czech farmers


NKU Audit: Agriculture Subsidy Funding Non-Transparent

EU Subsidy Fraud

Prague, June 4 (CTK) – Most of the billions of crowns worth of EU subsidies from the Rural Development Programme go to large companies, while support to small and medium-sized companies lags behind, the Supreme Audit Office (NKU) said today in a press release on its inspection.


The evaluation of projects of applicants for subsidies is non-transparent, it added.


The Agriculture Ministry, which distributes the subsidies from the programme, rejects the reproaches.


During the check, the NKU focused on distribution of money from the Cooperation measure for the programming period of 2014 to 2020. The subsidies are to back research, development and innovations in agriculture and help small and medium-sized companies.


“Of the prepared Kc3.8bn, the ministry has set aside more than Kc2.8bn for one concrete area – support to development in processing of agricultural products where most of the approved projects for subsidies were of large food processing companies,” said NKU spokesman Vaclav Kesner.


The ministry has confirmed that out of the supported applications in this area, projects of small and medium-sized companies made up only some 30 percent.


“It is logical that it is easier for larger companies to cope with the organisation of cooperation with research institutions,” the ministry’s press department said in reaction to the NKU’s findings.


In the support to development in processing of agricultural products, the ministry also set more favourable conditions for the applicants than in other areas, the NKU said, adding that applicants in this programme can ask for support repeatedly. Also, no ceiling limit has been set for them.


Companies use the money for the purchase of machinery or for construction, while spending on research was negligible, of the 46 checked projects, it represented only some 1 percent.


This is surprising as support to science and research is one of the main reasons why the ministry distributes these subsidies, Kesner said.


“Putting results of research in practice is the main goal, aimed at raising of competitiveness. Purchase of new technology and machinery is needed for this as well,” the ministry’s press department said.


In this programme, some companies of Agrofert group have acquired the highest possible amount of money this year, according to data from the State Agricultural Intervention Fund (SZIF). Until February 2017, Agrofert was owned by Prime Minister Andrej Babis but then it was transferred to trust funds.


Olma dairy got Kc75m for innovations in cheese production and Vodnanska drubez poultry producer the same sum. An application of Kostelecke uzeniny meat processing company for some Kc70m has been approved this year.


Other companies have gained the highest possible subsidies as well – Polabske mlekarny and Madeta dairies among them. Rabbit Trhovy Stepanov, where Agrarian Chamber president Zdenek Jandejsek is director, has gained Kc35.5m.


One of the reasons why small firms are at a disadvantage are complicated conditions for gaining a subsidy in some areas. In other areas which the ministry has picked for support, companies are not interested in the subsidies, said Kesner.


The ministry is analysing the reasons for low interest in subsidies in some areas and wants to adjust the conditions to motivate also smaller firms, the ministry said.


The NKU also criticised the approval process for subsidies. The ministry has formed commissions for evaluating the projects but their decisions cannot be checked, only the result is known.


Appeals of some unsuccessful applicants, moreover, are assessed by the same commission which rejected their application.


The ministry argues that the results are published transparently on the Internet and applicants are informed about the reasons why their application has been turned down.


The NKU also pointed at delays in drawing of the subsidies. By the end of 2017, subsidies had been paid only to five projects for Kc186m in total by the ministry.


“Now work has to start to change the situation. We are roughly in the middle of the programming period so it is not too late to do something about it,” said NKU member Pavel Hrncir who led the inspection.


The ministry stated that the Rural Development Programme ranks among the best as regards drawing of subsidies.