Staykov, “Abrupt price amendment in payment ceiling is precarious”

The European Commission’s intention to reduce the current ceiling of 300 000 Euro direct payments to a single agricultural holding, has triggered contradictory responses in the agricultural sector.  According to some sources, the upper limit will be 60 000 euros, and according to others-100 000 euros, Stayko Staykov- chairman of the Bulgarian Association of Owners of Agricultural land (BAALO), shared with Farmer BG. “If there is any sort of correction, it should be much smaller – 10-20% lower, not 300% lower, as it is currently expected to be. There is no point in cutting the minimum subsidy under SAPS, which for us is the lowest in Europe. In any way, it is inevitable that amendments will be made. For example, agricultural ecology and crop rotation will be cut out. Funds will be cut, but this must be done in the right way, “commented Stayko Staykov. The issue of the payment ceiling will once again lead to an opposition between the interests of the old EU Member States with those of Bulgaria and Romania.

For Bulgaria, as a country which entered the EU later, it is predetermined to have conventional agriculture and to grow cereals. And in this sector, farms are large. It is normal to handle 10 000-15 000 acres. They will be the ones to suffer the most if the ceiling is substantially reduced”, explained Staykov. At the same time, the European producers of vegetables and fruits, which historically receive much greater subsidies than their Bulgarian counterparts, will not be affected by the changes because the few acres they own bring great profits. BAALO Chairman gave an example of what would possibly appear in numbers with a probable reduction in payment ceiling for a farm for grain production with 30 000 acres area.  The subsidy is now 30 BGN/Decar. If it is maintained, the amount comes out 900 000 BGN. or 450 000 euro. The upper limit of payments is currently 300 000 euros. Lowering the ceiling to 100 000 euros would mean a triple reduction of the subsidy for this particular agricultural holding. If this happens, people will be forced to seek for any other alternative options which are not typical for the business development. The idea is to let the business work smoothly by taking reasonable decisions, “added Staykov.

“The reduction of subsidies will force owners of large farms to try to divide them into several smaller ones, so as not to lose financial resources.  A new European Parliament will be elected next year. The final decision on the payment ceiling is very likely to be taken by it. Until then, the Bulgarian government has the time, in cooperation with NGOs, to formulate the national position on the subject and to protect it politically.

I expect the ceiling to be put at 100 000-150 000 euros, and I am hopeful it will be 150 000 euros. Thus, the agricultural holding will not be affected. Because there is no way to make farms for wheat, rape seeds, sunflower, chickpeas and others on 500 or 1000 acres. Agricultural machine equipment is very expensive and no one will invest in buying it unless there is a profitable financial return on the investment”, explained Stayko Staykov. For the countries with conventional agriculture, like ours, a new challenge has emerged. Ukraine has entered actively on the regional cereal market and has become a major competitor.