Description

Subsidies that help farmers invest in new facilities, expand their production, diversify into new and additional products, or fundamentally change their farming methods. They may be spent on buildings, machines, breeder animals, seeds and plants or on business management courses.

It is important that subsidies for farms and cooperative businesses in the food sector are regarded as initial assistance and not as permanent subsidies.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Clear development prospects for agriculture, the agri-food sector and participation of farms
• Clear responsibilities in public authorities
• Close cooperation and knowledge sharing with farmers' organisations
• Compatible regional and world trade law (WTO conformity)
• Constant market surveying and forecasting
• Ownership and initiative on behalf of the local population
• Regulated and legally protected payment structures
• Sanction mechanisms
• Regulatory framework

Possible Negative Effects

• Corruption and personal gain
• Market distortion
• Incentive for machinery suppliers and banks to increase prices