State Fund Agriculture

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Ministry of Agriculture

Interviews - 900 million Levs are going to farmers in 5 days

Subsidy per hectare will reach 40 Levs

Mr. Porozhanov, is there any clarity when Fund Agriculture will begin paying subsidies for farmers fields? What will be the subsidy per hectare?

 The agricultural layer of eligibility of areas for 2014 was provided by the Ministry of Agriculture in the beginning of December. The first payment of subsidies for land is expected in the period from 25 to 30 January this year. I would specifically like to emphasize that in the end of last week I had a conversation with the Minister of Finance Mr. Vladislav Goranov, and I have the assurance that the financial resource of 850-900 million Levs for this payment will be provided to us. The subsidy per hectare is expected to be 27 Levs. You may notice a slight decrease as compared to last year - from 30 Levs to 27 Levs per hectare. The reason is that the declared areas for aid are 3,845 million hectares, and we justified with the EC aid for 3 492 hectares. The increased area for which subsidy is requested, imposes a reduction of about 10% of the subsidy per hectare. This payment in January will not cover payment for subsidies for plots where there is an overlap, i.e. at least two farmers claim to have cultivated them last year. No redistribution payments will be paid - this is a new scheme, which was launched for the first time and provides additional funds for the first 300 hectares cultivated by farmers. Payments for complaints of farmers can not be paid in January, either.

 When will be the redistributive payment you mentioned done, and what will be its extent?

 We must be tolerant to the fiscal reserve. The subsidies paid in January should be refunded by Brussels to the Bulgarian budget by 5th March this year. So my forecast is that this additional payment of about 150 million Levs will be made in late March - early April. Redistribution payment for the first 300 acres is expected to be 12.38 Levs per hectare. So by this spring the total subsidy to farmers from the two tranches will be about 40 Levs per hectare. 

-                     How many farmers tried to deceive the administration and fragmented their farms in order to receive additional subsidies?

-                     The artificial fragmentation, intended both to get unlawful redistributional payment and to circumvent the cap - a farmer can receive up to € 300,000 per year, is a serious risk and the European regulations require each EU country to create controls to prevent artificial fragmentation. Currently about 170 candidates have been identified with reduction of the areas under 300 hectares, so they have the possibility to receive redistributional payment. Of course we can not say that this is done artificially or intentionally. No controls have been signed off currently. We expect the Ordinance to be ready in the second half of January, but thorough checks will certainly be carried out before payment. I recommend to the Ministry of Agriculture to examine how other EU countries check for artificial fragmentation, because it is necessary for the administration to have sound evidence. Otherwise our sanctions will not stand in court proceedings.

-                     In March Bulgarian farmers will apply for the first time under new schemes for direct payments - for young farmers, for small farmers, for green component, for cotton, etc. In terms of software is the fund ready for the new schemes, is there a risk some of them not to start?

-                     It is not accidental that the EC gave one year extension to start the schemes and applying will now be from 1st March so that the EU countries will have time to prepare. Unfortunately I must note that for many months Bulgaria did absolutely nothing, both in the Ministry and the Paying Agency, for the introduction of requirements for new subsidies. The first activities actually began with the caretaker government. Currently teams of the Ministry of Agriculture and the fund work on the schemes on a daily basis. The application form for subsidies is almost completed, it is being pilot tested in some municipalities. So we consider that the Fund's software training will begin in the second half of January this year, and by the start of the campaign all new schemes will be open. 

-                     There will be separate direct subsidies to young farmers, what are the requirements?

-                     For young farmers it is being discussed for the first 300 hectares to receive up to 25% in addition to the basic subsidy. Of course, there is a requirement for them to be under the age of 40. The final regulations will be clear within the next 2 weeks, when the Ministry's Ordinance will be ready.

-                     There will be a new scheme for the small farmers...

-                     For them the aid will be for areas of at least 5 hectares. The subsidy will be calculated individually depending on the size of the farm.  According to the regulations the subsidy should be between EUR 500 and EUR 1250 per farmer, and not all will receive the cap of EUR 1250, as such information is being circulated currently. The minimal amount is guaranteed, not the maximun. The good thing is that the farmers who have applied now will receive the same subsidies until the end of the Programme's period in 2020. The requirement is that they keep their farms and cultivate the land.

-                     Did our country lose only 50 million Euros under the Rural Development Programme?

-                     Yes, the loss is approximately within these parameters. I would like to point out that last year EUR 428,8 million were paid under this Programme, of them EUR 347,5 million were from the EU, the rest were co-financed by the state. The budget, which we should have absorbed was EUR 397,7 million from the EU, or the loss was about EUR 50 million. After some accounting adjustments are made the loss would be EUR 50 -53 million. For us the challenge was great, because according to preliminary estimates the loss amounted to EUR 120 million.

-                     How much money do you have to pay under the Programme this year and do you expect further loss?

-                     The budget is similar - betweenEUR 390 and 400 million. However, I'm rather inclined to think that prhaps there will not be enough money because the previous regular government over-negotiated the measures. The total subsidy of the contracted projects exceeds EUR 1 billion. Of course there are many projects of farmers, that because of the crisis will not be completed, the Russian embargo on exports also contributes. Immediately, however, we must learn a lesson for the new programming period. Why not regulating that if the entrepreneur realizes that he can not realize his investment, he is obliged to inform Fund Agriculture within 6 months, and not we to be the last to find out.

-                     You said that the money under the Programme may not be enough, will you seek opportunities for these projects to be subsidized by the new program 2014-2020?

-                     This possibility has been communicated with the EC, especially for public, municipal projects. I personally believe that this opportunity should be used. In farming projects I can not say whether currently there is such a possibility.

-                     Are you ready to head the BNB if its current Governor Ivan Iskrov decides to listen to the appeal of Prime Minister Boyko Borisov and resign?

-                     As we see, the preconditions for this are not happening. I hadn't thought on this issue in the last few weeks.

-                     And why did you have to think on it?

-                     Because I found it interesting. There is no such issue for me, at least no one raised it. So whether a name is mentioned, in the media or not, it does not mean that the information is backed up with a story.

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