State support for the agricultural and food sector in connection with Covid-19
On April 14, the Cabinet of Ministers approved the draft Cabinet Regulation “Procedures for the Granting, Administration and Supervision of State Support in the Agricultural and Food Sector in Relation to the Negative Impact of the Spread of Covid-19”. The Regulation is intended to provide financial support to producers and other enterprises in the agricultural and food sector in relation to the impact of the spread of Covid-19 on the national economy. The support is intended to alleviate financial difficulties arising from the impact of Covid-19, by supporting the availability of working capital, partially covering the reduction in income, the costs of storing finished goods stocks, the reduction in turnover, as well as compensating for the value of destroyed or donated products that could not be used in the provision of catering services in educational institutions during the emergency situation. The total amount of support reaches 35,500,000 euros.
The dairy sector, which is most dependent on exports, could suffer the most, as the experience of the Russian embargo has already shown, as the majority of Latvian milk producers directly or indirectly supply raw milk to exporting dairy processing companies, or this raw milk is further exported for processing in Lithuania and Estonia, but the beef, pork and poultry sectors could also suffer, losing export opportunities for the products of these sectors. The beef production sector in Latvia is mainly based on the export of live cattle, which is currently significantly disrupted due to problems with the logistics flow, which is why farmers' income from the sale of cattle is decreasing.
The project provides for the possibility of granting support:
1. To stabilize incomes for farmers, if in the relevant sector during the period from April to June the total revenue of the producers will be decreased by at least 20 percent compared to:
- in the dairy and beef sector – the average of the last three years for the same period;
- in pig farming – the same period in 2019.
Support will be available for dairy cows, beef or beef-dairy cattle sold from the farm, and pigs sold to a slaughterhouse or sent to a slaughterhouse for slaughter.
Rates: 86 euros about dairy cow, 137 euros about beef cattle, 96 euros about dairy bull and 22.15 euros about fattening pig. The support is paid until December 31, 2020. The total amount of support: for dairy cows – 12,500,000 euros, for cattle – 3,000,000 euros, for fattening pigs – 3,500,000 euros.
– Average milk purchase prices will be taken from the LDC database.
Example: The average milk purchase price for the last 3 years (April - June) is EUR 0.2857/l. Support of up to EUR 86 per cow will be granted if the average milk purchase price from April to June 2020 is EUR 0.228/l and lower.
– In the cattle trade (6 – 16 months old), prices for live cattle will be compiled from information provided by companies and average carcass prices at slaughterhouses.
Example: If the average price at the auction house or slaughterhouse is EUR 2.80/kg. Support of up to EUR 137 per beef cattle and EUR 96 per dairy cattle will be granted if the average price from April to May 2020 is EUR 2.24/kg and below.
2. For destroyed or donated products that could not be used for the provision of catering services in educational institutions due to the emergency situation. This support will be available to caterers of educational institutions and to those vegetable growers who supply their products to caterers of educational institutions. The total amount of support is 2,500,000 euros.
3. To alleviate the difficulties caused by the increase in the cost of stocks of ready-made food products and the decrease in turnover for food producers (including dairy companies and others), as well as primary producers who do not receive support for income stabilization or for products destroyed or donated free of charge. Support will be granted if the applicant's stocks of unsold goods in March, April, May and June 2020 have increased by 25 percent or net turnover has decreased by 25 percent, compared to the corresponding period in 2019. The support will be recalculated in the amount of 20 percent of either the increase in the value of stocks of goods or the amount of the decrease in turnover. The total amount of support is 14,000,000 euros.