Subsidies for agricultural investments – Improving profitability and competitiveness

The audit was targeted at investment subsidies granted to agricultural entrepreneurs in order to promote the profitability and competitiveness of farms. The objective was to assess the effectiveness of investment subsidies.

Subsidies are granted for various projects promoting agricultural production and for animal and crop production. Typical investments subsidised include cowsheds and other buildings and equipment of animal production, the structures of greenhouse production, improving the condition of fields and purchases of various machinery. The funding for the current subsidy period 2023–2027 amounts to approximately EUR 470 million.

The audit found it impossible to assess the effectiveness of the subsidies based on current data. The assessment is also hampered by the fact that, in practice, subsidies are granted to all applicants. According to the audit, investments clearly have a positive link to profitability, but it was not possible to assess the impact of investment subsidies on investments.

Agriculture has changed from what the subsidy scheme was designed for. The previous family farm model is becoming history at the farms that make investments. The family farm model has been replaced by a model similar to other business activities. In the new model, the farm is no longer just the residence and livelihood of one family but a limited liability company that buys a lot of resources from outside.

Based on the audit, the NAOF recommended that the Ministry of Agriculture and Forestry should develop agricultural statistics and the information collected in connection with investment subsidies to make it possible to obtain information on the effectiveness of the subsidies. In addition, when designing new subsidy schemes, the ministries should take into account the structural change in agriculture.