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Zijne Excellentie De Heer Steven VANACKERE Ministerie Van Buitenlandse Zaken Karmelietenstraat 15 B - 1000 Brussel

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Zijne Excellentie De Heer Steven VANACKERE Ministerie Van Buitenlandse Zaken Karmelietenstraat 15 B - 1000 Brussel EUROPEAN COMMISSION Brussels, 10.2.2010 C(2010)935 Subject: State Aid - Belgium (Flanders) Aid No N 34/2010 Limited amounts of aid for primary producers hit by the financial crisis Sir, The Commission wishes to inform Belgium that, after examining the information supplied by your authorities on the aid referred to above, it has decided to raise no objections to the aid in question, as it is compatible with the Treaty on the Functioning of the European Union (TFEU)1. The Commission has taken this decision on the basis of the following considerations: 1. PROCEDURE (1) By electronic notification of 22 January 2010, the Belgian authorities notified a temporary aid scheme for granting limited amounts of compatible aid under the Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis" (hereinafter referred to as the Temporary Framework)2. (2) Additional information was submitted by e-mails of 25 and 26 January 2010. 1 With effect from 1 December 2009, Articles 87 and 88 of the EC Treaty have become Articles 107 and 108, respectively, of the TFEU. The two sets of provisions are, in substance, identical. For the purposes of this Decision, references to Articles 107 and 108 of the TFEU should be understood as references to Articles 87 and 88, respectively, of the EC Treaty where appropriate. 2 Communication from the Commission - Temporary framework for State aid measures to support access to finance in the current financial and economic crisis, OJ C 83, 7.4.2009, p.1, as amended by Communication from the Commission of 28 October 2009, OJ C 26, 31.10.2009, p.2. Zijne Excellentie de heer Steven VANACKERE Ministerie van Buitenlandse Zaken Karmelietenstraat 15 B - 1000 Brussel Commission européenne, B-1049 Bruxelles – Europese Commissie, B-1049 Brussel – Belgium Telephone: 32 (0) 2 299.11.11 2. DESCRIPTION OF THE AID SCHEME 2.1. Objective of the aid scheme (3) The scheme intends to provide support to the agricultural sector in the Flemish region, which has been severely hit by the financial and economic crisis. It aims therefore at remedying the serious disturbance in the economy of Belgium. (4) The scheme is expressly based on Article 107 (3) (b) of the TFEU, as interpreted by paragraph 4.2.2 of the Temporary framework. (5) The Belgian authorities have provided information on the impact of the financial and economic crisis on the Belgian and Flemish economy. (6) As far as concerns, first of all, the impact of the financial crisis, the Flemish authorities have indicated that the economy has shrunk with 3.9 % in 2009, and that the growth will be nil in 2010. A growth of 2.5 % is foreseen only in 2011. The gross investments have declined in Flanders with 7.3 % and the SME's have difficulties to access credits3. The employment rate has decreased in 2009 by 0.7 %, and the forecast for 2010 is that it will continue to decrease (- 1 %). The amount of open job opportunities has decreased with 20 % in the course of the second trimester of 20094. The number of households suffering from social exclusion and do not have sufficient revenues to lead a decent life has increased in 2009. (7) As far as concerns the impact of the economic crisis specifically on the agricultural sector in Flanders, the Flemish authorities have communicated data from the Flemish Agricultural Economic Index. This factor is issued twice a year, and aims at getting a view on the economic changes, the trust of the entrepreneurs and the planned investments in the Flemish agricultural and horticultural sector. Since the end of 2008, this factor went downwards (until -9 end 2008 whereas it was positive (+0.5) in the beginning of 2008) due to the increasing costs of energy and other inputs, and the decrease in the price of the agricultural products. In spring 2009, the factor went further downwards (until -22) because of the economic crisis, the decrease in demand of agricultural products and in the prices of the agricultural products. End of 2009, the factor went slightly upwards (up to - 19). (8) The fragmentation of this index into the different sub-sectors (i.e. arable farming, fruit growers, vegetable growers, fruit and vegetable glasshouses sector, dairy cattle sector, ornamental plant sector, beef cattle sector, pig sector) shows the same trend (exception made of the ornamental plant sector) especially in the sector of the vegetable growers. This negative trend is particularly visible in the investment plans, where there is a significant reduction in the intention to invest. (9) Belgium has provided other figures showing that the number of bankruptcies in the agricultural and horticultural sector has risen slightly in 2008-20095. A study 3 Source : KeFiKbarometer 4 Source : VDAB 5 Source : FOD Economics, KMO, Middenstand en Energie 2 made by Flanders in the bank sector shows that the terms for payment are delayed and there is a slight reduction in the number of new investment files. This overview of the banks shows that there is no real financing problem for the larger undertakings, but that the smaller undertakings had more difficulties. The situation seemed to be very difficult especially in the pig sector and in the dairy cattle sector, where the prices of the products are very low and/or volatile. If these low prices continue to drag on, these undertakings will have to use their own reserves (capital of the undertaking) and start to ask for supplier's credits. 2.2. The nature and form of the aid (10) The aid will be provided in the form of interest rate subsidies and in the form of guarantees. (11) The bridging loan is intended for the financing of operational costs (such as the buying of feeding stuff, of fertilizers, of fuel, of seed stocks, of pesticides, …) and aims at ensuring the continuity of the undertaking. A guarantee can be granted on this bridging loan amounting to 80 % of the credit amount for a period of three years. The Belgium authorities confirmed that for the guarantees the aid element will be calculated on the basis of the safe harbour premiums laid down in the annex to the Temporary Framework. (12) The Belgian authorities have submitted detailed calculations showing that the total actual value of the aid measures was below 15 000 EUR. 2.3. Legal basis (13) The legal basis for this scheme is the decision of the Flemish government of 24 November 2000 concerning aid to investments and installation in the agriculture6, followed by a ministerial circular to be adopted on that basis. 2.4. Administration of the scheme (14) The notified scheme will be applied in Flanders only and administered by the Vlaamse Landbouwinvesteringsfonds (VLIF). The VLIF will carry out an investigation to verify that the conditions for receiving the aid have been complied with. Potential beneficiaries of the aid will introduce their demand for aid via a specific form to the VLIF with the necessary annexes. 2.5. Budget and duration of the measure (15) The notified measure has a total budget of €2.73 million. (16) Aid can be granted from the date of approval of the present scheme until 31 December 2010. 6 Besluit van de Vlaamse regering van 20 november 2000 betreffende steun aan de investeringen en de installatie in de landbouw, BS, 14.2.2001. 3 2.6. Beneficiaries (17) The beneficiaries of the notified scheme will be small and medium-sized undertakings active in the primary production of agricultural products. According to the Belgian authorities, the sector of the primary agricultural production in Flanders consists only of SME's. The number of beneficiaries will be between 501 and 1000. (18) The Belgian authorities have indicated under which conditions the beneficiaries will be allowed to receive aid : a. The gross operating income is minimum 15 % lower during one year than the previous one-year period or than the average of the three previous periods, on the basis of minimum the same size of the undertaking b. This decrease in the gross operating income is the consequence of the economic crisis c. The undertaking possesses its own positive net assets d. A financial analysis shows that the supplementary credit burden due to the bridging loans could be borne in normal circumstances by the undertaking e. The income for the operator stemming from non-agricultural activities is less than 10 000 EUR . f. The production risks have to be borne by the operator (19) The Belgian authorities have mentioned that these specific conditions mentioned above guarantee that the measure is proportionate. (20) Only those agricultural producers that were not firms in difficulty7 on 1 July 2008 can benefit from the aid. The aid may be granted to undertakings that entered into difficulties after this date due to the economic and financial crisis. (21) Apart from these conditions, the Belgian authorities have indicated that the beneficiary of the aid should qualify as farmer according to the VLIF conditions. Furthermore, the farmer should be able to exercise his profession, and the undertaking should be viable. The accountancy should be kept in order, and the minimal prescriptions in terms of environment, hygiene and animal welfare should be respected. The undertaking must dispose of the necessary production and emission rights. The credits of the applicant may not be cancelled. 7 Within the meaning of point 2.1 of the Community guidelines on State aid for rescuing and restructuring for firms in difficulty (OJ C 244, 1.10.2004, p.2) as regards large firms and within the meaning of Article 1 (7) of the General Block Exemption Regulation (Regulation (EC) No 800/2008, OJ L 214, 9.8.2008, p.3)) as regards SMEs.
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