State Fund Agriculture

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Ministry of Agriculture

Interviews - There will be more money for rural tourism

Did rural areas become wealthier after we joined the European Union? How much money will farmers receive this and next year? How does the economic depression affect the absorption of EU funds? We spoke with Rumen Porozhanov – the executive director of State Fund Agriculture.

By Y. Uzanicheva
- Mr. Porozhanov, how much money has State Fund Agriculture paid out to rural areas as of today?
- As of last week, we have approved proposals worth 434 million euro under all measures of the Rural Development Programme (RDP). Ninety-nine per cent of these projects were contracted in 2011. We have settled all delayed 2009 contracts and almost all 2010 contracts have been finalised as well. There are about 100 proposals remaining – ones that deal with the reconstruction of monasteries and churches where we have some delays because of problems with ownership documents. Next week, we will finalise some of these proposals. According to our prognosis, we should be able to contract an additional 50 million euro by the end of the year. We opened four new application periods under Axis 3: diversification into non-agricultural activities; support for the creation and development of micro-enterprises; encouragement of tourism activities. These will begin on November 8th or 9th. Later, there will be new application periods under the measures for modernization of holdings as well as the municipal measures for building roads.
- Will there be any additional funding for modernisation of holdings and setting up young farmers?
- We strongly hope that our demand to transfer more funds to Measure 121: Modernization of agricultural holdings will be approved. We are also making an effort to provide an additional 100 million euro for municipal projects – mainly for road construction. We are also claiming an extra 40 million euro for young farmers’ holdings. We will likely revise this measure by strengthening the control on making payments. As of now, we have paid out 608 million euro from the European Agricultural Fund for Rural Development, which is 23% of the entire sum we have to absorb by 2013. Axis 2, which deals with green payments, is very problematic for us. The budget for agri-environment is meant to provide 255 million euro to roughly 40,000 landowners but at the moment we only have about 2 000 bio-farmers. 
- How many proposals under the RDP have been turned down?
- Over 15 600 candidates applied for a total of 5.6 billion leva. We have approved 10 685 applications and subsidies worth 2.3 billion leva. That comes up to 43% of the budget of the programme. The main reasons for the discrepancy between the number of applications and the number of approvals are insufficient budgeting, missing documentation, troubles meeting all the requirements. There are no problems with the administrative process and we do our best to keep all documentation grouped up without delaying certain proposals, while pushing others ahead. I must point out that the programme requires all beneficiaries to pay off their debt to the state in order to be eligible for funding. However, it is difficult for our beneficiaries to come up with the necessary financial resources despite the opportunity to apply for a 50% advance payment. A number of our beneficiaries eventually fail to perform their contracts within the stipulated two-year period. This is why we will offer a legislative change – a new clause that would give beneficiaries the option to notify us of such developments. This means that if a certain beneficiary is unwilling or unable to perform his or her contract for market or financial reasons, he or she would have to notify us of this within the first six months of signing the contract in order not to incur penalties. The way it works right now is that, if a contract is violated, the funds are blocked for two years and other beneficiaries cannot use the money.    
- How many contracts have been violated?
- I can’t give you a concrete number, but the trend is obvious and it started in 2009 when the economic depression began.  
- When are the 2011 direct payments due?
- The registration period for direct payments and stock-breeding subsidies is now over. The subsidies under the Single Area Payment Scheme (SAPS) will increase by 10% so the EU funding for a unit of land will become 22 leva, with an additional 8 leva in complementary national payments. Overall, direct area payments will reach 30 leva, which is 2 leva more than last year. The complementary national payments are now 8 leva as opposed to 10 leva last year. This difference will free an additional 55 million leva. The sum will be distributed among sectors that have not received funding so far – plant-growing, fruit-growing, poultry-farming and pig-breeding. As for the area payments, we have an agreement with trade organisations to pay out 90% of the EU funds by January 31st 2012. We are doing our best to meet that deadline. Unfortunately, over 50,000 beneficiaries, which is more than half of them, have declared overlapping lands. In December we will make payments to stock-breeders both from The European Agricultural Guarantee Fund (EAGF) and the national budget. These payments will amount tor 53 million leva. Our goal is to make all agri-environmental payments in December. Last year, we completed payments under the SAPS in April, but now we are trying to pay everything earlier so both farmers and the country’s economy can benefit from the funds earlier.
- Does next year’s national budget allot enough money to farmers? 
- Financing is very important and we focus a lot of our efforts there. Next year, the funding for stock-breeding is supposed to reach its ceilingl, which is about 72-73 million leva. The overall sum the state will dedicate to agriculture next year, including tobacco-growing, is around 500 million leva This is 30-40 million leva more than what we had this year. This is the plan we proposed and we hope it will be adopted next year.
- When will the fund make compensatory payments for excise duty on fuels?
- The State Fund will function as an executive agency, while the ministries of agriculture and finance will deal with sending the notifications to the European committee. They contain the requirements, procedures, and scale of this type of state aid. Depending on the aid that gets approved, the State Fund will give out vouchers to beneficiaries, which they could redeem. Judging by the rate at which the notification process is going, the aid will probably be applied in 2012.  
- The European Commission announced its proposals for changes to the Common Agriculture Policy. How will the changes affect Bulgaria?

- Several committees are examining the changes right now. One proposal is to introduce the notion of “active farmer”, which means that funding would be paid only if 5% of the holding’s income is generated by agriculture. Another proposal is to set the subsidy limit per registered farmer at 300,000 euro. A third proposal is to have the so-called green measures make up 30% of the budget for direct payments. The axes under RDP will disappear. This will allow for greater flexibility when distributing resources. The market is becoming more accommodating. All of that will be considered and debated. Our expectations are to not suffer any cuts and, especially when it comes to direct payments – to receive more funding. We are currently on schedule when it comes to reaching the level of payments of the oldest EU members. Right now we receive 60% of that level and the amount increases by 10% each year. There should be no concerns when it comes to the budget, but we will have to adapt to the new conditions quickly.

17 899 635 BGN

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