Luxembourg Unveils Support Plan for Pig Meat Sector

Following an in-depth discussion with representatives of the Luxembourg pig meat sector, Romain Schneider, Minister of Agriculture, Viticulture and Rural Development, presented a support plan for companies in difficulty.

The Agriculture Minister recognised the essential role played by farmers and all professionals in the agro-food chain in the supply of the food chain. Although the essential activities of the pig meat sector have not been interrupted in order to maintain the supply chain, the sector has been heavily impacted by the COVID-19 health crisis.

The price of pork (mainly determined by the German market price) started to fall as soon as lockdown measures were introduced in April 2020. However, with the current closure of restaurants as well as the emergence of African swine fever in Germany, the situation is only getting worse and has become alarming.

Luxembourg's Agriculture Minister stressed that these circumstances, which have had a significant impact on the turnover and the cash flow of pig farms, require a support plan to cover their immediate working capital needs.

Such support includes a non-repayable capital grant of up to €20,000 per quarter, thus aligning with the aid granted to small and medium-sized enterprises (SMEs) for uncovered costs. It encompasses a fixed capital grant of €4,000 on the one hand and an amount of assistance based on the reimbursement of financial charges and the monthly costs of employees on the other.

For piglet breeders (the most vulnerable sector), a maximum of 75% of eligible costs will be reimbursed with a maximum of €20,000 per quarter and per farm. For all other pig farms, a maximum of 50% of the eligible costs will be reimbursed with a maximum of €20,000 per quarter and per farm. This aid will also be subject to various conditions, including a decline in quarterly turnover of at least 30% compared to the same quarter of the previous year. Initially, the last quarter of 2020 and the first quarter of 2021 will be taken into account. After this period, an analysis of the situation of the sector will be carried out.

Professionals in the sector may also be eligible for the new COVID-19 social security contribution measures aimed at easing the financial burden on employers and the self-employed. Whilst social contributions remain due and are invoiced monthly, the Joint Social Security Centre (Centre commun de la sécurité sociale - CCCS) will not receive default interest in the event of late payment of contributions until 30 June 2021, after which the rate of default interest is reduced to 0% if the payment deadlines from which certain employers and self-employed workers benefit are respected.

Agricultural producers also have the possibility of obtaining a reduction in their tax advances, on justified request to the Luxembourg Inland Revenue (Administration des contributions directes).

Minister Romain Schneider pointed out that the new tax measures as well as the initiatives in terms of social contributions apply not only to companies in the pig meat sector, but to the entire agricultural sector.

The Agriculture Minister deemed these new measures essential for companies in difficulty in the sector to be able to overcome the challenges caused by the health crisis and to continue their activity. Nevertheless, he stressed that the support plan should also include medium and long-term measures to make the sector more resilient.

In addition to preserving their cash flow, the position of regional producers is set to be strengthened. In order to consolidate the links between consumers and farmers and to strengthen this framework of trust, transparency and solidarity in a sustainable way, it is considered important to make consumers aware of the advantages of short circuits.

The main objective of the support plan will nevertheless be the strategic orientation of the pig meat sector in the medium and long term. To do this, the Agriculture Minister will initiate discussions with representatives of the pig meat sector, taking into account the fact that the European Green Deal and Farm to Fork strategy mention an upcoming review of legislation relating to the sector, particularly with regard to animal welfare and the promotion of organic farming.

Another subject during this consultation will focus on the creation of a mutual fund for a future improvement of the risk management of income loss in the sector.

Minister Romain Schneider concluded by emphasising that this support plan is aimed at helping regional producers achieve a more sustainable, environmentally friendly and economically robust model.