Subsidies on Co-operation: most funds are distributed between large firms, support of small and medium-sized enterprises falls behind

Press release to audit No. 17/26 – 4. 6. 2018


The Supreme Audit Office examined the distribution of European subsidies from the Rural Development Programme 2014-2020. Auditors focused specifically on a part of these subsidies provided by the so-called "Co-operation" measure. In this measure, there are CZK 3.8 billion prepared for recipients, which are distributed by the Ministry of Agriculture (MoA) within six areas - for example, to support the development of agricultural primary production or the development of agricultural products processing. Subsidies are intended to help to boost research, technological development and innovation in agriculture, and also to help small and medium-sized enterprises.

In the middle of the programming period, the balance is as follows: the drawdown of subsidies from the Rural Development Program is delayed - from the Co-operation measure, the Ministry of Agriculture paid only five projects at the end of 2017 in the total value of CZK 186 million. Furthermore, the MoA has set the rules in such a way that the biggest beneficiaries of subsidies are large enterprises. On the other hand, support for small and medium-sized enterprises falls behind.

Of the prepared CZK 3.8 billion, the resort has earmarked more than CZK 2.8 billion for one specific area - to support the development of agricultural products processing, where large-scale food companies made up the majority of approved grant applicants. The MoA has set more favourable conditions for applicants in this area than for applicants in other areas. They can apply for a grant without restriction and repeatedly - the maximum ceiling of support that an applicant can achieve in this programming period has not been set. In general, it is easier for beneficiaries to obtain subsidies, even when they ask for more money.

Allocated funds are used by companies to acquire machinery and technology or for structural alterations. Expenditure on science and research was negligible. 46 examined project applications accounted for about one percent, which is striking considering the fact that the support for science and research is one of the main reasons why the MoA allocates these subsidies.

By contrast, supporting small and medium-sized enterprises is failing. For example, complicated subsidy conditions for some areas are one of the reasons why grant applications have not been approved. In other areas which the MoA selected for support, applicants have no interest in these subsidies. In total, the support does not work for three of the total of six areas - these are the ones that should have helped mainly small and medium-sized enterprises.

Other exposed shortcomings are associated, for example, with the selection of supported projects. In order to assess the innovation and other expert criteria of the projects, the MoA established evaluation commissions and defined rules for their activities. The rules are such that the evaluation of projects by these committees is not transparent - their decision cannot be reviewed, just the result is known. It is also problematic that appeals of some unsuccessful subsidy applicants have been judged by the same committee, which originally decided that they were not entitled to the subsidy.

"Our goal was to map weaknesses and to show problems that these specific subsidies bring. The results of our audit speak for everything. Now it is necessary to start working on the situation to change. We are approximately in the middle of the programming period and it is not too late to do something about it," said Pavel Hrnčíř, Member of the Supreme Audit Office, who was in charge of the audit.

Communication Department
Supreme Audit Office

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