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Fertilizer producers will get support. Will the farmer benefit?

Fertilizer producers will get support.  Will the farmer benefit?

Fertilizer producers will get support. Will the farmer benefit?

The Council of Ministers adopted the program “Aid for energy-intensive sectors related to sudden increases in natural gas and electricity prices in 2022.” It is expected that about 1,000 companies will benefit from it, mainly medium and large ones. This also means that fertilizer producers will also receive the announced support. But will the farmer benefit from it?

This week, the Council of Ministers adopted the program “Aid for energy-intensive sectors related to sudden increases in natural gas and electricity prices in 2022.” The assumptions of the program were approved by the European Commission in December 2022.

This is the next stage of government support for energy-intensive companies with a budget of as much as PLN 5 billion. The first was the granting of compensation in 2022 to 92 entities for 2021 in the amount of almost PLN 800 million, informs the Minister of Development and Technology Waldemar Buda.

In this way, the Ministry of Development and Technology wants to mitigate the effects of the increase in electricity and gas prices among enterprises caused by the Russian aggression against Ukraine.

– State support is essential in those industries that are most affected by energy prices. Today, some Polish energy-intensive companies are facing problems that may result in a partial or full suspension of production. This would cause shortages of raw materials and semi-finished products, and thus disruptions in the supply chain of many products. Interruptions in the supply of basic parts and raw materials result in the suspension of the production of many goods needed in everyday life. We have already seen this in the pandemic, for example, interruptions in the supply of microprocessors from East Asia – adds Minister Waldemar Buda.

As noted in the release of the Ministry of Entrepreneurship and Technology, companies operating in energy-intensive industries are often a significant employer on the local labor market. They employ up to several thousand employees in one plant. In some cities, industrial plants provide system heat for local communities. The current situation on the energy market may pose a threat to thousands of jobs, as well as to the possibility of supplying heat to residents of housing estates.

Consent of the European Commission

The program was developed on the basis of the Act of 29 September 2022 on the rules for the implementation of support programs for entrepreneurs in connection with the situation on the energy market in 2022-2024.

In terms of compliance with EU legislation, it is based on the data published in October this year. by the European Commission of the updated “Crisis Temporary Framework of State Aid Measures to support the economy after Russia’s aggression against Ukraine”.

The European Commission notified the program on December 20, 2022, confirming its compliance with EU state aid law.

Who is the help for?

It is estimated that the group of industries that will be able to benefit from the aid consumes more than 20 TWh of electricity annually, which is more than one third of the consumption of all industrial companies. These are industries such as: metallurgy, ceramics, cement production or fertilizers.

Entrepreneurs operating in Poland who meet two conditions jointly will be eligible for the program:

  • The costs of purchasing electricity and natural gas accounted for at least 3% of the value of their production in 2021 or 6% of the value of production in the first half of 2022.
  • At least half of their revenues or production value came from activities in the PKD codes or PRODCOM codes listed on the list of sectors particularly vulnerable to the effects of the crisis, developed by the European Commission.

Financial assistance

The budget of the program is over PLN 5 billion.

The amount of support will depend on the amount of eligible costs incurred by the entrepreneur from February to December 2022. These are the costs of purchasing gas and energy resulting from a price increase higher than 50% compared to the average price in 2021.

There will be two maximum aid limits depending on the financial situation of the entrepreneur. The basic limit is 50% of eligible costs, up to a maximum of EUR 4 million per capital group. Entrepreneurs who have recorded a decrease in EBITDA (a measure of enterprise profitability) by at least 40% between the entire year 2021 and 2022 or between the second half of 2021 and the second half of 2022 will be entitled to the increased limit of aid. The increased limit will also apply to those companies which recorded negative EBITDA in both periods. The amount of support in the increased limit may amount to up to 80% of eligible costs up to EUR 50 million per capital group.

Call for proposals

The operator of the program will be the National Fund for Environmental Protection and Water Management.

The call for proposals should be launched by mid-January. Entrepreneurs will have 14 days to submit applications from the date of publication by the Ministry of Development and Technology and the program operator of information on the possibility of submitting applications.

The payment of the funds should take place in February this year.

Will the farmer benefit?

When the European Commission announced in September that it was opening the way to support EU energy-intensive companies (including fertilizer producers), both Janusz Wojciechowski, EU Commissioner for Agriculture, and Henryk Kowalczyk, Deputy Prime Minister and Minister of Agriculture, predicted that this would mean a direct reduction in fertilizer prices in in the near future.

How it will really be, only time will tell.

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