;
improving the resilience and environmental value of forest ecosystems;
investing in forestry technologies and in the processing, mobilising and marketing of forestry products;
investing in infrastructure to develop, modernise or adapt forestry;
conserving cultural and natural heritage in forests;
contributing financially to mutual funds.

Area-specific disadvantages from mandatory requirements.

Forest-environment, climate services and conservation.

Knowledge exchange and information.

Advisory services.

Cooperation.

Start-ups for producers groups and organisations.

Ecological, protective and recreational measures:

maintaining or restoring ecosystems, biodiversity and the local landscape;
maintaining and improving soil quality and ensuring balanced and healthy tree growth;
restoring and maintaining natural pathways, landscapes and natural habitat for animals;
maintaining roads to prevent forest fires;
repairing damage by protected animals.

Measures aligned with agricultural aid:

research and development;
forestry land consolidation.

Rural areas

Activities co-financed by the European agricultural fund for rural development or paid as additional national financing:

basic services;
business start-ups for non-agricultural activities;
agri-environment-climate commitments to non-farmers;
area-specific disadvantages from mandatory requirements to non-farmers;
promotion and support for cotton or food quality schemes and their use by farmers;
cooperation including participation in community-led local development and European Innovation Partnership for Agricultural Productivity and Sustainability operational group projects;
creation of mutual funds.

In general, the Commission:

will only authorise aid schemes of limited duration;
may require independent experts to evaluate aid schemes after their implementation, particularly those with large budgets or containing novel characteristics – evaluations are mandatory for aid over €150 million in one year or €750 million over the life of the scheme;
requires Member States to submit annual reports and to keep detailed records for 10 years;
may review or amend the guidelines as it sees fit.

FROM WHEN DO THE GUIDELINES APPLY?

The Commission applies them from 1 January 2023.

Member States must adapt existing aid schemes to the new guidelines by 30 June 2023 at the latest.

BACKGROUND

The guidelines are part of a package of measures the Commission adopted on revising State aid rules for the agricultural and forestry sectors (Regulation (EU) 2022/2472, see summary) and Regulation (EU) No 1408/2013 on small-scale (de minimis) aid for farming (see summary).

The revised rules align State aid with the EU’s strategic priorities, notably the common agricultural policy and the European Green Deal.

For further information, see:

State aid: Commission adopts new rules for agriculture, forestry and fishery and aquaculture sectors (European Commission).

KEY TERMS

Fallen stock. Animals killed or that have died, but not slaughtered for human consumption.

Protected animal. Animal protected by EU or national legislation.

MAIN DOCUMENT

Communication from the Commission – Guidelines for State aid in the agricultural and forestry sectors and in rural areas 2022/C 485/01 (OJ C 485, 21.12.2022, pp. 1–90).