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European Union Guidelines
for State aid in the agriculture and forestry sector and in rural areas 2014 to 2020
(Text with EEA relevance)
1
Table of Contents
I. Common provisions 6
1. Introduction 6
2. Scope and definitions 10
2.1. Effect of the CAP and the rural development on the scope of application 10
2.2. Scope of application 11
2.3. Horizontal rules and aid instruments applicable to the Agriculture and Forestry sector and to rural areas 14
2.4. Notification 17
2.5. Definitions 18
3. Common assessment principles 29
3.1. Contribution to a common objective 30
Rural development objectives 31
CMO rules 32
Environmental objectives 32
3.2. Need for State intervention 33
3.3. Appropriateness of aid 33
3.4. Incentive effect and need for aid 34
3.5. Proportionality of the aid 37
Maximum aid intensities 37
Additional conditions for investment aid for notified individual investment aid, and large companies under notified schemes 39
Cumulation of aid 40
3.6. Avoidance of undue negative effects on competition and trade 41
Notified individual investment aid 43
OR INSTEAD OF POINTS XXX ABOVE, ALTERNATIVE APPROACH for assessment of individual investment aid (as provided in Env GL) 45
3.7. Transparency 46
II. Categories of aid 46
1. Measures in favour of undertakings active in the primary production, processing and marketing of agricultural products 46
1.1. Rural development measures 46
1.1.1. Aid for investment 47
1.1.1.1 Aid for investment in agricultural holdings linked to primary production 47
1.1.1.2 Aid for investments in favour of conservation of cultural and natural heritage located on the agricultural holding 53
1.1.1.3 Aid for investment concerning the relocation of farm buildings 54
1.1.1.4. Aid for investment in connection with the processing and marketing of agricultural products 55
1.1.2. Start-up aid for young farmers and the development of small farms 57
1.1.3. Aid for the transfer of agricultural holdings 58
1.1.4. Start-up Aid for Producer Groups and organisations 59
1.1.5. Aid for agri-environmental-climate and animal welfare 61
1.1.5.1. Aid for agri-environmental-climate commitments 61
1.1.5.2. Animal welfare aid 64
1.1.6. Natura 2000 payments and water framework directive payments 65
1.1.7. Aid to areas facing natural or other specific constraints 67
1.1.8. Aid for organic farming 69
1.1.9. Aid for new participation of producers of agricultural products in quality schemes 71
1.1.10. Provision of technical support in the agricultural sector 73
1.1.10.1. Knowledge transfer and information actions 73
1.1.10.2. Advisory services 74
1.1.10.3 Farm replacement services 76
1.1.11. Aid for co-operation in the agriculture sector 76
1.2. Risk and crisis management 79
1.2.1 Aids to Compensate for Damage to Agricultural production or the Means of Agricultural Production and to prevent damages 80
1.2.1.1 Aid to make good the damage caused by natural disasters or exceptional occurrences 80
1.2.1.2. Aid to compensate for losses caused by adverse climatic events 83
1.2.1.3. Aid for combating animal and plant diseases 86
1.2.1.4. Aid concerning TSE tests and aid for fallen stock 89
1.2.1.5. Aid for damages caused by protected animals 90
1.2.1.6. Aid for the payment of insurance premiums 91
1.2.1.7. Aid for compensations paid by mutual funds 93
1.2.2. Aid for Closing Production Capacity 95
1.2.2.1. Closing of capacity for animal, plant or human health, sanitary or environmental reasons 95
1.2.2.2. Closing of capacity for other reasons 97
1.3. Other types of aid in the agricultural sector 98
1.3.1. Aid to the livestock sector 98
1.3 2. Aid for promotion of agricultural products 100
1.3.3. Aid for the outermost regions and the Aegean islands 103
1.3.4. Environmental aid 104
1.3.5. Aid for Rescue and restructuring firms in difficulty 105
1.3.6. Aid for research and development 105
2. Aid for the forest sector which are co-financed by the EAFRD, granted as additional national financing to such co-financed measures or granted as a pure State aid 107
2.1. Investments in forest area development and improvement of viability of forests 108
2.1.1. Aid for afforestation and creation of woodland 109
2.1.2. Aid for agro-forestry systems 110
2.1.3. Aid for prevention and restoration of damage to forests from forest fire and natural disasters and catastrophic events 111
2.1.4. Investments improving the resilience and environmental value of forest ecosystems 112
2.1.5. Investments in forestry technologies and in processing, mobilizing and marketing of forest products 113
2.1.6. Aid for investments in infrastructure related to the development, modernization or adaptation of forestry 114
2.2 Natura 2000 payments in forest areas 116
2.3. Forest- environment and climate services and forest conservations 117
2.4. Knowledge transfer and information actions 118
2.5. Advisory services in forest sector 118
2.6. Co-operation in forestry sector 119
2.7. Start-up aid for producer groups and organisations 120
2.8. Other aid with environmental, climate, protective and recreational objective to the forestry sector 121
2.8.1 Aid for the creation of wooded land for recreation purposes 122
2.8.2 Aid for maintaining and improving the soil quality 122
2.8.3 Restoration and maintenance of natural pathways, landscape elements and features and natural habitat for animals 122
2.8.4. Treating and compensating damage done by protected animals 123
3. Aids in rural areas linked to the agriculture sector which are co-financed by the EAFRD or granted as additional national financing to such co-financed measures 124
3.1. Aid for investments concerning the processing of agricultural products into non-agricultural products, the production of cotton or investments in the creation and development of non-agricultural activities 124
3.2. Aid for basic services and village renewal in rural areas 126
3.3. Business start-up aid for non-agricultural activities in rural areas 129
3.4 Aid for agri-environment-climate commitments in rural areas 129
3.5. Aid for Natura 2000 and Water framework directive payments in rural areas 130
3.6. Knowledge transfer and information actions in rural areas 131
3.7. Aid for advisory services in rural areas 132
3.8. Aid for new participation of active farmers in quality schemes for cotton and foodstuffs 133
3.9. Aid for information and promotion activities concerning cotton and foodstuffs covered by a quality scheme 134
3.10 Co-operation in rural areas 135
3.11. Aid for setting-up of mutual funds 138
III. Procedural Matters 139
1. Duration of schemes and mid-term evaluation 139
2. Revision clause 140
3. Reporting and monitoring 140
4. Application to new aids 141
5. Accession of new Member States 142
6. Proposals for appropriate measures 142
7. Expiry 142
I. Common provisions
1. Introduction
(1) Article 107(1) of the Treaty on the Functioning of the European Union (hereafter "the Treaty") stipulates that, "(s)ave as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.".
(2) However, despite that general prohibition State aid may be necessary to address market failures so as to ensure a well-functioning and equitable economy. Therefore, the Treaty leaves room for the granting of State aid in respect of several policy objectives.
(3) With particular relevance to the agriculture sector and forestry, firstly in accordance with Articles 107(2)(b) Treaty, aid to make good the damage caused by natural disasters or exceptional occurrences shall be compatible with the internal market. Secondly, on the basis of Articles 107(3)(c) of the Treaty, the Commission may consider compatible with the internal market State aid to promote the economic development of the agriculture and forestry sector and in rural areas.
(4) In these Guidelines, the Commission sets out the conditions and criteria under which aid for the agriculture and forestry sector and in rural areas will be considered to be compatible with the internal market and establishes the criteria for identifying the areas that fulfil the conditions of Article 107(3)(c) of the Treaty. As regards aid granted pursuant to Article 107(2)(b), the Commission hereby sets out conditions which will be verified in order to determine that a measure indeed constitutes aid to make good the damage caused by natural disasters or exceptional occurrences is indeed covered by the exception.
(5) State aid to promote the economic development of the agriculture and forestry sector and in rural areas is enshrined in the broader Common agricultural policy (CAP)[1]. Within the CAP, the Union provides financial support to the agriculture and forestry sector and in rural areas. Because the economic effects of aid do not change depending on whether it is (even partly) financed by the Union, or whether it is financed by a Member State alone, the Commission considers that there should in principle be consistency and coherence between its policy in respect of the control of State aid, and the support which is granted under the Union’s own common agricultural policy. Consequently, the use of State aid can be justified only if it is in line with the objectives of this policy and, in particular, the underlying objectives of the CAP reform for 2020.
(6) The following European instruments are of particular relevance for state aid considerations related to CAP:
Ø Regulation (EU) No…/2013 [sCMO][2] of the European Parliament and of the Council establishing a common organisation of the markets in agricultural products, Regulation (Single CMO Regulation), which establishes common rules for agricultural markets. In particular, these rules concern public intervention in the markets, quota and aid schemes, marketing and production standards, and trade with third countries
Ø Regulation (EU) No…/2013 [DP][3], of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy, (DP Regulation), which governs direct payments granted directly to farmers in the form of a basic income support under certain support schemes.
Ø Regulation (EU) No…/2013 [RD][4],of the European Parliament and of the Council on support for rural development by the European Agricultural Fund for Rural Development (EAFRD) (Rural Development Regulation), which aims at promoting sustainable rural development throughout the Union in a complementary manner to the other instruments of the CAP (direct payments and market measures). It contributes to the development of a more territorially and environmentally balanced, climate-friendly and resilient, competitive and innovative Union agricultural sector and to the development of rural territories.
Ø Council Regulation (EC) No 3/2008 of 17 December 2007 on information provision and promotion measures for agricultural products on the internal market and in third countries[5], or any replacing regulation, which governs information and promotion measures for agricultural products and their method of production as well as for food products based on agricultural products carried out on the internal market or in third countries.
Ø Regulation of the European Parliament and of the Council (EU) 228/2013 laying down specific measures for agriculture in the outermost regions of the Union and repealing Council Regulation (EC) No 247/2006[6] (POSEI Regulation) and Regulation (EU) No 229/2013 of the European Parliament and of the Council of 13 March 2013 laying down specific measures for agriculture in favour of the smaller Aegean islands and repealing Council Regulation (EC) No 1405/2006[7] (smaller Aegean islands Regulation). Under these regulations, support programmes are designed to take account of the geographical and economic handicaps of those regions. The EU´s outermost regions benefit from the POSEI ("Programme d'Options Spécifiques à l'Éloignement et l'Insularité") arrangements.
(7) The CAP is based on two pillars: the first pillar consists of instruments related to the functioning of agricultural markets and the food supply chain (sCMO Regulation) and to direct payments (DP Regulation) conditional upon statutory management requirements, good agricultural and environmental conditions. Combined, these measures provide a fundamental layer of support to EU farmers, creating the basis for keeping sustainable farming in place throughout the EU. First pillar measures are mandatory for Member States and, with very few exceptions, there is no co-financing. This ensures the application of a common policy within the internal market. The second pillar of the CAP is the Rural Development policy which aims at improving the competitiveness of agriculture, the sustainable management of natural resources and climate action and a balanced territorial development of rural areas. Rural development measures are largely voluntary, contractual in nature, co-financed and delivered within a strategic framework and realised via rural development programmes meeting the Union's priorities for rural development at national, regional and local level. According to Article 39(1) of the Treaty, the CAP shall have as its objectives to increase agricultural productivity, to ensure a fair standard of living for the agricultural community, to stabilize the markets and to assure the availability of supplies reaching the consumer at reasonable prices. According to Article 39(2) of the Treaty, in working out the CAP and the special methods for its application, account has to be taken of the particular nature of agricultural activity, which results from the special structure of agriculture and from structural and natural disparities between the various agricultural regions, the need to effect the appropriate adjustments by degrees and the fact that agriculture constitutes a sector closely linked with the economy as a whole.
(8) Agriculture has to adapt to new realities and to face challenges in terms of food security, environment, climate change and keeping the rural economy alive. In order to address these major challenges, in the Communication on "The CAP towards 2020"[8] the Commission has outlined the following objectives for the future CAP: 1) viable food production; 2) sustainable management of natural resources and climate action; and 3) balanced territorial development.
(9) As an integral part of the CAP, the future rural development policy shall contribute to achieving the following objectives: (1) fostering the competitiveness of agriculture; (2) ensuring the sustainable management of natural resources, and climate action and (3) achieving a balanced territorial development of rural economies and communities including the creation and maintenance of employment. The achievement of these objectives of rural development shall be pursued through the following six Union priorities for rural development: (1) fostering knowledge transfer and innovation in agriculture, forestry, and rural areas; (2) enhancing farm viability and competitiveness of all types of agriculture in all regions and promoting innovative farm technologies and sustainable management of forests; (3) promoting food chain organisation, including processing and marketing of agricultural products, animal welfare and risk management in agriculture; (4) restoring, preserving and enhancing ecosystems related to agriculture and forestry; (5) promoting resource efficiency and supporting the shift towards a low carbon and climate resilient economy in agriculture, food and forestry sectors; and (6) promoting social inclusion poverty reduction and economic development in rural areas.[9]