Commission approves €500 million French State aid scheme to support investments in agriculture

The European Commission has approved, under EU State aid rules, a €500 million French scheme to support investments in holding companies active in agricultural primary production. The measure will contribute to the achievement of the objectives of the Common Agricultural Policy by fostering the development of a smart, competitive, resilient and diversified agricultural sector that ensures food security, while supporting and enhancing environmental protection and promoting climate action.

The French measure

France notified the Commission of its plan to support investments in agricultural holding companies, in a context where the agricultural sector faces the dual challenge of (i) maintaining and developing the ability to produce food sufficiently and (ii) its adaptation to climate change. The aim is to promote the sustainable development of the sector by strengthening its economic competitiveness, while ensuring environmental protection and animal welfare. The scheme will also focus on supporting young farmers with the goal to facilitate generational renewal in agriculture. The scheme, with a budget of €500 million, will run until 31 December 2029.

Under the scheme, the aid will take various forms such as direct grants, interest rate subsidies, low-interest loans, repayable advances, guarantees, as well as tax advantages. The scheme will be open to i) small and medium agricultural holding companies; ii) large hatcheries that will make investments aimed, in particular, at improving animal welfare; and iii) local and regional authorities engaged in economic activity in primary agricultural production. The aid will cover between 65% and 100% of the eligible costs.

The Commission’s assessment

The Commission assessed the French scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (‘TFEU’), which allows Member States to support the development of certain economic activities under certain conditions, and under the 2022 Guidelines for State aid in the agricultural and forestry sectors and in rural areas (‘2022 Agricultural Guidelines’).

The Commission found that:

• The measure supports investments in the primary production of the agricultural sector, and therefore facilitates the development of an economic activity.
• The scheme is necessary and appropriate to ensure that holding companies active in agricultural primary production make significant investments. It therefore supports the general objective of the Common Agricultural Policy of fostering a smart, competitive, resilient and diversified agricultural sector that ensures long-term food security in the EU, while remaining economically sustainable. In addition, the aid is proportionate, as it is limited to the minimum necessary.
• The aid will have an ‘incentive effect’ as the beneficiaries would not carry out the investments without the public support.
• The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU.

On this basis, the Commission approved the French scheme under EU State aid rules.

Background

The 2022 Agricultural Guidelines provide guidance on how the Commission will assess the compatibility of aid measures in the sector, which are subject to the notification requirement, under Article 107(3)(c) TFEU. The Guidelines create a flexible, fit-for-purpose enabling framework to help Member States provide the necessary support and contribute, among other things, to the objectives of the Common Agricultural Policy. The 2022 Agricultural Guidelines aim to help Member States design national measures and meet national and EU’s goals at the least possible cost for taxpayers and without undue distortions of competition in the Single Market.

The non-confidential version of today’s decision will be made available under the case number SA.107520 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.