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GROWTH - 17 December 2024

State aid to the agricultural sector: more than €18 billion since 2021

by Farm Europe

 

🇪🇺 A three-speed Europe 🇪🇺

 

Since the start of the budget period (2021), Member States have allocated more than €18 billion in State aid to the agricultural sector, representing no less than 11% of total aid under the first pillar of the CAP – a proportion that rises to 14% when focussing solely on the 2021-2023 period.

The Netherlands has by far provided the most support to its agricultural sector, both in absolute terms and relative to direct payments or the national agricultural production value. During the period analysed, the aid amounted to 101% of the first pillar received by Dutch farmers. Denmark, Greece, Hungary, the Czech Republic, and Slovakia also granted substantial funds, ranging from 20% to 43% of their respective direct payments. For the 2021–2022 period, Spain distributed the equivalent of 28% of its first pillar. Lastly, while the total amounts distributed by Italy, France, and Germany remain significant, these countries limited their support to between 5% and 10% of their respective direct payments, a level below the European average.

On average across Europe, these State aids only partially compensated (70%) for the loss in the real value of CAP first pillar payments resulting from their lack of indexation to inflation. The situation, however, varies significantly from one Member State to another:

  • Four countries overcompensated for the decline, providing farmers with liquidity that could boost their investment capacity. The Netherlands stands out in particular, with support 8 times greater than the inflation-related decline. Poland and Spain (1.4 times), and Greece (1.3 times) follow.
  • The other countries that provided the most support for their agriculture offset the decline by between 50% and 75%.
  • Finally, it should be noted that some countries granted very little state aid to their agricultural sectors (e.g. Latvia, Estonia, Ireland, Romania, Belgium, Luxembourg, Bulgaria and Portugal).

 

 

Note:

It should be emphasised that the figure of €18 billion is a minority figure, as the available data has certain limitations:

  • Publication thresholds: Member States are only required to reference their aid above certain thresholds1 , which leads to an underestimation of the actual amounts spent.
  • The data for 2024 only include aid referenced before 8 November. As a result, the proportion of aid in relation to CAP aid is underestimated.
  • Absence of certain national data: Poland, Spain, Romania and Slovenia do not use the Commission’s database, but their own national transparency registers. Poland and Spain are among the countries that have heavily subsidised their agricultural sector through State aid. According to the State Aid Scoreboard (the European Commission’s reference tool for monitoring State aid), Spain and Poland allocated €1.97 billion and €1.88 billion respectively in State aid to their agricultural sectors over the period 2021-2022.

 

 

Contents

 

Heterogeneous aid between Member States

The amount of aid granted varies greatly between Member States. Three distinct groups can be identified.

Ten countries granted aid volumes approaching or significantly exceeding €1 billion, collectively amounting to over €15.5 billion. Looking exclusively at the aid recorded in the Commission’s database (excluding Spain and Poland), the top eight countries accounted for €11.6 billion, representing 84% of the referenced aid. Among them, the Netherlands stands out with €2.83 billion in aid, followed by Italy, France, Denmark, Germany, Greece, and Hungary, each allocating between €1 billion and €1.5 billion2. 

A second group of countries is characterised by aid packages that, while still significant, remain well below those of the first group. Slovakia, Austria, Lithuania, Sweden, Latvia, Finland, Ireland, and Croatia supported their agricultural sectors with amounts ranging from a few to several hundred million euros. Finally, a third group of countries made very limited or no use of this aid mechanism, including Bulgaria, Portugal, and Belgium.

The analysis changes when comparing State aid to the CAP’s direct payments:

  • The Netherlands provided by far the most support to its agricultural sector, both in absolute terms and relative to direct payments. Over the studied period, aid reached 101% of the first pillar.
  • Denmark, Greece, Hungary, the Czech Republic, and Slovakia also allocated very high proportions, ranging from 20% to 43% of their respective direct payments. During the 2021–2022 period, Spain and Poland each distributed the equivalent of 28% and 17% of their First Pillar payments, respectively.
  • Conversely, while the total amounts distributed by Italy, France, and Germany remain substantial, these countries limited their support to between 5% and 10% of their respective direct payments, a level below the European average.

 

Agricultural support unequally proportionate to the production value

This heterogeneity is also evident when comparing the aid provided to the agricultural production value of different countries during the 2021–2023 period.

Eight countries granted particularly high amounts in proportion to the value of their agricultural production (between 2.5% and 4.5%), including Slovakia (4.5%), followed by the Czech Republic, Hungary and Greece (3% – 3.5%). Finally, Latvia and the Netherlands are both around 2.5%.

Five states paid out slightly lower but still substantial proportions of their agricultural value (between 1 and 2%): Lithuania and Poland (2%), followed by Croatia, Estonia and Spain (1%). Among the countries with the highest agricultural turnover, Spain is the only one to have subsidised to such an extent.

Six States granted aid in more moderate proportions, between 0.5% and 1%: Austria, Italy, Finland and Sweden are slightly below 1%, while Germany and France are around 0.5%.

Finally, the last eight States allocated low to very low proportions (< 0.5%), including: Ireland, Romania and Bulgaria are around 0.3%, while Belgium, Luxembourg and Portugal allocated less than 0.1%.

 

Aid only partially offsetting the erosion of CAP payments due to inflation

In most Member States, the aid is lower than the cumulative inflation over the 2021–2023 period. At the EU level, State aid has only partially compensated for the loss in the real value of first pillar payments due to its non-indexation to inflation. Over this period, State aid covers about 70% of this decline. However, the situation varies from one Member State to another, and three categories can be distinguished among those that have provided the most support to their agriculture:

The Netherlands stands out with an entirely atypical level of State aid: the amount allocated is 7.8 times higher than the real value loss of first pillar aid.

The States that more than offset the decline :

  • Spain: had the lowest inflation in the European Union alongside France (12%). Its aids account for 142% of the decline.
  • Poland: relatively moderate inflation, around the European average (20%). Its aids account for 140% of the decline.
  • Greece: Its aids represent 133% of the decline. Along with the Netherlands, these are the only two countries to have experienced relatively moderate inflation (below the European average) but to have allocated more than 2.5% of the value of their agricultural production.

Those who only partially offset the decline:

  • Czech Republic: 91% compensation. Although second in terms of the proportion of aid in relation to agricultural value, it is one of the Member States most affected by inflation between 2021 and 2023 (32%), and its aid has not been sufficient to fully compensate for the loss in value of CAP aid.
  • Hungary: 61% compensation. Despite high levels of aid, both in absolute terms and as a proportion of its agricultural value, Hungary recorded the highest inflation rate in the European Union over the period (41%), reaching a level twice that of the European average.
  • Italy: 75% compensation.
  • France: 50% compensation.
  • Germany: 47% compensation.

France, Germany, and Italy have by far the highest agricultural values. Between 2021 and 2023, they contributed to 18% (€274 billion), 14% (€216 billion), and 13% (€207 billion) of the EU’s agricultural value, respectively. Yet these are the same three countries which, among those that supported their agriculture, allocated the least proportionally to their agricultural value and compensated the least for the decline in aid linked to inflation.

Among the other countries that paid much less aid in absolute terms, there are two groups.

Those whose aid offset some of their losses:

  • Slovakia: 95% offset. Its situation is similar to that of the Czech Republic. Slovakia is the Member State that has paid out the most aid in proportion to its agricultural value (4.5%), but it is also one of those most affected by inflation (29%). While this aid helped to compensate for losses, they were not enough to boost farmers’ investment capacity.
  • Austria: 65% compensation.
  • Finland, Croatia, Lithuania and Sweden: compensation between 40 and 45%. Croatia and Lithuania stand out for their high proportions of aid in relation to their agricultural value (around 1.5%), while Finland and Sweden, less affected by inflation, allocated more moderate proportions (around 0.7%).

Those who made little to no compensation for their losses:

  • Latvia (32% compensation) and Estonia (22%) stand out for their high levels of aid in proportion to their agricultural value, at 2.7% and 1.1% respectively. However, these two countries also suffered some of the highest inflation rates in the European Union (32% and 36% respectively).
  • Romania (16% compensation) and Bulgaria (1%): although they recorded relatively high inflation, around 30%, they paid out very little aid.
  • Ireland (18% compensation), Belgium (12%), Luxembourg (8%) and Portugal (0%). The latter countries only marginally compensated for the losses, despite relatively low inflation (around 15%).

 

Aid Categories

State aid notified as a “response to crises” largely dominates, accounting for 74% of total aid distributed by Member States.

Aid relating to COVID-19 represents the largest area of State aid expenditure in the agricultural sector. It accounts for €6 billion or 43% of total aid over the period, a higher share than all other crisis aid combined (31%). Although COVID aid will continue to be distributed in 2024, it has been decreasing since 2021, with a sharp reduction in 2023. The countries that distributed the most aid in response to COVID-19 are Denmark (€1.27bn), the Netherlands (€1.25bn), Greece (€1.10bn) and, to a lesser extent, Italy (€781 M), Germany (€431 M) and Hungary (€399 M). For the first three countries, COVID aid alone accounted for 39%, 45% and 13% of their direct aid respectively.

At the same time, aid under the TCF (Temporary Crisis Framework) accounted for €1.26 billion or 9.1% of total aid paid over the period. It approached €1 billion in 2023, a year in which it was the leading source of crisis aid, accounting for 23% of total aid. Italy (€475bn) and Hungary (€311bn) dominate in the use of the TCF framework, followed by France (€130 M) and Slovakia (€101 M). These 4 Member States alone account for 81% of this category of aid.

TCTF (Temporary Crisis and Transition Framework) aid amounts to €641 million. Starting in 2023, this aid accounts for less of the total over the period. However, although not all the aid has yet been referenced, TCTF aid appears to be the main source of aid in 2024 (33%), following on from COVID aid in previous years. Slovakia largely dominates TCTF aid, with €342 M. France (€123 M) and the Netherlands (€99 M) follow more moderately, while the rest of the Member States paid little or no aid under this heading.

Aid for the prevention, control and compensation of animal and plant diseases totals €1.1 billion and accounts for 8% of total aid, i.e. slightly less than aid under the TCF framework. The volume of aid has increased by 193% between 2021 and 2023. The livestock sector accounts for the vast majority of this aid (85%). France (€503 M) alone accounts for almost half of this aid, followed by the Czech Republic (€219 M) and Sweden (€121 M). 

Finally, aid linked to climatic or natural events amounts to €777 million. Although it remains a minority in the aid mix, it has increased by 124% between 2021 and 2023. Most of this aid went to France (€315 million), Italy (€235 million) and Hungary (€117 million), which together accounted for 86% of the total. Other countries, such as Greece and Portugal, which were also hard hit by such phenomena, did not grant this aid.

Non-crisis aid accounted for €3.6 billion or 26% of total aid. The Netherlands (€1.14 billion), Germany (€737 million) and the Czech Republic (€530 million) distributed much larger amounts than the other countries, together accounting for 66% of this type of aid. Driven by these 3 countries, non-crisis aid has increased by 77% between 2021 and 2023.

 

Supported sectors

Although the sectors benefiting from State aid are not always specified, which limits the analysis, certain features are evident.

Taking all Member States together, the livestock sector received the most aid, amounting to €5.27 billion or 38% of total aid.

In terms of absolute amounts, the countries that provided the most support for livestock farming are Denmark (1.26 Md), the Netherlands (€865 M), France (€647 M), Greece (€583 M) and, to a lesser extent, Hungary (€427 M), the Czech Republic (€386 M) and Germany (€372 M).

If we look at the proportion of each State’s total aid allocated to livestock farming, we see that Denmark (93%), Finland (84%), Sweden (67%), Estonia (63%), Ireland (54%), Lithuania (51%), Greece (47%) and France (44%) gave specific support to the sector.

Italy (75%), Austria (63%) and Hungary (44%) were more supportive of their crop production sectors.

 

Analysis of the most “generous” states

🇳🇱 Netherlands :

The Netherlands has supported its agriculture by far the most, both in absolute terms and in terms of direct aid. Over the period studied, State aid allocated exceeded direct CAP aid.

The Netherlands stands out for its strong support both outside and during crises. Non-crisis aid, linked in particular to the national agricultural transition plan, accounts for a significantly higher proportion of its aid than the rest of the Member States (40% compared with an EU average of 26%). They alone account for €1.14 billion, or 41% of the country’s direct aid, and more or almost as much as the average aid for the other Member States, all categories taken together. At the same time, the Netherlands has also massively distributed aid in response to COVID-19, to the tune of €1.25 billion. In comparison, this is equivalent to what the 7 other States that distributed large amounts of aid paid out on average, all aid taken together.

Aid was distributed relatively evenly across the different sectors.

🇮🇹 Italy:

Category: Italy paid out higher proportions than the European average

  • of COVID aid: 50% (€781 M) compared with 43%.
  • TCF aid: 31% (€475 M) compared with 9%.
  • aid linked to climatic or natural events: 15% (€235 M) compared with 8%.

Conversely, it paid no aid for the prevention, control and compensation of animal and plant diseases.

Sectors: Italy stands out for its strong support for plant production (the analysis of sub-sectors is less clear and does not reveal support focused primarily on the wine sector). This ‘focus’ on plants is all the more marked for COVID (87%) and TCF (93%) aid.

🇩🇪 Germany:

Category: Germany has distributed the majority of non-crisis aid (57%), and stands out for its lesser support during crises, compared with the other ‘big distributors’ of aid. With the exception of COVID aid, which still represents €431 M, Germany has granted relatively little crisis aid.

Sectors: the country is characterised by relatively uniform support for all sectors and by strong support for mixed farming, which accounts for 17% (€219 M) of its aid, compared with an EU average of 4%.

🇫🇷 France :

Category: the proportion and amount are lower for COVID aid (14% or €200 M), compared with the European average (43%) and with other States that distributed large amounts of aid (€764 M). Aid for the prevention, control and compensation of animal and plant diseases plays an important role: 34% (€503 M) of aid over the period. In 2023 and 2024, this aid will be the main area of expenditure. Aid linked to climatic or natural events is also higher than the European average and the other States that distributed large amounts of aid: it accounts for 22% of aid (€315 M) in the case of France. This aid was particularly high in 2022 (53% of total aid).

Sectors: Similar to its German neighbour, France is characterised by relatively homogenous support for all sectors, although the proportion of amounts for the livestock sector is slightly higher than for other sectors. Within the livestock sector, pig farms (mainly in connection with support following the COVID-19 crisis) and the poultry sector (in connection with diseases) dominate. Aid linked to climatic or natural events has been targeted at fruit trees and vines in particular.

🇩🇰 Denmark :

The case of Denmark is specific in that, although it appears to be one of the countries that has strongly supported its agriculture, this support in fact concerns almost exclusively the mink farming sector. In fact, 93% of Denmark’s aid is linked to COVID-19 and 86% to the “other animals” sub-sector. Of the aid for this sub-sector, 96% is for mink farms, following the decision to cull all mink by 2020. Apart from this aid, Danish aid is low, amounting to around €186 million, including €83 million for pig farming.

🇬🇷 Greece :

Category: COVID aid accounts for the vast majority of aid distributed by Greece: 88% of the country’s aid, totalling €1.10 billion. Greek aid will be concentrated mainly in 2021 and 2022. Greece has distributed very little other crisis aid, and virtually none linked to climatic or natural events.

Sectors: the pig sector alone receives 44% of aid (€555 M), a concentration that is even greater if we look at COVID aid alone (50%).

🇭🇺 Hungary :

Category: slightly lower proportion and amount of COVID aid (38% or €399 M), compared with the European average (43%) and with the other States that distributed large amounts of aid (€764 M). Conversely, a relatively high proportion and amount of TCF aid (30% or €311 M). In addition, alongside France and Italy, Hungary is one of the three countries which significantly allocated aid linked to climatic or natural events. In Hungary’s case, this accounted for 11% or 117 million euros.

Sectors: Hungary has provided very uniform support for the crop and livestock production sectors. It stands out in particular for its clear support for the production of cereals, pulses and oilseeds, which receives 32% (€328 M) of total aid. This homogeneity is also found within the livestock sector: 14% for poultry, 13% for pigs and 7% for dairy cows.

 

        1. ↑ AGRI and ABER State aid (Commission Regulation (EU) 2022/2472 of 14 December 2022 and AGRI State aid guidelines) : For aid granted after December 2022, the transparency obligation thresholds are EUR 10,000 for beneficiaries active in primary agricultural production and EUR 100,000 for beneficiaries active in the processing of agricultural products, the marketing of agricultural products, the forestry sector or for activities falling outside the scope of Article 42 of the Treaty. For aid granted before December 2022, the thresholds are EUR 60,000 for beneficiaries active in primary agricultural production and EUR 500,000 for beneficiaries active in the processing of agricultural products, the marketing of agricultural products, the forestry sector or for activities falling outside the scope of Article 42 of the Treaty.
          GBER (Commission Regulation (EU) No 651/2014 of 17 June 2014 as amended): the transparency thresholds since July 2023 are €10,000 for beneficiaries active in primary agricultural production, €100,000 for individual aid and €500,000 for aid involved in financial products supported by the InvestEU fund. For aid granted before July 2023, the threshold is €500,000.
        2. ↑Italy: €1.55bn; France: €1.46bn; Denmark: €1.36bn; Germany: €1.30bn; Greece: €1.25bn; Hungary: €1.04bn.
Written by Farm Europe