The EU Commission response to the threat posed to agricultural supply chains by the Covid-19 pandemic was mostly appropriate, but insufficiently targeted, the European Court of Auditors (ECA) has said.
The pandemic impacted the agriculture sector right across the supply chain from farm to fork and affected several markets.
The EU measures to guarantee food security during the pandemic included “green lanes” to move food, market measures such as private storage aid, financial support to farmers and Common Agricultural Policy (CAP) flexibilities.
The auditors said that direct support, with a budget of €712 million, was implemented quickly through the reallocation of unused European Agricultural Fund for Rural Development (EAFRD) funds.
However, member states did not sufficiently target the use of direct support, and the crisis distillation rules for the wine production sector were not clear.
ECA
The Commission measures were adopted in 2020 and the audit covered their implementation up to the end of 2021.
The report examined the implementation of the EU measures in Greece, Spain, France, Poland and Romania, which accounted for 69% of the amounts allocated as exceptional aid.
The ECA said that the main fiscal response to the pandemic came from national budgets with the commission putting procedures in place to facilitate state aid.
The auditors identified a risk of distortion of competition between member states, along with a risk of overcompensation of producers when state aid supported an agricultural sector that also received EU funds.
“Direct support was insufficiently targeted by the member states,” the auditors said.
Aid
The report noted that five member states made EU funding available to all farmers that suffered losses, while nine others targeted selected sectors and supported beneficiaries irrespective of whether they had suffered losses.
The auditors gave an example of sheep and goat farmers in the Andalusia region of Spain who were estimated to have losses of €8.6 million, due to the pandemic.
The EU provided €8.7 million in support, while the sector also received €10 million in national aid.
“There is consequently a risk of overcompensation for some beneficiaries, as demonstrated by this example, where state aid and EU support overlapped,” the report said.
The auditors recommended that the EU Commission share good practice to improve targeting of CAP measures and in the event of future crises propose clear rules.
Commission
In response to the ECA report, the EU Commission said that if member states did not respect the rules on EU direct financing, unlawful state aid could be recovered where overcompensation occurred.
The commission said it has been establishing clear rules on crisis support measures in relation to the targeting of support by member states.
“Regarding state aid, it is up to the member states to decide in which sectors they spend national money based on EU state aid rules,” the commission said.
A crisis coordination mechanism for better preparedness and reactivity on food security challenges in a crisis situation has also been established by the commission.
In a social media post yesterday (Monday, May 8), European Commissioner for Agriculture, Janusz Wojciechowski described the report as a “positive opinion”.