Description

Subsidies for investments in tangible/intangible assets for setting up new processing facilities, expanding existing processing facilities, diversifying into new, additional products, or fundamentally changing the entire production process. In the case of product-related processing subsidies, the grant is tied to a particular product.

In the event of a seasonal or temporary surplus in certain agricultural products, product-related processing subsidies can be provided (e.g. the school milk programmes in Thailand and Germany). 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 development prospects for agriculture, the agri-food sector and participation of farms
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Clear responsibilities in public authorities
• 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
• Regulatory framework
• Sanction mechanisms

Possible Negative Effects

• Corruption and personal gain
• Market distortion
• Bad investments
• Risk of abuse through nepotism