EUROPEAN COMMISSION Brussels, C(2013) Subject: State Aid / Austria SA.35471 (2012-N) Bridging loans to mitigate the effects of drought 2012 in Lower Austria Sir, The Commission wishes to inform Austria that, having examined the information supplied by your authorities on the aid referred to above, it has decided to raise no objections to the relevant aid as it is compatible with the Treaty on functioning of the European Union (hereinafter "TFEU"). In taking this decision the Commission has relied on the following considerations: 1. PROCEEDINGS (1) In accordance with Article 108(3) of the TFEU, the Permanent Representation of the Austria to the European Union notified the Commission of this measure by letter of 26 September 2012, registered on the same day. (2) By letter of 26 November 2012, the Commission asked for supplementary information which the Austrian authorities provided on 14 December 2012, registered on the same day. 2. DESCRIPTION OF THE AID SCHEME Title Bridging loans to mitigate the effects of drought 2012 in Lower Austria (Niederösterreich) Duration (3) One-off measure. Applications for the support until 31.12.2012; payments in 2013 after the approval of the scheme by the Commission. His Excellency Dr. Michael SPINDELEGGER Federal Minister for Foreign Affairs Ballhausplatz 2 A - 1014 Wien B-1049 Brussels - Belgium Telephone: exchange 32 (0) 2 299.11.11. Telex: COMEU B 21877. Telegraphic address: COMEUR Brussels. Budget (4) The annual amount foreseen is EUR 0.6 million. Beneficiaries (5) Agricultural producers. The estimated number of beneficiaries is over 1000. Type of aid (6) Direct grant. Legal basis (7) The measure is based on Richtlinie für die Gewährung eines Zuschussess des Landes Niederösterreich zur Überbrückungskredite zur Abfederung der Auswirkungen der Dürre 2012 (Directive on the grant of aid by the Land of Lower Austria in the form of direct grant to bridging loans to alleviate the effects of the drought in 2012). Meteorological situation (8) The weather related damage was produced by a combination of a rain deficit from October to the end of December 2011 (with November 2011 being the driest in the eligible area since beginning of the recording), cold winter (February temperatures amounting 10 degrees below the long-term average), exceptionally warm and dry March 2012, rain deficit (25-40% of the annual average rainfall in Weinviertel1) and extreme ground frost in May as well as considerably higher temperatures in June 2012. This unfavourable hydrological situation culminated with heat weaves in July- August 2012 accompanied frequently by violent storms. The Austrian authorities have pointed out that the rain deficit in Weinviertel since August 2011 was in some cases significantly below of the respective long-term values for this area constituting, in the period from November 2011 to March 2012 mean values being 70-80% under the average. (9) The hydrological service of the government of the Lower Austria reported that the rainfall in May 2012 in the northern part of the Weinviertel amounted to only 25-40% of the long-term average, e.g. in Poysdorf (district Mistelbach) the precipitation deficit measured at end-May/early-June 2012 reached a minimum never registered until then. In Hochenau (in district Gänserndorf) the rain deficit from September 2011 till August 2012 amounted to 280 mm and was the lowest recorded since 1947. At the same time hours of sunshine in Lower Austria were 15-20% above the long-time average. Objective (10) The notified aid scheme is designed to mitigate the effects for damages caused by the adverse weather conditions (drought) in several districts of Lower Austria in the period between autumn 2011 and spring 2012. In case of the present measure draught affected many crops cultures resulting in significant yield losses. Particularly affected 1 The Weinviertel ("Wine Quarter") is the north-eastern quarter of the four quarters of Lower Austria. The following administrative districts are considered to be parts of the Weinviertel: Gänserndorf, Hollabrunn, Korneuburg, Mistelbach, the northern part of the district of Tulln and some parts of the districts Krems and Horn. 2 are the agricultural regions of the Weinviertel, adjacent areas of the Waldviertel2 and some parts of the Industrieviertel3. (11) To this end support will be granted in the form of direct grants to bridging loans with maximal duration of 5 years (i.e. until 31.12.2017) offered by the private banks to the farmers in the eligible areas affected by the drought which were cultivating in 2012 the crop cultures listed in the legal basis. (12) The eligible area consists of the areas situated in the districts of Baden, Bruck/Leitha, Gänserndorf, Hollabrunn, Horn, Korneuburg, Krems an der Donau, Mistelbach, Mödling, Neunkirchen, Tulln, Wien Umgebung, Waidhofen an der Thaya und Wiener Neustadt. The adverse weather situation for these districts was verified by public authorities like the hydrological services of the Lower Austria and the Central Institute for Meteorology and Geodynamics (Zentralanstalt für Meteorologie und Geodynamik, ZAMG). (13) The aid would be paid towards income losses for the cultivation of following cultures: field bean (Ackerbohne/Puffbohnen), emmer/einkorn (Emmer/Einkorn - Sommerung und Winterung), medical- and spice plant (Heilpflanzen und Gewürzpflanzen), grain peas (Körnererbsen), pumpkin (Ölkürbis), maize (Mais), mustarde (Senf), soya bean (Sojabohnen), spelt (Sommerdinkel/Spelz), summer and winter barley (Sommer-, Wintergerste), summer and winter oat (Sommer-, Winterhafer), summer and winter durum (Sommer-, Winterhartweizen/Durum), summer and winter meslin (Sommer-, Wintermenggetreide), summer and winter poppy (Sommer-, Wintermohn), summer and winter rape (Sommer-, Winterraps), summer and winter rye (Sommer-, Winterroggen), triticale (Sommer-, Wintertriticale), summer and winter soft wheat (Sommer-, Winterweichweizen), sunflower (Sonnenblumen), winter spelt (Winterdinkel/Spelz), milk thistle (Mariendistel), cereal-legume mix (Getreide- Leguminosen Gemisch). Aid intensity (14) In order to compensate for the weather-related damage the Austrian authorities intend to grant aid with a maximum limit of 350 € (50 ha of cultivated arable crop x 7 €) accessory4 to the loans offered by the banks which shall not exceed 20 000 € per farm. With a maximum aid limit of 350 € the average aid intensity accounts to about 3% of the income loss calculated as an eligible damage for a model farm in 2012 (10 676 €) and thereby does not exceed the maximum allowable aid intensity of 80%. Calculation method (15) The reference period is 2009-2011. The affected districts are similar in their structure and have been affected in the same way by the adverse weather conditions. Therefore the representation of average quantitative losses suffered by farmers in the eligible area is based on a uniform calculation made for an average model farm of 50 hectares of cultivated farmland with crop species distribution consisting of 25 hectares of winter wheat, 10 ha of barley, 10 ha of oilseed rape and 5 ha of grain pea. The 2 The Waldviertel ("Forest Quarter") is located in the northwest of Lower Austria. The following administrative districts are considered to be parts of the Waldviertel: Gmünd, Horn, Krems an der Donau, Waidhofen an der Thaya, Zwettl, the northern part of the district of Melk and some western parts of the district Hollabrunn. 3 The Industrieviertel ("Industry Quarter") is located in the northeast of Lower Austria. The following administrative districts are considered to be parts of the Industrieviertel: Bruck an der Leitha, Mödling, Neunkirchen, Baden, Wiener Neustadt, Wiener Neustadt-Land and Wien-Umgebung. 4 The grant is not meant as a direct compensation for losses and is taken into account for the loss calculation. 3 representation of average income losses suffered by farmers in the area concerned refers to the same average model farm. The figures for calculation of the reference values are based on data provided by Statistik Austria5, the Agricultural Chamber of Lower Austria (NÖ Landwirtschaftskammer) and the Austrian Hail Insurance (Österreichische Hagelversicherung). (16) The quantitative loss in production as compared to the reference period amounts to 640 dt or -50.68 % for winter wheat (Winterweichweizen), 234 dt or -45.84 % for malting barley (Braugerste), 154 dt or -54,17% for oilseed rape (Ölraps) and 42 dt or -72,37% for grain pea (Körnererbse). The reduction in yields of 2012 deviate from the normal production of the relevant crops in the reference period by more than 30%. This threshold of loss demonstrates that it is resulting from adverse weather conditions and is not due to a natural variation in agricultural production. (17) The average price for winter wheat was 147,26 €/t in the reference period and 175,85 €/t in 2012. This results in an average output (quantity times price) of 11 254 € (64 t x 175,85 €/t) in 2012 as against to an average performance of 19 107 € in the reference period. (18) The average price for malting barley was 148,15 €/t in the reference period and 195,62 €/t in 2012. This results in an average output (quantity times price) of 4 578 € (23.4 t x 195,62 €/t) in 2012 as against to an average performance of 6 400 € in the reference period. (19) The average price for oilseed rape was 323,72 €/t in the reference period and 433,85 €/t in 2012. This results in an average output (quantity times price) of 6 681 € (15,4 t x 433,85 €/t) in 2012 as against 10 877 € in the reference period. (20) The average price for grain peas was 137,39 €/t in the reference period and 160,78 €/t in 2012. This results in an average output (quantity times prices) of 683 € (4,25 t x 160,78 €/t) in 2012 as against 2088 € in the reference period. (21) The loss of income of the model farm has been calculated according to the formula "average annual production of a crop in the preceding three normal years times the average price of the last three normal years".