Support for agriculture
The agricultural support system consists of several support instruments. Based on the source of funding, the different forms of support can be divided into fully EU-funded direct payments, partly EU-funded support paid through the Rural Development Programme and fully nationally funded support. Farmers can benefit from several different forms of support based on the number of animals and hectares of arable land, with different support forms having specific goals and conditions. One of the key objectives of the new support system introduced in 2015 has been to harmonise the criteria of different support forms, where possible.
In addition to support forms that ensure the basic profitability of production, farmers may also be eligible for investment support for improving their farms. Payment levels vary depending on the investment target. Young farmers receive setting-up support for setting up as a farmer.
The Agency for Rural Affairs (Mavi) is responsible for implementing the support schemes and administering the support payments.
Aid to farmers based on the EU CAP
In the European Union, agricultural policy falls under EU competence, and individual Member States are allowed to apply their national agricultural policies within the limits of EU provisions. The Finnish agricultural support system is based on the EU CAP support forms, which include the EU’s direct payments and the partially EU-funded natural constraint payments and environment payments. In addition, EU support schemes also promote animal welfare and organic production. The support package is complemented with the Finnish national aid system to account for the special circumstances in Finland.
EU support schemes are implemented in all Member States in accordance with EU regulations and the more detailed implementation rules adopted by the European Commission. Individual Member States have very limited decision-making power in the application of EU regulations. When regulations are drafted, Finland always tries to ensure that the texts take into account the special characteristics of Finnish agriculture. The CAP reform gave Member States some decision-making competence, for example, in the application of direct payments coupled to production.
Natural constraint payments and environment payments are so-called programme-based support forms that are based on Finland’s Rural Development Programme, which the European Commission approved in December 2014. The proposals for rural development programmes presented to the Commission are prepared at the national level by broad-based working groups. EU regulations concerning rural development form the framework for preparing the programmes.
Since 2015, Finland’s national aid system consists of two main elements: national aid for farmers in Southern Finland and Nordic aid. Certain other forms of national aid are also available, but they are more limited and targeted in nature. The payment of national aid requires approval from the Commission. Before being submitted to the Commission, the programme proposals concerning national aid are discussed with the central organisations of agricultural producers.
The Commission’s decisions on national aid set the limits for national decisions. The annual preparation of national aid schemes is based on the wider coordination of the support system, the funds available, and the framework conditions determined by Commission decisions.
Agricultural support ensures domestic food production and its development
Conditions for farming in Finland differ considerably from those in many other EU countries. Due to the special characteristics of Finnish agriculture, like our northern location and smaller farm sizes, the production costs of agricultural products in Finland are significantly above the EU average. Income from the sales of agricultural products only covers a part of the production costs. For instance, the average farm-level production costs of one litre of milk are approximately twice as much as the price paid to the producer.
One of the key aims of the EU’s agricultural policy is to ensure that food is available to consumers at reasonable prices. In the EU, the prices of many agricultural products are close to average world market prices, and the price level in the internal market is essentially the same in different parts of the EU. Due to the price level, it would be impossible to produce certain vital agricultural products in Finland without support from the society. The same is true also in other EU countries, at least in terms of current production levels. To ensure the profitability of production, agriculture is supported through budget funds in all EU countries. The support forms can be fully EU-funded, co-financed by the EU and the Member State or fully financed from national funds.
In the EU, agricultural policy falls under the EU’s competence and decision-making power, and Member States’ national aid systems must comply with the objectives of the common agricultural policy. The basic principle of the CAP is that its targets should be primarily reached through EU instruments. Any remaining problems can be addressed through national special arrangements that are based on regulations adopted by the European Parliament and the Council or on regulations and decisions issued by the Commission.
Finland is divided into different support areas to enable the application of different support levels in different regions. For example in milk and beef production, support payments increase from south to north. In crop farming, the support per hectare is nearly the same across the country when all forms of area-related aid are taken into account.
In addition to annual aid, farmers may also receive structural support. The aim of these support forms is to improve agricultural productivity, develop the structure of agriculture and promote generational renewal.