National subsidies for livestock production have been rising over a long period. The objectives of pork production and of number of animals are not met
Press release to audit No 18/08 - 15 April 2019
The Supreme Audit Office examined subsidies to support the livestock production distributed between 2014 and 2017. The Ministry of Agriculture (MoA) and the State Agricultural Intervention Fund (SAIF) distribute and manage these subsidies from the national budget as well as from the EU funds. The Czech Republic is one of the EU countries which significantly subsidises livestock production. Between 2015 and 2017, this support amounted to CZK 21 billion, out of which CZK 10 billion came from the EU funds. In spite of this considerable volume of funds, there is a failure on the part of the state to increase self-sufficiency in livestock production. The Supreme Audit Office found the most serious deficiencies in setting of national subvention terms.
Although subsidies for livestock production are steadily rising since 2012, the Ministry of Agriculture fails to achieve the strategic objectives it had set itself. For example, between 2012 and 2016, subsidies for pig and poultry farming rose by 300%. In 2017, the livestock population — dairy cattle and pigs — as well as the level of consumption coverage of beef and pork was reduced compared to 2015.
The Supreme Audit Office found the biggest deficiencies in a national subsidy programme to help pig and poultry farmers to fight disease outbreaks. The Ministry of Agriculture reimbursed CZK 5.3 billion for these subsidies in the period under review. The conditions imposed by the MoA did not make the beneficiary act economically. For example, they used subsidies to pay for overpriced leasing of cleaning and disinfection machines, or to pay for professional supervision during the cleaning of stables carried out by their own forces.
Subsidies from the national subsidy programme are also intended to increase the quality of milk. However, the Ministry of Agriculture paid over CZK 200 million to dairies to cover normal operating expenses. These were companies with long-term profits, though.
In the case of national subsidies, the control system did not work well either. Nevertheless, more than two thousand applicants are reported annually. In some cases, beneficiaries thus received support for ineligible expenditure or for expenditure to which they had not submitted invoices. For example, the MoA paid out almost CZK 24 million for milk transport for the years 2016 and 2017, even though this is ineligible expenditure.
On the other hand, in the case of subsidies from European sources, the MoA set up a management system as well as conditions for granting aid effectively, with some specific shortcomings. Errors concerned splitting of investment projects from rural development programmes. Thus, thanks to the division of projects, some grant recipients could receive a higher subsidy than allowed by the threshold.
The SAO also analysed data from the European Commission’s Farm Accountancy Data Network (“FADN”). This network is the main source of information on the real economic situation of agricultural holdings. The analysis of the FADN data showed that the Czech Republic was paying higher than average subsidies in livestock production compared to other EU Member States.
Please consult the detailed analysis here: https://www.nku.cz/scripts/detail.php?id=10419
Supreme Audit Office
- Audit Conclusion from audit No. 18/08 (pdf, 811 kB)