The Business of Subsides
The European Union has funding available for the promotion of agricultural products. Michèle Shah looks at how the funds are used in Italy
The first announcement of Italy’s COM wine promotion was published in 2008, with a total funding scheme of €4.5m ($4.7m). The most recent funding scheme issued for 2016/2017 is for €102m, of which €30.6m is destined for national promotion and the rest for regional promotion. Over the past few years, Italy’s level of funds for promotion have grown consistently, allowing for continuity within non-EU markets. The funding regulations published by Italy’s ministry of Agriculture are accessible to Italy’s entire wine industry, to large and small companies alike, so long as they qualify.
In general, access to EU funding is not without hitches and glitches, not least of which are the rigorous bureaucratic procedures, tight deadlines, difficulties in communication with institutional divisions, and a lengthy and constrained control system. Small wineries are often faced with the difficulty of deciding on which country to invest in and how to plan the investment, as new markets can evolve rapidly. Accessing COM funding can be a particular challenge for such wineries, as they not only don’t have the internal know-how to deal with the necessary regulations, but they also struggle to reach the requirements in production and investment, such as the minimum €100,000.00 investment per country project; although this can be halved to a minimum of €50,000.00 per country when applying for multiple country projects, it still remains an inconceivable amount for most small companies, and a reason why many estates have grouped together, forming their own consortiums in order to access funding. According to Felluga, difficulties crop up from the application process through to the management of projects. “The project management rules require a scrupulous collection of documents and verifications that justify the results of the investment, which is of course acceptable, but this requires a certain expertise and it is very time consuming,” he says. The complexity of the process had him turning to Business Strategies, which specialises in this field. Based in Florence, Business Strategies has helped more than 500 wineries apply for EU/COM funding. The company provides strategic and operational support, and acts as a supervisor of the funding allocations, and an adviser for marketing and promotional activities. Above all, they monitor the legal and regulatory framework of the EU and national institutions. “This means providing the necessary support required in the reporting process by providing financial monitoring mechanisms designed to ensure proof of activities and expenditures with
approved projects,” says managing director Silvana Ballotta. “The handling of the funding allows the winery to focus on carrying out its promotional activities without having to worry about the complexity of the paperwork.”
The existence of COM and public funding is controversial in some quarters. “The EU’s agriculture has always been sustained by public funding,” says Angelo Gaja of Gaja Winery in Piedmont. “This is because it is a strategic, but also a fragile sector, often incapable of standing on its own two legs.” Gaja says he doesn’t deny the usefulness of public money on occasion, particularly if it encourages new and younger farmers to start businesses. “The welfare state, however, has become the blight of European agriculture, especially when it supports incapable entrepreneurs who do not qualify for public financing.” He says this allows them to remain in the market and distort it, “to the detriment of entrepreneurs who are capable of assuming the responsibility and risk of business. Prolonged welfare over time hinders free and fair competition within the sector.” Gaja also levels criticism at the bureaucratic and political aspects attached to EU funding. “The handing out of contributions for agriculture has also generated a massive public bureaucracy with the task of identifying who to allocate public funds to and to what extent, as well as to verify that public money is well spent,” says Gaja. “As long as the EU continues to generously pour public money in agriculture it will be difficult to find a remedy.” Nevertheless, COM funding has also contributed to promoting the quality concept of Italy’s DOP and IGP in non-EU countries, highlighting product quality, as well as protecting their labelling and promoting the region’s provenance. The current plan for COM funding is active up until 2020. While regulations are revised continually, access to funds is to become more complex, giving precedence to companies that have not yet applied for funding. And after eight years, it also will be necessary to assess the effects of the funding. That question will determine whether funding continues past that date.
Origin information: WineMeridian