State aid: Commission publishes results of evaluation of EU State aid rules for agriculture, forestry and rural areas

The European Commission has published a Commission Staff Working Document summarising the results of an evaluation of the State aid rules for the agriculture and forestry sectors and for rural areas. The evaluation concludes that, overall, the existing rules work well, are fit for purpose and meet the needs of the sectors concerned. However, some targeted adjustments may be necessary to align the current rules with the current EU priorities, in particular the future Common Agricultural Policy (CAP) and the European Green Deal.

The evaluation was carried out as part of the ongoing review of the State aid rules for agriculture, forestry and rural areas, namely the Agricultural Block Exemption Regulation, and the 2014 EU Guidelines for State aid in the agricultural and forestry sectors and in rural areas. The Commission has recently extended the validity of these rules until 31 December 2022.

The evaluation aimed at assessing how the current Regulation and Guidelines, which started applying in July 2014, have performed, in light of their main objectives, namely:

• To minimise distortions of competition and trade in the agricultural and forestry sector;
• To ensure the consistency of the agricultural State aid rules with the CAP and in particular rural development objectives under the CAP; and
• To simplify procedures and reduce administrative costs.

The Commission’s assessment involved internal analyses, an open public consultation and a study conducted by an external consultant.

The findings of the evaluation

The evaluation concludes that, overall, the rules under scrutiny work well are broadly fit for purpose. In this respect, they largely meet the needs of the sectors concerned, while also contributing to the achievement of broader EU policy objectives, such as environmental protection as well as animal and, more generally, public health.

At the same time, the evaluation revealed that the existing rules need certain targeted revisions, including clarifications of some concepts, further streamlining and simplification, as well as adjustments to reflect the EU current priorities.

In this respect, the evaluation showed that some rules appear to be outdated, e.g. with respect to aid in sectors which are subject to production limits, such limits are set in previous CAP legislation which is no longer in force. Furthermore, certain definitions and terms in the existing rules give rise to recurring interpretation requests (e.g. the definition of protected animals causing damage for which farmers may be compensated) and, hence, should be further clarified. Lastly, some requirements under the existing rules, in particular those relating to aid for subsidised services, such as information actions, appear to be too complex.

The rules will also need to be aligned to the Commission’s current priorities, in particular the European Green Deal, the Farm to Fork Strategy and Biodiversity Strategy, as well as the CAP and national CAP Strategic Plans, including their enhanced environmental ambition.

The Commission will take the results of the evaluation into account when reviewing the existing rules. In this context, the Commission will in particular examine the possibility to extend the scope of the Agricultural Block Exemption Regulation, i.e. of measures that could be implemented directly by Member States without the need for prior notification to and approval by the Commission with a view to further simplify the existing framework. Furthermore, the Commission will reflect on possible targeted changes to the rules to improve incentives for farmers and foresters to engage in activities that favour biodiversity and climate mitigation.

Next steps

The Commission will proceed with the impact assessment phase of the review, to look into the issues identified during the evaluation, with a view to having revised rules in place by 31 December 2022 when the current rules will expire.

At the beginning of next year, the Commission will publish a draft of the revised Agricultural Block Exemption Regulation and new Guidelines for stakeholder comments.