The European Commission has approved, under EU State aid rules, two Dutch schemes with a total budget of around €1.47 billion to reduce nitrogen deposition on nature conservation areas. The measures will contribute to the EU's strategic objectives relating to the European Green Deal.
The Dutch measures
The Netherlands notified the Commission of its plans to adopt two schemes, called LBV and LBV plus, to compensate livestock farmers for the voluntary definitive closure of livestock husbandry sites in the overburdened Natura 2000 areas, as defined in the national legislation.
The schemes, which can run until 27 February 2028, are open to small and medium-sized livestock farmers in the Netherlands that voluntary close their breeding sites, provided that their current nitrogen deposition load exceed certain minimum levels.
Under the €500 million LBV scheme, the aid will take the form of direct grants to compensate up to 100% of the losses incurred by farmers who decide to close their dairy cattle, pig and poultry breeding sites, in particular relating to the loss of production capacity and of production rights. Depending on the area where the breeding site is situated, to be eligible under the LBV scheme, the breeding site concerned has to have certain minimum levels of nitrogen deposition load per year.
The €975 million LBV plus scheme will be open to so-called peak-load emitting breeding sites who emit a high level of nitrogen per year, fixed as a minimum level. As the LBV scheme, it will also be open to farmers breeding dairy cattle, pigs and poultry and, in addition, to farmers breeding veal calves. Also under this measure, the aid will take the form of direct grants to compensate up to 100% of the losses incurred by farmers who decide to close their breeding sites, in particular in relation to the loss of production rights as well as to demolition costs. As regards the loss of production capacity, under the LBV plus scheme, the farmers concerned may receive up to 120% as compensation.
Under the schemes, the beneficiaries guarantee that the closure of their production capacity is definitive and irreversible, and that they will not start the same breeding activity elsewhere in the Netherlands or within the EU.
The Commission's assessment
The Commission assessed the schemes under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union ('TFEU') and under the 2023 Guidelines for State aid in the agricultural and forestry sectors and in rural areas. The Commission found that:
- The aid facilitates the closure of certain sites, in favour of the sustainable and environmentally friendly development of livestock farming. At the same time, it supports the objectives of key EU policy initiatives such as the European Green Deal.
- The schemes are necessary and appropriate to improve the environmental conditions of the targeted areas and to allow a high quality, sustainable and environmentally friendly production. In addition, the aid is proportionate, as it is limited to the minimum necessary.
- The aid brings about positive effects that outweigh any potential distortion of competition and trade in the EU. Moreover, the beneficiaries commit to the definitive closure of their livestock production. This commitment also binds any future purchaser or user of the livestock site concerned.
On this basis, the Commission approved the Dutch schemes under EU State aid rules.
Background
In December 2022, the European Commission adopted revised State aid rules for the agricultural and forestry sectors. The revised rules align State aid with the EU strategic priorities, in particular the Common Agricultural Policy (CAP) and the European Green Deal. The revised Agricultural Guidelines introduce the following main changes: (i) a new, simplified procedure for the authorisation of State aid for measures co-financed under the CAP; (ii) an enlarged scope of measures targeting animal diseases and plant pests, allowing for aid to be granted for emerging animal diseases and certain invasive alien species; (iii)_new incentives for farmers to commit to schemes under which they respect stricter environmental standards than what is required by law.
Among others, the Guidelines for State aid in the agricultural and forestry sectors and in rural areas allow aid for the full or partial closure of production capacity for environmental reasons. For such measures to be compatible with State aid rules, the beneficiaries must commit to the definitive and irreversible closure of the production capacity concerned. In addition, they must also commit to not start the same activity elsewhere. Only farmers that have been constantly producing over the five years before the closing of the production capacity are eligible for aid.
If these conditions are met, farmers can be compensated up to 100% for the loss of value of assets and for the costs of destruction of the production capacity. They can also be compensated up to 120% for the loss of value of assets where the closure relates to environmental or climate reasons. If the closure is done for environmental reasons, the Member States can grant an additional 20% ("green bonus") on top of the compensation for the loss of the value of the assets.
The non-confidential version of the decisions will be made available under the case number SA.106555 and SA.106559 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
