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 prevents producers from buying them without a subsidy 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 the Polish authorities through an open tendering process.
The amount of assistance allocated to qualified beneficiaries can reach up to 65% of their insurance premiums, as long as they stay within the predetermined thresholds.
To address the specific threat of drought, Poland has incorporated a state reinsurance mechanism. This mechanism ensures that the government will include a portion of the compensation payments normally required to be paid by insurance companies to affected agricultural producers.
The approved scheme will remain in place until 31 December 2027, offering stability and support to agricultural producers in the coming years.
The Commission examined the scheme under the framework of EU State aid rules, and concluded that the scheme is consistent with the objectives of the Common Agricultural Policy, promoting a stable, competitive, and diverse agricultural sector while ensures long-term food security.
The inclusion of a state reinsurance mechanism to address drought risks is also considered necessary, as insurance companies are reluctant to offer coverage for such risks.
In addition, the Commission confirmed that the proportional nature of the scheme guarantees that it only targets the minimum necessary to achieve the intended objectives. Furthermore, the positive effects of the scheme outweigh any potential distortion of competition and trade within the European Union.
“This €1.3 billion measure will develop a strong agricultural sector in Poland and ensure long-term food security. It will help protect agricultural producers against losses due to adverse events climate and therefore keep their income stable. All without excessive distortion of competition,” said Margrethe Vestager, Executive Vice-President in charge of competition policy.