On Wednesday, Luxembourg's Ministry of Agriculture, Viticulture and Consumer Protection held a press conference to present details of a series of initiatives where Luxembourg farmers can apply for grants to help alleviate hardship caused by cash-flow problems.

These initiatives will be two-fold: (1) a partial payment by the State regarding social contributions; (2) ad hoc aid for restructuring loans on existing bank debt.

The markets for agricultural products, including milk and pork, have been affected by a crisis. Since 2014, prices are down to the point that the price paid to producers hardly covers the cost of production. This lower margins economic model directly affects farmers' cash flow.

From June 2014 to June 2015 producers' prices were down by 24%; and from June 2015 to June 2016 producers experienced a further decline of 13%. Farms have also been hit from all directions, the negative effects of extremely wet weather in spring and early summer 2016 on agricultural production.

Luxembourg's Minister of Agriculture, Viticulture and Consumer Protection, Fernand Etgen, has proposed the government to help farmers as follows:

• by raising the share of social contributions of all farmers to support from the state budget for the year 2016. The amount of this aid is estimated at €3.7 million;

• providing the opportunity for dairy producers to restructure their existing loans into a lost year (with the bank's agreement). The State will support the payment of interest in connection with bank loans payable in that year with a €15,000 ceiling.

For exemple; A farmer repays a loan of €750,000 at an interest rate of 2.5% over a period of 15 years. The interest is paid by the State for a year, which corresponds to an aid of €15,000 (aid ceiling). During the same year, the farmer is exempted from payment of €45,000 in capital. This amounts to a total of €60,000 reparments due, not to be repaid this year.

Minister Etgen emphasised that this measure is intended to temporarily free up cash without increasing capital borrowed on the farm.

Added to these national aid initiatives are additional European aid, as decided on 18 July at the European Council in Brussels. This new series of support measures worth €500 million, is mainly based on two axes: (1) €150 million (managed at European level) - these are measures aimed at limiting or reducing milk production in order to restore the balance between supply and demand; (2) €350 million of which €560,115 is for Luxembourg. They are classified as temporary aid measures, mainly for the dairy sector, to stabilise the market and alleviate the plight of farmers.

Minister Etgen insists he intends to use national top-ups fully, which means that the envelope of €560,115 will be doubled with national funds.

Besides these market stabilisation measures, an advance payment of CAP aid is planned at EU level, as follows: (1) an advance of 70% on direct aid; (2) an advance of 85% on aid under the RDP (Rural Development Plan) (agro-environmental measures, premiums landscape maintenance, compensation).

Regarding the stormy weather weather last week which also affected farms, Minister Etgen corroborated the intention of the Luxembourg Government to help farmers. With the new agrarian law, it is possible, in the case of natural disasters, to help farmers up to 100% of costs incurred after deducting the share borne by insurance companies, to enable them to restore their potential production faster. The farms will also be supported by the services of ASTA.

Photo by MAVPC (L-R): Christine Herzeele, attachée du Service d'économie rurale (SER); Pierre Treinen, directeur du Service d'économie rurale (SER); Fernand Etgen, Minister for Agriculture, Viticulture and Consumer Protection; André Loos, conseiller de gouvernement 1ère classe at the Ministry