Read in full: EU beef fund draft regulation sent to member states

As Irish beef farmers await clarity from the European Commission on the more questionable conditionality aspects of the €100 million beef fund, here’s a full copy of the draft regulation that has been circulated to all member states.

The commission has invited member states to give an opinion on the draft regulation – aimed at providing temporary exceptional adjustment aid to farmers in the beef and veal sector in Ireland – through its Common Market Organisation Management Committee.

The commission will offer a €50 million support for beef farmers – this figure will be matched by the Irish Government.

The draft regulation has been drawn up entirely by the commission and is not for negotiation with Ireland or other member states, in terms of its content.

Here’s what it says:

Beef has traditionally been the most fragile agri-food sector due to a number of factors, most notably restricted market access to third-country markets and falling domestic consumption.

Additional new challenges emerge from concerns over the sector’s contribution to greenhouse gas emissions.

The structure of the beef industry makes it vulnerable, notably its long life-cycle and high costs linked to extensive production.

These factors have been aggravated by the prospect of the UK leaving the union and uncertainties linked to the future UK customs tariff once it withdraws from the union.

The UK is a premium market for beef, critical for the sustainability of the entire EU beef and veal sector.

In parallel, the sector is confronted with demands of trade partners for increased market access to the union.

The above-mentioned problems are more acute in the case of the Irish beef sector. The latter is concentrated in small-scale holdings in the poorer regions of the country where alternative productions are limited.

After years of stagnating beef prices in Ireland, gross margins have fallen in the past year by 11% to 19%, with suckler cow farms suffering the biggest losses.

Ireland’s beef sector is both large and hugely dependent on exports. Five of every 6t of beef produced is exported and almost 50% of these exports are to the UK.

The very threat of disruption to this market puts downward pressure on prices, with the risk of onward disruption of the overall EU market.

This actually happened in the months preceding earlier announced dates for the withdrawal of the UK.

Market adjustment is particularly slow in Ireland’s extensive beef production system where animals are typically slaughtered at a later age, between 18 and 30 months-of-age.

This particular production system is suited to the requirements of the UK beef market.

Efforts to open new markets continue to be hampered by third-country restrictions related to unjustified animal health requirements in particular.

Downward price pressure on Irish beef would spill over to other member states.

Acting at the root of the problem without delay would both enhance the Irish beef sector’s resilience and avoid generating a union-wide market disruption.

In light of the above-mentioned specific problems faced by Irish producers, and in line with Article 221 of Regulation (EU) No 1308/2013, it is in the interest of the union beef sector’s market stability to adopt measures that reinforce the resilience of Irish beef.

Available CAP [Common Agricultural Policy] instruments such as public intervention and private storage aid are not adequate measures to address the needs of the Irish beef sector.

It is therefore appropriate to provide Ireland with a financial grant to support beef and veal farmers engaging in actions enhancing their resilience and sustainability, including the adjustment of production to markets with requirements other than the UK.

The financial support made available to Ireland should take into account the main features of its beef and veal sectors including its share of specialised beef farmers and its vulnerability to disruption of exports.

Ireland should design measures aimed at production reduction and restructuring of its beef sector to protect its long-term viability, based on one or more of the following activities: fostering environmental and economic sustainability; developing new markets; and enhancing beef and veal quality.

Ireland should distribute the aid through the most effective channels on the basis of objective and non-discriminatory criteria, while ensuring that beef and veal farmers are the ultimate beneficiaries of the aid, and avoiding any market and competition distortion.

As the amount allocated to Ireland would compensate only a part of the actual cost for farmers in the beef and veal sector, Ireland should be allowed to grant additional support to those farmers, under the same conditions of objectiveness, non-discrimination and non-distortion of competition.

In order to give Ireland the flexibility to distribute the aid as circumstances require, Ireland should be allowed to cumulate it with other support financed by the European Agricultural Guarantee Fund and the European Agricultural Fund for Rural Development.

In accordance with Article 221 of Regulation (EU) No 1308/2013, the measure should be limited to a period of maximum 12 months starting from the date of entry into force of this regulation.

Payments made by Ireland to the beneficiaries after that period should not be eligible for union financing.

In order to ensure transparency, monitoring and proper administration of the amounts available, Ireland should inform the commission of the concrete measures to be taken, the criteria used to distribute the aid, the measures taken to avoid distortion of competition in the market concerned, the intended impact of the measures and the methods to check that it is achieved.

In order to ensure that farmers receive aid as soon as possible, Ireland should be enabled to implement this regulation without delay. Therefore, this regulation should apply from the day following that of its publication.

The measures provided for in this regulation are in accordance with the opinion of the Committee for the Common Organisation of the Agricultural Markets.

Adopted regulation – Article 1

Union aid of a total amount of €50,000,000 shall be available to Ireland to provide exceptional adjustment aid to beef and veal farmers subject to the conditions set out in paragraphs two to five.

Ireland shall use the amounts available for measures referred to in paragraph three. The measures shall be taken on the basis of objective and non-discriminatory criteria, provided that the resulting payments do not cause distortion of competition.

The measures taken by Ireland shall be aimed at reducing production or restructuring the beef sector and one or more of the following objectives:
  • Implementation of quality schemes in the beef and veal sector or projects aiming at promoting quality and value added;
  • Boosting market diversification;
  • Protecting and improving the farmers’ environmental, climate and economic sustainability.

Ireland shall ensure that, if beef and veal farmers are not the direct beneficiaries of the payments of the union aid, the economic benefit of the union aid is passed on to them in full.

Ireland’s expenditure in relation to the payments for the measures referred to in paragraph three shall only be eligible for union aid if those payments have been made by [May 31, 2020, at the latest].

Article 2

Ireland may grant additional national aid for the measures taken under Article 1 up to a maximum of 100% of the amount set out in Article 1, on the basis of objective and non-discriminatory criteria, provided that the resulting payments do not cause distortion of competition.

Ireland shall pay the additional support [by May 31, 2020, at the latest].

Article 3

Ireland shall notify the commission of the following (without delay and no later than July 31, 2019):

  • A description of the measures to be taken;
  • The criteria used to determine the methods for granting the aid;
  • The intended impact of the measures;
  • The actions taken to check that the intended impact is reached;
  • The actions taken to avoid distortion of competition;
  • The level of additional support granted pursuant to Article 2;
  • The total amounts paid per measure (when applicable, broken down by union aid and additional support);
  • And the number and type of beneficiaries and the assessment of the effectiveness of the measure.

This regulation shall enter into force on the day of its publication in the Official Journal of the European Union.

This regulation shall be binding in its entirety and directly applicable in all member states.