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Agricultural Protection Fund – cooperative members announce success, but satisfaction is still far away

Fundusz Ochrony Rolnictwa - spółdzielcy ogłaszają sukces, ale do zadowolenia nadal daleko
  • Consultations with farmers and agricultural organizations regarding the Agricultural Protection Fund have been completed.
  • Farmers fear the inclusion of FOR funds in de minimis aid.
  • Some of the farmers' demands were taken into account by the ministry.
  • The group of beneficiaries included cooperatives, farmers’ associations and producer groups, but under certain conditions.

In August, the draft law on changes to the Agricultural Protection Fund saw the light of day. The document electrified both farmers and farming organizations. It turned out that the changes that were proposed were, to put it mildly, disadvantageous to farmers. Let us recall what changes were specifically in question.

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What are the changes in FOR about?

The bill assumed that:

  • from 1 July 2024, it will be possible for the KOWR to issue decisions on compensation, taking into account the provisions of Commission Regulation (EU) No 1408/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to de minimis aid in the agricultural sector;
  • the amounts paid by entities purchasing receivables will be reduced to the amount resulting from multiplying the reduced coefficient from 0.125% to 0.07% of the value of purchased agricultural products in net prices. OSR indicates that the contribution rate at the level of 0.07% of the net value of purchased agricultural products will translate into a total amount of payments of around PLN 77.5 million.
  • the submission of declarations and the deadline for paying amounts due to the Agricultural Protection Fund account will be limited to annual declarations and one-off payments to the account by 31 January of the year following the settlement (calendar) year;
  • there will be a waiver of imposing penalties for failure to submit declarations by purchasing entities. These sanctions will only apply to failure to pay dues into the FOR account;
  • deregistration of the activity from CEIDG is excluded from the list of grounds for recognizing the entity as insolvent. This means that the recognition of the entity as insolvent may be recognized only on the basis of court decisions on bankruptcy, liquidation or restructuring of the purchasing entity;
  • the deduction for the National Support Centre for Agriculture (KOWR) will be doubled from 2.5% to 5% for the payment of costs related to FOR service due to the reduction in the ratio of receivables paid by purchasing entities and the extension of the scope of KOWR tasks in the KOWR Act to include the task specified in the amended Act;
  • the amount exempt from payments will be reduced from twenty times to five times the amount of the costs of the reminder in enforcement proceedings in administration. This amount of the amount due will be counted towards payments to the Fund for the following year in which the amount due exceeded five times the amount of the costs of this reminder;
    there will be a waiver of compensation payments for receivables of agricultural producers resulting from the sale of agricultural products arising after the date of the entity's insolvency.

The proposed changes caused a wave of indignation. The date of setting the period for submitting comments on the project also remained questionable for farmers. Farmers argued that the first two weeks of August were not the right time to consult on such important matters, mainly due to the holiday periods in many agricultural organizations.

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Will changes in the Farmers' Protection Fund lead to its end? The Ministry responds

The first consultations were held in August, during which both farmers and industry organisations presented their comments and concerns about the project.

Two aspects raised the most doubts – the introduction of funds from the Agricultural Protection Fund into de minimis aid and the lack of inclusion of cooperatives, associations and producer groups among the beneficiaries.

Many ideas emerged for introducing solutions that, according to farmers, would improve the Fund's operation. After talks, the ministry gave itself a few weeks to present an improved project.

However, as yesterday's consultations showed, the proposed solutions do not fully satisfy those interested. But there are also positives.

It is clear that the ministry has sat down once again to this project and has seriously miscalculated everything – says Paweł Jaruga, a farmer from the Lublin region, in an interview with Farmer. – According to yesterday's information, the contribution to the Fund will remain at the same level. It is good that this has been noticed, because you cannot rely on data from one year of operation. It is like in agriculture, you have to look at it from a broader perspective.

Łukasz Zbonikowski, president of the National Audit Council of Agricultural Production Cooperatives, also spoke about the amount of the contribution.

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It's fantastic that the ministry has understood the problem – he says in an interview with the editorial office. – The reduction in the contribution is practically imperceptible for the companies that pay it, and it would cause a significant impoverishment of the fund – he adds.

Another change is to concern the catalogue of beneficiaries who will be covered by the Fund's protection. The catalogue will include cooperatives, associations and producer groups, which have not been covered by such protection so far.

This is a huge success – Łukasz Zbonikowski tells Farmer. – Both of our Union and the farmers who fought for it with great commitment. The previous provisions, which did not protect cooperatives and associations, were simply discriminatory – he adds.

However, the inclusion of cooperatives, associations and producer groups is to take place on certain terms.

Only members of the cooperative who sell their own goods will be taken under the protection of the Fund – Paweł Jaruga clarified in an interview with the editorial office of Farmer. – In the case when the cooperative earns additionally from intermediation and sells goods from people who are not its members, such transactions will not be secured by FOR.

Another important change is the retention of the provision in the Act stating that an extract from the CEIDG is the basis for recognizing an entity as insolvent.

We have repeatedly emphasized that most frauds take place at the level of sole proprietorships – Jaruga told Farmer. – Excluding the CEIDG business record from the list of grounds for recognizing an entity as insolvent would be highly unfair and would condemn farmers, who are already wronged, to long legal battles.

The National Audit Union of Agricultural Production Cooperatives also appealed for organizational changes.

The application process should be continuous – says Łukasz Zbonikowski in an interview with the editorial office. – Life is richer than this law invented. People have various problems and during the last recruitment it turned out that not everyone had time to submit their applications. Someone was in hospital, someone in a sanatorium. Such action will really improve a lot – he adds.

For now, it will be stipulated that an aggrieved farmer has the right to apply for compensation within two years of the occurrence of the problem.

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Will KRIR take over the Agricultural Protection Fund?

Not everything could be pushed through

These are positives. However, there is also a spoonful of tar in this honey. In this case, it is the inclusion of funds from the Agricultural Protection Fund in de minimis aid.

In practice, this would mean that a farmer who has already used the de minimis aid (EUR 20,000/3 years) cannot use the Fund's resources if needed. Similarly, if he has used the aid partially, the FOR compensation will be paid only up to the amount of possible de minimis aid. If the losses are higher than the aid limit, the farmer also loses.

The government justifies this state of affairs by the fact that the Fund is managed by KOWR, and money paid out by a state institution by definition constitutes public aid.

Except that in this case they have nothing to do with public aid, because the value of the fund is contributed by farmers themselves through purchasing companies.

We will fight until the end to exclude this money from de minimis aid – Łukasz Zbonikowski convinces in an interview with Farmer. – The method of collecting funds and handling the Fund is identical to the promotion funds, and that aid is not treated as de minimis aid. The government has shown great overzealousness by submitting to the European Commission an application for consent to include this money in the de minimis pool. The fact that the funds are paid out by KOWR does not make them state money. What's more. After all, we pay KOWR for the service, so in reality we are only buying a service.

As Zbonikowski emphasizes, this is absurd. All the more so because the Act on the Agricultural Protection Fund clearly states that the Fund's resources are not public funds.

The financial resources of the Fund are not public funds within the meaning of the Act of 27 August 2009 on public finances – quotes Article 2 of the Act on FOR.

During the consultations, an idea even emerged for the National Council of Agricultural Chambers to take over the management of FOR.

This would be possible – said Wiktor Szmulewicz, president of KRIR, in an interview with Farmer. – We have the right tools and we are ready to take on the management of the Fund – he declared.

There is no consent for such a step for now. Agricultural organizations and farmers themselves assure, however, that they will not give up.

We need to look at this issue more broadly – Jaruga tells Farmer. – If there was a mountain left in the Fund, it could be used in the event of disasters such as those we have in Lower Silesia today. If these funds are included in de minimis, there are practically no possibilities for their additional use.

There are also doubts about what will happen with the accumulated funds, since revenues from companies will be at a constant level and farmers will be limited by a limit on their use.

Currently, work is underway on a new text of the act, which will include the amendments presented. The act will then go to the Sejm and work in the Sejm committees.

Farmers announce that they will fight until the very end for it to be adopted in a form that will actually protect their sector.

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