TALLINN – While the pending increase in direct subsidies for Estonian farmers is welcome, the subsidies will grow to 80 percent of the EU average and that ratio could have been higher still, Roomet Sormus, head of the Estonian Chamber of Agriculture and Commerce, told Postimees.
For the EU's next seven-year budget period 1.35 billion euros has been earmarked in direct support for Estonian farmers, 35 percent more than for the current period. In addition, 638 million euros will be added in support for rural life under the long-term budget and 64 million euros under the plan for restarting the economy.
If at present direct support amounts to 177-178 euros per hectare, equaling 66 percent of the EU average, it is set to rise to 200 euros per hectare by 2022 and to 215 euros per hectare, or 80 percent of the EU average, by 2027.
Sormus told Postimees that while the increase in subsidies is welcome, it could have been bigger still.
"Our long-term objective is for agricultural support in the EU to be equalized. Since joining the European Union, Estonian farmers have received much, much lower subsidies than their competitors in many other states," he said.
The head of the Estonian Chamber of Agriculture and Commerce pointed out that higher direct subsidies come with a downside.
"Also the environmental requirements applied to agricultural producers, animal welfare requirements and other bureaucratic obligations which require very big investments and mean additional costs for farmers will increase significantly in the new period," he said.
Sormus added that in light of that, he would have expected a substantially bigger contribution from the EU when it comes to rural life funding, as it is specifically the fund for rural development that is contributing to investments and environmental sustainability.
If we look at the second pillar of the EU agricultural policy, meaning the fund for rural development, the subsidies paid to Estonia from it will decrease in the future instead, he said.
"We are anticipating a cut of approximately 20 million euros there compared with the current period, however it's too early to estimate now whether this also means a cut for rural businesses and the rural development program because the co-financing obligation of Estonia will grow significantly in the new period," Sormus said.
On the upside, Sormus pointed out that capping, meaning the cutting back of income support for major agricultural producers, is optional for the member states.
"Considering the structure of our agricultural enterprises, it's good that Estonia gets the freedom to decide on this subject," Sormus said, adding that it also must not be forgotten that the European Parliament has vocally demanded cuts in major subsidies and that the final decision depends on agreements to be made in the future.