After several days - long and intensive discussions, the decision madalsoe by the European Council on the EU multiannual budget for the next programming period also lays down the amounts of funding for rural development and direct payments for Latvian farmers for 2021-2027.
Kaspars Gerhards, the Minister for Agriculture: “Undeniably, such an important decision is a success, at the same time, it must be noted that regardless of the increased funding as compared with the previous programming period, unfortunately, Latvia will still remain among the countries, receiving the lowest level of direct payments for agriculture. It must be noted that a huge work has been done explaining this unfair situation at level of the European Commission, fighting at different levels for the necessity to increase the funding for Latvia, and this should be a staring point of a fair and honest distribution of the funding for all the EU Member States. However, taking into consideration the decision made by the European Council on the amount of support for Latvia, a hard work is awaiting the government to also find the national funding for agricultural sector that would ensure competitiveness of domestic farmers and producers on the European market.”
Although, figures show that in next programming period Latvian farmers will see an increase in the EU funding in several sectors, as compared with the programming period 2014-2020, the Ministry of Agriculture is not satisfied with the decisions made by the European Council because even with a slight increase in funding, Latvian farmers, as compared with farmers of other EU Member States, will receive a considerably lower amount of the EU support, reaching only 82% of the EU average level in 2027. Thus, also the next programming period, Latvian farmers will remain in unequal competition conditions, as compared with farmers of other Member States although, prices of agricultural raw material, services and technical provision are at equal level all over the European Union, and international market with its purchase prices for agricultural goods also is common for all the Member States. Moreover, by the decision of the European Council, Latvia will not achieve the EU average level neither in respect of direct payments nor rural development funding. Unfortunately, it will have a negative impact on further development of Latvian rural areas.
The rural development funding has suffered most of all during this negotiation process on the EU multiannual budget. During negotiations, Latvia managed only slightly to reduce the reduction by 15,3%, initially proposed by the European Commission (COM), ascending to minus 12% that respectively means EUR 118 million reduction as compared with the current period.
Slightly satisfying news is that part of EUR 750 billion, allocated by the European Economic Recovery Plan (EERP), is also earmarked for Latvian rural development. At the EU level, EUR 7,5 billion has been allocated for rural development that are divided proportionally for all the Member States. For Latvia in this case EUR 86 million has been allocated. Although this is a short-term support, still at least in this financial perspective, it will allow at least slightly to smooth out a huge reduction in rural development funding, achieving that the rural development funding for 2021-2027 as compared with 2014-2020, is reduced by EUR 33 million or 3%. However, EERP funding is a short-term and it will not be taken into account in further negotiations on the EU multiannual budget.
Just as it must be noted that in next programming period, farmers will have to comply with the new and more stringent environmental and climate requirements laid down by the Common Agricultural Policy (CAP) that will also impact competitiveness as part of the funding intended for rural development will be spent on achievement of the environmental objectives thus, the amount of resources, which farmers are able to invest in the development of direct agricultural production will be reduced.
The decision made by the European Council means that in the period 2021-2027, Latvia will receive within CAP EUR 3,347 billion of which EUR 2,41 billion for direct payments and EUR 851 million for rural development. And already mentioned EUR 86 million from EERP. This means that in the period 2021-2027, the total funding for Latvia from CAP will increase by EUR 661 million or 24,6% as compared with the current period.
All this will result in Latvia receiving as direct payments in 2021-2027 by EUR 693 million more than in the current period 2014-2020 – the total amount of direct payments for Latvia will increase by 40%. The decision by the European Council means EUR 139 million will be added to the amount of direct payments Latvia receives as compared with the initial COM proposal. However, as it was previously stressed, it is not enough to place Latvian farmers in equal competition conditions with farmers of other Member States. Starting from 2022, Latvian farmers will receive as direct payments EUR 200 per ha that by 2027 will increase to EUR 215 per ha or 82% of the EU average. The same direct payments per ha will also receive Lithuania, Estonia, Portugal and Romania.