Poland S Application for EU Funding to Compensate for Losses in the Porkmeat Sector In

Working translation

Warsaw, 3 November 2016

Poland’s application for EU funding to compensate for losses in the porkmeat sector in Poland resulting from restrictions imposed to control ASF and funding for compensations for farmers for abandoning keeping pigs as a consequence of failing to comply with bio-security requirements

African swine fever was confirmed in Poland for the first time in February 2014 (in the Sokółka poviat, Podlaskie Voivodeship) – the first cases of ASF were reported in feral pigs. By 1 November 2016, a total of 121 cases of ASF in feral pigs were confirmed.

In 2014 and 2015, three ASF outbreaks were found also in domestic pigs.

In 2016 (beginning in June, with the highest intensity in August and September), another twenty ASF outbreaks have been found in domestic pigs (as at 1 November 2016).

The introduced veterinary restrictions have a major negative impact on the economic aspect of the performance of holdings with pigs, as well as slaughterhouses and processing plants located in the area covered by these restrictions.

The occurrence of ASF in the herd causes a significant decline in production. The infection is slow and affects a significant proportion of animals in the herd, with mortality as high as 100%. The occurrence of ASF causes financial losses related primarily with costs associated with the eradication of the disease in holdings where it has been found (associated with, among others, the killing of animals from infected herds and disposing of their carcasses, necessary cleaning and disinfecting of infected premises and laboratory tests), as well as strict restrictions on the sale, movement and exports of pigs or pigmeat, both in Poland and abroad. Losses are suffered directly by farmers dealing with pig production in zones covered by restrictions, due to lower market prices, difficulties selling pigs and keeping them for a longer period.

Veterinary restrictions and their impact on the situation on the market

Pursuant to the Commission Implementing Decision 2014/709/EU[1] as amended by Commission Implementing Decision (EU) 2016/1900, the following zones have been established on part of the Polish territory: protection, restricted and surveillance ones.

These Decisions will be valid until 31 December 2019.

Pursuant to the provisions of this Decision, the concerned Member States shall prohibit:

a) the dispatch of live pigs from the areas listed in Parts II, III and IV of the Annex to the Decision;

b) the dispatch of consignments of porcine semen, ova and embryos from the areas listed in Parts III and IV of the Annex;

c) the dispatch of consignments of pig meat, pig meat preparations, pig meat products and any other products containing such meat from the areas listed in Parts III and IV of the Annex;

d) the dispatch of consignments of animal by-products from porcine animals from the areas listed in Parts III and IV of the Annex.

The decisions provide for prohibitions and derogations therefrom, which can be applied only when strictly defined additional requirements have been met. It should be emphasized that not only difficulties related to meeting the conditions allowing for the movement of pigs, and hence lack of interest on the meat market in these animals, are a serious impediment to maintaining profitable production in these areas. Moreover, in accordance with SANTE/7112/2015 of 7 October 2015, the duration of restrictions imposed on these areas makes it impossible to plan production rationally..

In 2016, in the protection area established by way of the most recent decisions, restrictions on the movement of pigs have caused problems relating to the demand for pigs and pigmeat from this area. Slaughterhouses avoid purchasing pigs from this area, because their customers are not interested in buying such meat. There is thus a serious problem of the loss of customers’ confidence.

Furthermore, particular difficulties selling pigs have occurred in the Polish administrative territories covered by restrictions provided for in the Commission’s Decision 2016/1367/EU and Decision 2016/1406/EU, under which Poland has been obliged to establish a protection zone and a surveillance zone, in which there is a ban on removing pigs from holdings as a rule for 40 and 30 days, respectively.

In accordance with Council Directive 2002/60 EC of 27 June 2002, the following restrictions for pig producers shall apply in the protection zone:

- pigs may not be removed from the holding in which they are kept for at least 40 days after the completion of the preliminary cleansing and disinfection. After 40 days, provided a relevant permit has been granted, pigs can be transported directly to a designated slaughterhouse within the protection zone for the purpose of immediate slaughter or to a processing plant where carcasses are processed under official supervision’

In the surveillance zone:

Pigs may not be removed from the holding in which they are kept for at least 30 days after the completion of the preliminary cleansing and disinfection. After 30 days, the competent authority may authorize the removal of the pigs to be directly transported to a designated slaughterhouse, preferably within the surveillance zone, to a processing plant where the pigs are immediately slaughtered and the carcasses are processed under official supervision (Article 11).

Furthermore, fresh meat from these pigs must be cooked, processed at a high temperature of 80°C or pasteurized at 120°C.

As a result of the measures applied with respect to animal health, as well as veterinary measures, trade in piglets and pigs for fattening as well as their transport in the areas covered by Annex 1 are temporarily restricted. The restrictions result in pigs for fattening growing too much and getting too much fat tissue. Moreover, lack of continuity in sales in these holdings generates:

additional costs of having to keep animals for a longer time
significant losses in revenue, and
has a negative impact on production profitability.

Furthermore, in holdings covered by the veterinary restrictions, the welfare of pigs in pig houses is threatened. The production process is continued, which – given the fact that pig for fattening are not allowed to be sold – entails the risk of excessive density of animals in livestock buildings.

Restrictions on the free movement of goods resulting from the application of these veterinary measures have seriously destabilized the pigmeat market in Poland.

Poland requests the European Commission for:

(1) Financial support from the EU for:

(a) Compensation for pig producers for lower purchase prices of live pigs and piglets for pig producers continuing production in the area covered by the veterinary restrictions

Legal grounds:

Article 220 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organization of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 (OJ L 347 of 20.12.2013, p. 671, as amended).

Description of the mechanism:

Beneficiaries

The beneficiaries are a pig producers keeping animals in the area specified in Appendix 1 thereto.

Calculation of the financial consequences of the proposed solution:

Carcass weight – 100 kg of the warm carcass weight (wcw);

Support per kg of carcass weight – PLN 2*[*];

Maximum amount of support per animal – PLN 200 (EUR 46.2), i.e. 100 kg of carcass weight (if the carcass weighs less than 200 kg, the amount is calculated proportionally; if the carcass weighs more than 200 kg, the support amount equals 100% of the maximum amount per animal);

Support per piglet – PLN 67 (1/3 of the amount for a pig for fattening);

The number of pigs in the zones– 266 064 (according to Appendix 1 thereto).

Table 1 Calculation of the costs of compensations for pig producers.

Pig category / Number of pigs by categories / Support amount per animal / Cost of the support program
PLN / EUR*
Piglets / 67 580 / PLN 67 zł/szt. / 4 527 860 / 1 048 116
Other / 198 484 / 2 zł/kg
2 / 39 696 800 / 9 189 074
Total / 266 064 / 44 224 660 / 10 237 190

* Euro exchange rate: EUR 1 = PLN 4.32

Period covered by compensations:

From 1 August 2016 to 30 November 2016 – this period results from restrictions on sales and processing of pigs kept in the zone.

(b) Compensation for the lower value of meat from pigs kept in the area covered by the veterinary restrictions and additional costs of processing.

Legal grounds:

Description of the mechanism:

Customers (processing plants, supermarkets) are not interested in purchasing pigmeat from the zones affected by ASF.

Beneficiaries

The beneficiaries are entities obtaining and processing meat from pigs from the areas specified in Appendix 1 thereto.

Supports concerns compensation for the difference between the value of fresh pigmeat and that of heat-treated pigmeat, and involves compensation for economic losses suffered by operators for this reason.

Support per kg of pigmeat – PLN 2 (according to calculation in in Appendix 2 thereto)

The quantity of meat eligible for support: 198 484 animals x 100 kg = 19 848 400 kg

19 848 400 kg x PLN 2 = 39 696 800 PLN (9 189 074 EUR)

Table 2 Calculation of the costs of compensations for meat plants losses.

Numer of pigs
(heads) / Average weight of slaughtered animal (kg) / Suport amount (PLN/kg) / Cost of the suport program
PLN / EUR*
198 484 / 100 / 2 / 39 696 800 / 9 189 074

* Euro exchange rate: EUR 1 = PLN 4.32

Period covered by compensations:

From 1 August 2016 to 30 November 2016 – this period results from restrictions on sales and processing of pigs kept in the zone.

(2) EU support to compensate for the prohibition to keep pigs for sanitary reasons in holdings located in the zones covered by the veterinary restrictions (Parts I, II and III of the Annex to Commission Implementing Decision 2014/709/EU)

Legal grounds:

Article 219 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organization of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 (OJ L 347 of 20.12.2013, p. 671, as amended).

Description of the mechanism:

In the case of small holdings, the cost of implementing bio-security measures and complying with all bio-security requirements are high and farmers are unable to meet more stringent bio-security requirements. Having verified the level of adaptation to these requirements in holdings, veterinary services will issue a decision ordering to discontinue pig production. Producers will be entitled to compensation for the loss of income generated so far.

 Beneficiaries:producers of pigs intended for slaughter or breeding of piglets intended for further breeding in the areas listed in Parts I, II and III of the Annex to Commission Implementing Decision 2014/709/EU;having their pigs registered in the Animal Identification and Registration System.

Calculation of the financial consequences of the proposed solution:

The support will be paid for the period of 36 months as compensation for the prohibition to keep pigs in holdings for sanitary reasons in the zones covered by the veterinary restrictions. The support amount will be calculated by a degressive method and will depend on the number of pigs in the holding:

- 100% of the support amount will be paid to producers keeping from 1 to 299 pigs;

- 75% of the support amount will be paid to producers keeping from 300 to 1,999 pigs;

- 50% of the support amount will be paid to producers keeping more than 1,999 pigs.

The compensation amount will be calculated as the total recorded number of slaughter pigs or piglets for further breeding sold in the reference period (12 months). Suggested reference period: July 2015 – June 2016.

The compensation amount will be PLN 100 per animal, and will be paid for the number of pigs sold during the reference period and declaring not to keep pigs for three years.

In the case of piglets this will be PLN 80 per animal (acoording to data from Appendix 3 thereto).

Under the assumptions specified above, the cost of the program has been calculated as follows:

the number of pigs sold in the reference period (1 July 2015 – 30 June 2016), broken down into piglets and other, multiplied by the compensation amount.

Table 3 Calculation of the costs of compensations for pig producers for the prohibition to produce (according to Appendix 4 thereto).

Pig category / Number range / Number of pigs within the range / Degression
(%) / PLN/animal / Cost of the program (1 year) / Cost of the program (3 years)
PLN / EUR / PLN / EUR
Piglets / 1-299 / 24,831 / 100 / 80 / 1,986,480 / 459,833 / 5,959,440 / 1,379,500
300-1,999 / 75,568 / 75 / 60 / 4,534,080 / 1,049,556 / 13,602,240 / 3,148,667
over 1,999 / 93,938 / 50 / 40 / 3,757,520 / 869,796 / 11,272,560 / 2,609,389
other / 1-299 / 326,074 / 100 / 100 / 32,607,400 / 7,548,009 / 97,822,200 / 22,644,028
300-1,999 / 610,379 / 75 / 75 / 45,778,425 / 10,596,858 / 137,335,275 / 31,790,573
over 1,999 / 157,229 / 50 / 50 / 7,861,450 / 1,819,780 / 23,584,350 / 5,459,340
Total / 96,525,355 / 22,343,832 / 289,576,065 / 67,031,497

*EUR 1 = PLN 4.32

Period for cessation of the production

by 30 June 2017

Deadline for submitting applications: 60 days from the date of production cessation in the holding .

Complementary measures introduced to counteract the spread of the ASF virus in Poland

1.Support for preventive measures in holdings keeping pigs and support for alternative types of production for holdings abandoning pig production – RDP 2014-2020

Proposed amendments to the RDP 2014-2020, aimed at limiting the spread of ASF in Poland

Due to the fact that the currently designated area covered by restrictions aimed at eradication of ASF is dominated by small holdings in which pigs are kept, it is proposed – in order to reduce their number and the risk of the spread of ASF – to identify separate schemes under two support mechanisms: Restructuring of small holdings and Bonuses for starting a non-agricultural business.

Support in the form of bonuses will amount to PLN 60 thousand in the case of Restructuring of small holdings, and PLN 100 thousand in the case of Bonuses for starting a non-agricultural business, and will be intended for those farmers who will meet the eligibility criteria and will accomplish objectives defined in their business plans. It should be noted that under both aforementioned support instruments, support will be granted only to those entities that have ceased pig production.

Amendments to the RDP for 2014-2020, accepted by the Monitoring Committee and forwarded to the European Commission, will allow for amending national legislation and their implementation.

Due to the fact that the allocation of funds with respect to these sub-measures to the individual voivodeships (even though their implementation has not been started yet) has already been determined, applications under the above-mentioned schemes will be financed with additional funds from the reallocation of those measures under the RDP 2014-2020 in the case of which possible relocation of funds can be already identified at this stage of the implementation of the program.

The schemes will have a separate budget, one for the whole country, to finance exclusively operations carried out in holdings located in the areas covered by restrictions related to the eradication of ASF.

Given the assumed goal, the new schemes will require to adapt the selection criteria and change the approach to some eligibility conditions. It should be emphasized that the establishment of the new schemes, with a separate budget, exclusively for farmers involved in pig production in the areas covered by restrictions related to the eradication of ASF, will make access to the funds easier for them.

Complementary measures will concern the target group defined above will include advisory and training, primarily for beneficiaries in the area affected by ASF, financed from the RDP 2014-2020.

Promoting investment in preventive actions.

In June 2016, the Monitoring Committee for the RDP 2014-2020 adopted a resolution extending the group of potential beneficiaries in the sub-measure “Support for investments in preventive actions aimed at reducing the consequences of probable natural disasters, adverse climatic events and disasters” (5.1). This change will enable to support farmers (pig producers keeping herds with at least 300 pigs), located in the zones designated for the eradication of ASF, for the implementation of investment operations involving the construction of infrastructure needed to create appropriate bio-security conditions: fences and troughs for disinfection. The maximum support amount will be PLN 100 thousand.

2. The Bio-security Program aimed at preventing the spread of African swine fever by compensating for losses – the Program is funded in total with domestic funds.

Pursuant to the Act of 11 March 2004 on the protection of animal health and eradication of animal infectious diseases (Journal of Laws of 2014, item 1539, as amended), the Chief Veterinary Officer has developed a bio-security program aimed at preventing the spread African swine fever. The program was implemented under the Regulation of the Minister of Agriculture and Rural Development of 3 April 2015 on the introduction of the Bio-security Program aimed at preventing the spread of African swine fever for 2015-2018 (Journal of Laws item 517), and then amended by the Regulation of the Minister of Agriculture and Rural Development of 11 May 2016 amending the Regulation on the introduction of the Bio-security Program aimed at preventing the spread of African swine fever for 2015-2018 (Journal of Laws item 679) which entered into force on 26 May 2016. Applications to the Agency for Restructuring and Modernization of Agriculture could be filed by September 2016.

3. Culling of feral pigs

Pursuant to the Regulation of the Minister of Agriculture and Rural Development of 19 February 2016 on ordering to cull feral pigs (Journal of Laws item 229), feral pigs continue to be culled in the areas specified in the Annex to the said Regulation to reduce the density of the population of feral pigs to 0.5 animal/km2. At the same time, the Board of the Polish Hunting Association issued Decree No. 9/2016 of 7 September 2016 which obliges Regional Master Hunters from the Polish Hunting Association to take immediate action to intensify the hunting of feral pigs throughout the country in the current marketing year and reduce the target density of this species’ population to 0.5 animal/km2 in the hunting year 2017/2018 and in the long-term breeding plans for 2017-2027.

A lower density of the feral pig population will help to reduce the risk of the ASF spread. Feral pigs are being culled on areas neighbouring with Belarus, Ukraine and the Kaliningrad Oblast. Keeping the feral pig population density at a low level will help to reduce the possibility of transmitting the African swine fever virus among feral pig packs.

Conclusions:

By presenting the comprehensive support program for the pigmeat sector described above, Poland requests for financial support:

(1) to compensate for losses resulting from the veterinary restrictions imposed on both producers and slaughterhouses and processing plants in the form of: compensation for lower purchase prices of live pigs and piglets for pig producers continuing production in the areas covered by the veterinary restrictions, and compensation for the lower value of meat from pigs kept in these areas.