The EESC proposes creating an extraordinary fund to support the agricultural sector in response to the COVID-19 outbreak

The COVID-19 pandemic is demonstrating the geostrategic nature of the agri-food sector and the need to maintain food self-sufficiency in the EU. The European Economic and Social Committee (EESC) therefore welcomes the new measure proposed by the European Commission to support farms and agri-food SMEs experiencing liquidity problems and to ensure their economic survival during this crisis. However, the EESC thinks that the European Commission should set up a special fund outside of the common agricultural policy budget to implement it.

The coronavirus pandemic has had a significant negative impact on the EU agricultural and food sector, caused by unprecedented circumstances: movement restrictions put in place in the Member States (MS) and mandatory closures of shops, outdoor markets and restaurants, which led to abrupt market disruption.

The EESC therefore welcomes the new measure proposed by the European Commission to support the cash flow of farmers and other operators in the supply chain, particularly those in areas with disadvantages or isolated areas such as islands or mountains, who will need emergency support in order to maintain their activities.

But how will this extraordinary measure be financed?

The European Commission's proposal is limited to making targeted amendments to the European Agricultural Fund for Rural Development (EAFRD) regulation in order to enable national authorities to allocate up to 1% of the 2014-2020 budget to this new measure and thus use this unspent money for these extraordinary needs. The support will take the form of a one-off lump sum, with a fixed maximum of EUR 5 000 per farm and EUR 50 000 per SME, to be paid by 31 December 2020.

The proposed ceiling of 1% of the allocation ensures European harmonisation, which the EESC has always sought to achieve.

However, this proposal poses two major problems, according to the rapporteur of the opinion, Mr. Puech d'Alissac: the first is that some of the MS have already used up or committed their funds under the EAFRD and cannot therefore use this relief mechanism. The second and most important problem is that the money that was supposed to be used to improve the competitiveness of agriculture and forestry, the environment and quality of life in rural areas, will now be spent on addressing these urgent cash flow needs.

For this reason the EESC believes that the European Commission should set up an extraordinary fund outside the common agricultural policy budget to enable this measure, following the example of the recovery plan.