The European Commission has given the green light to a €1.3 billion Polish scheme aimed at providing support to agricultural producers by covering insurance premiums for selected vegetable products and livestock species at risk of damage.
This decision comes in response to a market failure where the high cost of insurance policies would have deterred producers from purchasing them without subsidies covering a portion of the premium.
Under the plan, small, medium, and large agricultural companies involved in primary production in Poland are eligible to participate. To access the scheme, beneficiaries must subscribe to insurance coverage through insurers selected by Polish authorities via an open tendering process.
The aid amount allocated to eligible beneficiaries can reach up to 65% of their insurance premiums, provided they remain within predefined thresholds.
To tackle the specific threat of drought, Poland has incorporated a state reinsurance mechanism. This mechanism ensures that the government will cover a portion of compensation payments that insurance companies would typically need to pay to affected agricultural producers.
The approved scheme will remain operational until 31 December 2027, offering stability and support to agricultural producers for years to come.
The Commission evaluated the scheme under the framework of EU State aid rules, and concluded that the scheme aligns with the objectives of the Common Agricultural Policy, fostering a resilient, competitive, and diverse agricultural sector while ensuring long-term food security.
The inclusion of a state reinsurance mechanism to address drought risks was also deemed necessary, as insurance companies were reluctant to offer coverage for such perils.
Additionally, the Commission affirmed that the scheme’s proportionate nature guarantees that it solely targets the minimum necessary to achieve its intended objectives. Furthermore, the positive impacts of the scheme outweigh any potential distortion of competition and trade within the European Union.
“This €1.3 billion measure will foster a resilient agricultural sector in Poland and ensure long-term food security. It will help protect agricultural producers against losses due to adverse climatic events and hence keep their incomes stable. All without unduly distorting competition,” Margrethe Vestager, Executive Vice-President in charge of competition policy, said.
