Agricultural Protection Fund or a new tax for farmers?

“On February 1, the Agricultural Protection Fund starts, which the processors and farmers already call a new tax for farmers” – this is how the Polish Chamber of Milk begins its January announcement.

The problem is that he writes untruthfully, because FOR has been operating since 2023. Last year, KOWR Regional Branches received almost 700 applications for compensation in connection with these regulations (for unpaid invoices for 2022) for the amount of PLN 30.91 million. 450 applications were positively considered and compensation in the amount of PLN 17.07 million was granted.

But already in February this year the second call for applications from farmers for compensation should start. As stipulated in the Act on FOR, an application for compensation should be submitted to the director of the local branch of the National Center competent for the place of residence or registered office of the agricultural producer, on a form developed by the National Center and available on its website, from February 1 until March 31:

• the year following the year in which the purchasing entity became insolvent, or
• the second year following the year in which the purchasing entity became insolvent.

PIM is against FOR

Already when the draft of this act appeared, among others, The Polish Chamber of Milk raised serious reservations regarding the appropriateness of establishing this fund.

– We pointed out then that with high production costs both on the part of farmers and the processing plant, the fund would be an additional burden, or even a tax that would hit farmers. Today, farmers have no certainty that the money they pay through the purchasing entity will go back to the dairy sector. It should be recalled that the fund has a solidarity nature and, for example, funds from the dairy sector can go to any other industry. – we read in PIM’s announcement on this matter.

A medium-sized cooperative will pay PLN 5 million to FOR

Purchasing entities that are payers of goods and services tax are obliged to make payments to the Fund. Payments are calculated in the amount of 0.125% of the value of agricultural products, net of goods and services tax, specified in Annex I to the Treaty on the Functioning of the European Union, purchased from agricultural producers within the meaning of the Act on the national system of records of producers, records of agricultural holdings and records of applications for payments. . The value of agricultural products net of tax on goods and services purchased from an agricultural producer should be determined on the basis of VAT invoices and VAT RR invoices included in tax returns. The first payments to the Fund should be made starting from the second quarter of 2024 for the period from January 1 to March 31, 2024.

Already last year, the Polish Chamber of Milk prepared preliminary simulations for the milk sector. It follows from them that A medium-sized cooperative must transfer approximately PLN 5 million to this fund annually. This money could be used for investments, which would result in the development of the cooperative and the funds from farmers would remain in the cooperative owned by the farmers.

– We want the government to analyze the validity of FOR’s actions. Both both farmers and processors believe that such a fund may generate pathological behavior on the market and create a gateway for companies and purchasing entities that, knowing about the existence of the fund, will not pay farmers, believing that they will receive remuneration from the fund. Therefore, it is important that in times of crisis in the agricultural sector, we very seriously analyze the creation of additional burdens on farmers and agricultural cooperatives, being sure that the effectiveness of its impact may be counterproductive – said Agnieszka Maliszewska, Director of the PIM Office, on her LinkedIn profile.

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