Банкеръ Weekly



The summer that passed turned out to be quite hot for the Agriculture Ministry. Farmers' aggressive protests sent minister Valeri Tsevtanov to Brussels, begging the EU Commissioner on Agriculture and Rural Development Mariann Fischer-Boel to allow state subsidies. In fact Bulgaria itself is to blame for that problem as it has not ensured additional payments to the European subsidies in its national 2008 budget.
Passing of the 2009 budget is now at hand and the situation looks much the same. On one part, grain producers threaten with protests if the Government does not release the full amount of the permitted additional payments by the state. On the other hand, livestock breeders expect the Agriculture Ministry to work out a new subsidy for each animal, to be enforced as of next year.
The drama in fact began still when Bulgaria joined the EU and our country chose to pay to all farmers - no matter if grain producers or livestock breeders - the European subsidy to a hectare of used land plot. It was agreed that in the first years of Bulgaria's EU membership farmers would get 25% of the amount of subsidies, allocated to older EU members. In order to compensate the lower size of direct payments, however, the EC allows the new EU states to make additional payments to the direct subsidies for land. These funds can be allocated by the national budgets if they don't exceed 30% of the money in the old EU members. Thus, the rate of payments in our country could really reach 55% оf that in Western Europe back in 2007, 60% in 2008, and 65% in 2009. But Bulgaria is the only country which decided not to make use of the opportunity to release these funds.
We are not extending that money because in our country political parties use agriculture just as a slogan, Mihail Tachev, Chairman of the National Association of Milk Processors, claims to the BANKER weekly. The truth in fact is that there is no political will for that, adds the owner of the Dyado Liben dairy, who stayed away from the protests all summer because he believes the promised all-year-round subsidy for a litre of good-quality fresh milk was doomed.
In end-September the National Association of Milk Processors sent a letter to the Agriculture Minister Valeri Tsvetanov, to Finance Minister Plamen Oresharski, and to Premier Sergey Stanishev, pointing to the fact that BGN200MN of unused additional payments (of a total of BGN350MN allowed) were lost in 2008, while the draft budget for 2009 did not project any funds whatsoever, although the permitted financial resource was BGN378MN.
It's obvious that tension within the branch would be far less if that money were set aside and used. Instead livestock breeders now constantly quote their Romanian colleagues whose Government has projected subsidies per litre of fresh milk and per each animal (about EUR170 per cow annually).
In Bulgaria the blame for the lack of such subsidies was thrown onto the National Veterinary and Medical Service which allegedly delayed working out an identification system for animals. In fact, as the BANKER wrote in its previous issue, such a system exists and operates but nobody in the state has so far made a decision to bind it with the Payment Agency, i.e. the authority that effects such payments.
There is really no problem for paying such a subsidy. Bulgaria may start paying per animal in 2009. We do not need to ask for EC's permission for that, but only prepare a notification procedure, Deputy Agriculture Minister Svetla Buchvarova told the BANKER. According to Mr. Tachev, however, the procedure should include also an amendment to the Agricultural Producers Assistance Act which explicitly stipulates that for the time being European subsidies are payable per land. The Council of Ministers should demand from the Agriculture Ministry to decide how to distribute these funds, he adds. However, the ministry's experts could not find time to answer our questions if there was such a decision.
The argument about additional national payments is yet to come. The Chairman of the Association of Grain Producers, Krassimir Avramov, told the BANKER that the Agriculture Ministry has projected to require to plan in the 2009 budget the entire allowed amount of additional payments for the sector. However, that is yet to be discussed by the tripartite coalition. According to Mr. Avramov, one of the main arguments for setting aside such money is the fact that our grain producers' competitiveness is some 4-5 times lower than that in the EU. We have no well-developed market and we don't have money to introduce the good European practice, Mr. Avramov underscored.
Let's hope Bulgarian rulers would this time manage to foresee better the needs of our farmers.

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