Farm buyouts may fall foul of EU state aid rules

Photo: Molly Quell

A voluntary buyout scheme for farmers aimed at reducing nitrogen emissions may break European Union competition regulations.

NRC quoted sources saying Brussels is worried that the MGA2 scheme – which provides financial compensation to farmers to reduce dairy, poultry and pig farms near natural areas – could constitute illegal state aid.

In most cases, European Union regulations prevent governments from providing financial support to private businesses out of concern that the money will distort markets across the bloc.

New programme

Nature and Nitrogen Minister Christianne van der Wal described the MGA2 programme as ‘wildly attractive’ when it was introduced in March.

It is set to replace the current MGO programme, which is due to expire in the coming weeks. That scheme has been a total failure. NRC reported earlier this year that not a single farmer had accepted the buyout agreement.

Moving abroad

The problem stems from the fact that farmers who accept the buyout could use the money to set up agricultural business in other EU countries, such as Hungary and Poland. Brussels is worried this would put local farmers out of business.

The buyout is the largest component of the government’s plan to meet its 2030 target to reduce nitrogen emissions. The cabinet has set aside 24.3 billion euros to tackle the crisis. Of that, some 7.5 billion is for buying out farmers.

What’s all the fuss about nitrogen in the Netherlands?

According to the Ministry of Agriculture, the MGA2 has yet to be submitted to the European Commission for an official inspection. Meanwhile, the government has now extended the MGO programme until December.

Hoekstra controversy

Yesterday, MPs grilled Foreign affairs minister Wopke Hoekstra on his remarks that the 2030 deadline in the coalition to cut nitrogen compound emissions was ‘not sacred’. He told the AD last week that the target could be moved back, earning backlash from his coalition partners and environmental groups.

Parliament agreed to shelve the issue for three weeks to allow government mediator Johan Remkes, who is chairing talks with farmers and other affected parties on the nitrogen plans, to produce his report before commenting further.

Should buyout packages fail, the NRC warns, it could result in the compulsory purchase of farms.

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