A European Commission proposal to allow member states to pay a lump sum of up to €15,000 to farmers and up to €100,000 for small and medium enterprises affected by rising input costs is generating some confusion.

While there is potential in the proposals, made last week, the devil is in the detail when it comes to realising the headline payment figures. Such lump sum payments are unlikely in an Irish context or if they do materialise, the funding available would only allow these levels of payments to be made to a minority of those affected.

This is due to the fact there is no new funding being apportioned to the proposal which is essentially a relaxation in rules to allow member states to reapportion monies from their Pillar II budget.

The Commission proposal states: “as this modification will be financed through amendments of Member States’ rural development programmes within the agreed envelopes, no extra payment appropriations will be needed overall, with any payments for this measure to be compensated by lower payments on other rural development measures”.

The pot of money available to fund the proposals is a maximum of 5% of a member states Pillar II budget for the years of 2021 and 2022.

While there is disappointment that there is no new funding source, the opportunity to allow member states to reapportion funds is being welcomed in the context that unspent funds can be reallocated.

Minister for Agriculture Charlie McConalogue made reference to the proposals in Brussels this week where he welcomed the Commission’s response to the income crisis facing farmers.

Support package

“I have welcomed the Commission’s support package, including the provision of exceptional aid, the new temporary State aid framework and the potential use of rural development funding,” he said.

Payments will be funded from the 2023 budget and must be made by 15 October 2023.

If member states decide to avail of the mechanism they will have to submit a modification to their rural development programme(s) to introduce the new measure.