Autumn Special 2014

EU subsidies: millions for doing nothing

Author: Kai Kreuzer

The EU spends around 50 billion euros a year on agricultural subsidies. The grants from the EU and member states are intended, among other things, to support organic agriculture. Scarcely anyone is aware, however, that financial support for organic agriculture in Poland is being embezzled on a massive scale by means of non-existent walnut plantations. The Polish government has made changes to the programme but, according to insiders, millions of euros have for years been finding their way into shady bank accounts.
(Picture: Supposed walnut plantations in Poland)

 

Farms, private individuals and firms owning land have been able to apply for a grant of up to 2,396 zloty (nearly 600 euros) per hectare of land that they claimed was being used for walnut plantations. Over the years, ample warnings by experts that funds were not being allocated appropriately were dismissed, but nevertheless the state is still approving the distribution of money by its agency ARiMR. The consequence was that the word about the new business model spread like wildfire in Poland, and the area of land for which applications were made has rocketed since 2004. In the meantime, the state payments agency itself stated, on 1.12.2008, that in 2007 14.8 million euros (55.6 million zloty) had been distributed for walnut plantations. What has to be remembered in all of this is that on much of the land in question there are either no walnut trees at all or that, years after being planted, there are just miserable little saplings 20 to 30 cm high. (Picture: To the left of the stake a little walnut tree desperately competing with the grass)

Thanks to this uncontrolled bonanza, the number of applications and approvals rose significantly between 2004 and 2008, and the area of subsidised land has mushroomed. Polish experts estimate that the 5,000 ha of walnut trees in 2004 doubled in 2005. In 2006, the 10,000 ha rose by 50 % to 15,000 ha, which then more than doubled again in 2007 to 31,000 ha. According to information from the Polish Council of Ministers in 2009 regarding financial support for environmental measures in agriculture, in 2008 this land area grew yet again to 35,850 ha. 2009 it could have been 40,000 ha of walnut and supposed walnut plantations, that were financed, what would correspond to 28 million euro.
(Graphic: Estimated area and estimated expenditure on walnut cropping in Poland – figures on 01.07 for each year and converted in keeping with www.oanda.com)

The level of subsidy for growing walnuts grew in close correlation to the land area from around 12 million zloty to 86 million zloty. The share of walnut plantations in the total environmental measures in agriculture rose from 13 % in 2006 to 30 % in 2007. In the meantime, this figure has probably risen even higher. A booming business for property owners, tax advisers and lawyers. Interestingly, the annual report with exact data on the development of the organic sector in Poland appeared regularly until 2006 and then stopped being published. It has to be asked why this report with detailed figures was replaced by a much more general and less precise publication. (Picture: Silnowo near Szczecinek (Pomerania). A supposed walnut-plantation, where thousands of car drivers pass every day)

However, it has to be said that not every walnut plantation in Poland in receipt of subsidies is a con. About 5,000 ha, on which this nourishing tree crop is grown, are perfectly justified in receiving grants for old plantations. In the Carpathians, for example, walnut trees are grown properly (picture below on right). Here, the tasty and healthy nuts have been harvested, processed and marketed for centuries. The trees thrive on the sunny slopes with their short, snowy winters. On the plains of Pomerania and the lowlands, however, the young trees are often nibbled by wild animals and severely damaged by frost. The result is that the main shoot dies, and at best they are left with weak side shoots from the main stem. For a long time, the state did not impose criteria for planting fruit trees. Was all you had to do to get your hands on a subsidy to stick a few twigs into the ground or plant 10 – 20 cm one-year-old trees in a meadow? (Picture above: So-called walnut plantation with no sign of a walnut tree)

“It doesn’t work unless you look after the trees,” is what the agricultural experts say. You have to mow the grass regularly, protect the trees from animals, and stinging nettles, for example, have to be cleared. If you don’t undertake this work, a walnut plantation will not thrive. But it has to be assumed that people applying for grants in recent years were not interested in this kind of input in any case. (Picture left: walnut trees in the Carpate mountains)

A definition of a walnut plantation was forthcoming late in the day (in a statement by ARiMR on 1.12.2008). Now, it is “official” that fruit trees have to be 80 cm tall and have a circumference of 8mm at 10 cm up the stem. Bushes must be at least 20 cm high. A regulation issued by the Council of Ministers on 16.2.2010 states that missing trees have to be replaced (at least 75 per ha are prescribed), and they must be at least 80 cm tall. (Picture on the right: young, vigorous walnut trees)
A regulation issued in 2009 stipulates in great detail which sorts of fruit are to be subsidised. The list contains, in addition to the usual apples, pears and apricots, species like the snowball tree (vibernum), mountain ash, cranberry, sea buckthorn, cornelian cherry, hawthorn and sloe. The question is why such specialist crops should be subsidised on such a grand scale.

In the meantime, the initial level of subsidies for walnut plantations has been drastically reduced, because the EU administration pricked up its ears and the ministry, after thinking about it for five years, was obliged to act. As early as 2005, they could have seen what was going on when the first facts emerged. Since 11 March 2010, payments have been cut back for the first six years to only 160 zloty/ha. After this period, the figures rise to 800 zloty/ha for land in conversion and 650 zloty/ha for plantations certified organic. We have to remember that this affects only new applications. All the old cases are continuing to be fully financed. Anybody whose application was approved in 2007, for example, will benefit from this cornucopia until 2012.

In contrast to the member states of the old EU, where national governments co-financed (50 %) the EU’s measures, in the case of the new members their contribution is only 20 %. So the EU Commission pays a whopping 80 % for these agricultural environment measures that were intended to make membership for the accession countries more attractive – membership that they in any case coveted.
(Picture on right: Frosted walnut sapling)

And the Poles have been pretty good too at exploiting any loophole: since the grants for fruit plantations over 100 ha were reduced by 50 %, and to a tenth in the case of plantations over 300 ha, some people have been cleverly getting round this regulation. For example, a former agricultural cooperative with over 500 ha was bought by several friends and family members who each, of course, were below the above limits. Each one of them then applied for the subsidies.

Another trick to get their hands on the coveted subsidies is to plant ash trees (Fraxinus excelsior) instead of walnut trees. The leaves look similar and they are much more robust. Of course, this contravenes the aim of the providers of finance, namely to promote the production of nuts and fruit, and it is therefore in contravention of the EU guidelines. (Picture on right: Young ash tree)

After all of this, and decades of fraud involving olive plantations in southern Europe, it is astounding that the EU has not implemented more measures to prevent the systematic abuse of subsidies in the European community.

Sources: 
Explanation of  Senator Jan Wyrowiñski - concerning walnut plantations
http://www.senat.gov.pl/k7/dok/sten/oswiad/wyrowinski/2702.htm

Answer of agricultural minister Bogdan Borusewicz to the explanation of Senator Jan Wyrowiñski
http://www.senat.gov.pl/k7/dok/sten/oswiad/wyrowinski/2702o.pdf

http://www.tvn24.pl/12690,1575393,1,1,jak-minister-zarobil-na-orzechach,wiadomosc.html
http://www.przekroj.pl/wydarzenia_kraj_artykul,3702,0.html
http://superwizjer.onet.pl/1520026,archiwum.html?MASK=50922621
http://www.przekroj.pl/wydarzenia_kraj_artykul,4497.html
 

07.06.2010

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