Ireland could use Exchequer funding to cover up to half of the fertiliser and fuel price spikes imposed on farmers since the end of February, under European Commission proposals.

EU state-aid rules determine how much and what type of temporary supports member states can offer sectors of their economies under strain.

Member states were asked by the Commission on Friday to provide feedback on a proposed relaxation of the rules in response to Iran war-related disruption of fuel, fertiliser and energy markets.

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Fertiliser prices currently stand “around 58% above 2024 averages,” the draft Commission document states.

These draft plans - which have yet to be officially announced - suggested that up to 50% of the price rise of farmers’ fuel and fertiliser could be covered by national-level schemes funded by Government, up to a cap of €50,000.

Price rise

The share of the price rise that could be covered by the State could increase to 100% if the fuel and fertiliser supports were only loaned to farmers - to be paid back in the future, the draft proposal document states.

The document suggests that haulage subsidy schemes similar to those that could be offered to farmers would also get the go-ahead, if EU countries back the Commission’s plans.

“The Commission has learnt from past crises that swift action and targeted flexibility are key to containing the hit of geoeconomic repercussions for Europe,” it says.

“As in previous crises, the Commission considers it necessary to respond quickly to mitigate risks for the economy, while protecting competitiveness and the level playing field with the single market.”

No sign of dropping CBAM

One area not referenced in the draft is the Carbon Border Adjustment Mechanism (CBAM) that has been levied on fertilisers imported into the EU since January.

CBAM is intended to place a cost on the carbon emissions associated with imported energy-heavy goods, including fertiliser, that is not levied in the form of carbon taxes in the country of origin.

The measure is intended on levelling the playing field for EU manufacturers, which is the reason cited by Commissioner for Agriculture Christophe Hansen last month when he rejected calls to suspend the levy in light of the fertiliser price increases.

A fertiliser action plan is also to be put forward by the Commission before the end of June to improve the “availability and affordability” of fertilisers.

However, although the Commission has hinted that some of the plan’s measures are to be farmer-focused, the decarbonisation of the fertiliser sector is to remain a key objective of the strategy.