1996-2000 Report on the implementation of the long-term national aid scheme for agriculture in the northern regions in Sweden pursuant to Commission Decision 96/228/EC presented by the Commission to the Council pursuant to Article 143(2) of the Act of Accession to the European Union of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden
Date: 2002-03-01
Institutions: European Commission
Subjects: North Middle Sweden, State aid, Sweden, aid system, aid to agriculture

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 01.03.2002
COM(2002) 105 final

1996-2000 Report

on the implementation of the long-term national aid scheme for
agriculture in the northern regions in Sweden pursuant
to Commission Decision 96/228/EC

presented by the Commission to the Council pursuant to Article 143(2) of the Act of Accession
to the European Union of the Republic of Austria, the Republic of Finland
and the Kingdom of Sweden

TABLE OF CONTENTS

1.

1.1.

1.2.

1.3.

1.4.

1.5.

1.6.

2.

INTRODUCTION.................................................................................................... 3

In general ................................................................................................................. 3

Reference period ...................................................................................................... 3

Method of calculating the Nordic aid ........................................................................ 4

Determination........................................................................................................... 4

The Swedish programme of national aid ................................................................... 4

Administration and controls...................................................................................... 6

Implementation of the aid scheme during 1996-2000................................................ 6

2.1.

Milk production........................................................................................................ 6

2.1.1. Milk delivered to dairies........................................................................................... 6

2.1.2.

Transport aid ............................................................................................................ 8

2.1.3. Direct sales............................................................................................................... 9

2.2.

2.3.

2.4.

2.5.

2.6.

2.7.

2.8.

3.

Pigs .......................................................................................................................... 9

Sows/piglets ........................................................................................................... 10

Egg production ....................................................................................................... 11

No of pigs, sows and laying hens eligible for aid .................................................... 13

Goats...................................................................................................................... 13

Soft fruit and vegetable production ......................................................................... 14

Total national and co-financed aid paid out 1996–2000 .......................................... 15

DEVELOPMENT IN NORTHERN SWEDEN – IMPACT OF THE AID .............. 16

3.1.

Production and profitability developments.............................................................. 16

3.1.1. Milk production...................................................................................................... 16

3.1.2.

Pig production ........................................................................................................ 18

3.1.3.

Egg production ....................................................................................................... 18

3.2.

Structural development........................................................................................... 18

3.2.1. Number of farms .................................................................................................... 18

3.2.2.

Labour requirements of different sectors................................................................. 19

3.3.

3.4.

4.

Environmental compensation for preserving open agricultural landscapes .............. 19

General effects ....................................................................................................... 20

CONCLUSION ...................................................................................................... 21

2

1.

INTRODUCTION

1.1.

In general

Pursuant to Article 142 of the Act of Accession to the European Union of the Republic of Austria,
the Republic of Finland and the Kingdom of Sweden, the Commission has authorised Sweden to
grant long-term national aid to maintain traditional agricultural activities in specially designated
regions. These regions have been determined by the Commission and they include the agricultural
areas to the north of the sixty-second Parallel and some adjacent areas where comparable climatic
conditions render agricultural activity particularly difficult.

low
The following factors have been taken into consideration when determining the areas;
population density (maximum 10 persons/km2), Utilised Agricultural Area (UAA) as a proportion
of the total area (less than 10 percent) and agricultural area used for the cultivation of crops
intended for human consumption as a proportion of UAA. The area covers a total of 509 442
hectares of utilised agricultural area, which corresponds to 14 percent of Sweden’s total UAA in
year 1994.

The northern regions affected consist of the areas 1, 2a, 2b and 3 of the Swedish aid system for
northern Sweden that was in force before accession (see figure 1). The previous differentiation
between these four regions or part-areas has been maintained for the application of the aid scheme
for the northern regions based on Article 142 of the Act of Accession.

Long-term aid is differentiated by aid area and granted on the basis of production factors (head of
livestock or hectare),
taking into consideration the restrictions established by the common
organisations of the market. Aid may not be linked to future production or bring about an increase
in production (quantitative restriction) or an increase in the level of combined aid (monetary
restriction) in relation to the aid granted during a reference period. The production amount is
considered at the total level, regional limits are set for the sake of clarity.

This Nordic aid system was approved by Commission Decision 96/228/EC1 of 28 February 1996.
It has since then been amended twice. The first amendment (97/557/EC2) corrected some material
errors, allowed aid for milk at farm level to be paid to the total amount of milk in accordance of
Article 2(1) of Regulation (EEC) No 3950/923 and increased slightly the aid for pig meat (as a
result of more accurate data). The second amendment (2000/411/EC4) transferred part of the aid
for milk to the aid for milk transport (retaining total budget neutrality), postponed the annual
reporting deadline from April to June and allowed some flexibility between pig meat and eggs
sectors in calculating livestock units eligible for support.

1.2.

Reference period

As a condition for national aid, agricultural production may not increase in relation to the period
before accession. In addition, the total level of aid should not exceed the level before accession.
On the basis of national statistics available, 1994 was chosen as a reference period for the
production of cow’s milk and soft fruit and vegetables, both in terms of quantity and level of aid.
The period was not considered to be affected by the forthcoming accession and was, at the same
time, representative of the situation after the Swedish agricultural reform. This year was also the

1

2

3

4

OJ L 76, 26.3.1996, p. 29.
OJ L 230, 21.8.1997, p.13.
OJ L 405, 31.12.1992, p. 1.
OJ L 155, 28.6.2000, p. 60.

3

first year during which aid was given for soft fruit and vegetables. 1993 was chosen as the
reference period for the other branches of production.

Figure 1: Support areas

1.3.

Method of calculating the Nordic aid

To evaluate the level of aid and the combined aid allocated by type of product receiving national
aid, the total level of regional aid during the reference period has been compared with the level of
aid after accession. Aid after accession relates not only to national aid but also to co-financed
compensatory allowances and agri-environmental measures.

National aid (with the exception of aid for cow’s milk for which there is a quota system) is
calculated on the basis of production factors (head of livestock or hectare) within the aid areas and
not on the quantities produced.

1.4.

Determination

To guarantee the level of aid and to avoid production or combined aid exceeding the level
permitted, the Commission Decision lays down a number of conditions. The decision states the
permitted number of aid units and the total combined aid per product type. Pursuant to Article 4 of
Commission Decision 96/228/EC, if the reference quantities for production are exceeded, Sweden
should reduce the aid granted proportionally during the following year for the product concerned.

4

1.5.

The Swedish programme of national aid

Fundamental domestic regulations on national aid to agriculture in northern Sweden can be found
in Swedish Regulation (1996:93)5 on aid to agriculture in northern Sweden. Pursuant to this
national legislation aid may be granted to create better conditions for agriculture in areas in
northern Sweden where, in view of the climate and other production conditions, it is particularly
difficult to pursue such activity. Due to the difficult, permanent natural conditions that prevail in
the areas they are eligible for a total subsidy amount which is greater than the maximum amount
stipulated in the Council Regulation which regulated compensatory allowances in 1995. The fact
that the areas are permanently disadvantaged, mainly due to the poor soil quality, structural
shortcomings and the short growing season, leads to low output and high production costs per unit.
This in turn makes it difficult for farmers in these areas to obtain a reasonable income from their
production, i.e. an income obtained by comparable farms in other regions.

Pursuant to Commission Decision 96/228/EC, national aid is granted for cow’s milk, pigs, goats,
piglets, eggs and soft fruit and vegetables. In most cases aid is differentiated in the above
mentioned regions to reflect previous conditions and the significance of the natural disadvantage.

Aid is also granted for the transport of cow’s milk between the place of production and the first
collection point (or the place of initial treatment). This is regarded as aid to facilitate the sale of
products pursuant to the aim of Article 142(3) of the Act of Accession. It covers some of the
transport costs between the place of production and the central collection point or the first
treatment plant.

National aid relating to animal production is granted per animal, with the exception of aid for
cow’s milk, which is paid per kg. Transport aid for milk is granted per kg, with aid amounts
differentiated by aid area. Regarding laying hens the aid is granted per replacement hen, once in a
lifetime.

The Swedish authorities have used the maximum permitted unit aids for all
the products
throughout the whole period, with the exception of egg production from 1998 onwards (1 SEK is
approximately 0.11 EUR).

Maximum permitted and actually applied aid level in each aid area (AA)

Product

Piglets, SEK/sows

Goats, SEK/nanny goat

Soft fruit/vegetables, SEK/ha

Milk, SEK/kg

Pigs, SEK/pig

Eggs, SEK/hen

- Applied since 1998

Milk transport, SEK/kg

AA 1

843

430

2850

1,05

222

13,45

10,00

0,043

Aid area and amount SEK

AA 2a

AA 2b

437

430

2850

0,71

143

13,45

10,00

0,039

437

430

2850

0,47

143

13,45

10,00

0,039

AA 3

101

430

1850

0,09

23

4,90

3,60

0,03

To be eligible for national aid a farmer must undertake to use at least three hectares of agricultural
land (arable or pastureland) within aid areas 1–3. National aid is not given to farmers who are

5

Regulation SFS (1996:93) of 22 February 1996 on the national aid for agriculture in Northern Sweden.

5

drawing a state old-age pension or a full early retirement pension. National aid is not paid out if
the amount is less than SEK 500.

Anyone applying for national aid for animals must have financial responsibility for the animals.
There are also special conditions linked to the different types of aid, which are listed below under
the relevant aid form.

1.6.

Administration and controls

National aid for milk, pig and egg production is handled, considered and approved by the Swedish
Board of Agriculture. Audits to check that aid beneficiaries meet the conditions required for the
aid are conducted within the scope of the integrated administration and control system (IACS)6.
Egg producers support is controlled with a copy of an invoice of the acquisition of the replacement
hen. On the spot checks are conducted on qualification factors and on meeting the requirement for
minimum three hectares of arable land. The Swedish Board of Agriculture also audits dairies and
slaughterhouses within the scope of the aid system according to the market regulations.

National aid for producing piglets, goats, soft fruit and vegetables is sought using a combined
application form for area aid, environmental aid and regional aid. The aid is considered by the
County Administrative Board in the County in which the farm is situated. The paying authority is
the Swedish Board of Agriculture. IACS is applied for audits. The Swedish Board of Agriculture is
responsible for co-ordinating the audits which are conducted by the County Administrative
Boards.

At least ten percent of the applications relating to animal based aid and at least five percent of the
area-based aid is audited. These percentages are coherent with the sampling techniques used in
IACS. Each year 25–30 farmers are selected for area based audit. The amount of land audited in
recent years has been approximately 100 hectares.

2.

IMPLEMENTATION OF THE AID SCHEME DURING 1996-2000

Each year Sweden must submit information to the Commission on the impact of the aid granted
and on economic development in the specific regions and on the impact on the environment and on
the preservation of the countryside. The following report provides details on aid in aid areas 1-3
during the years 1996–2000 and also provides information on the development of the economy in
the areas.

With the exception of milk and pig production, where statistics have been gathered from dairy and
slaughterhouse associations, the figures in the report are based on the Agricultural Farm Register
(ACR). Other statistics have been gathered from the aid system’s databases that relate to quantity,
amount of aid and, in some cases, head of livestock.

2.1.

Milk production

2.1.1. Milk delivered to dairies

To be eligible for aid for milk production the milk producer, in addition to meeting general
conditions, must have at least two dairy cows. National aid for milk production is granted for the
milk quantity delivered to the dairy.

6

Regulation (EEC) No 3887/92.

6

In 2000 the number of farms specialising in milk production in the northern regions and receiving
Nordic aid is 2 407 or 18.9% of the total number of dairy farms in Sweden. Their production
corresponds to only 14.8%, however, of the entire milk production in Sweden.

Table 1. Milk production in the national aid areas (AA), 1996–2000

Aid year

No of dairy farms
in AA 1–3

No of dairy farms
eligible for aid
in AA 1–3

As a proportion
of total farms in
Sweden by milk
quota, (%)

Milk production
in 1–3, proportion
of Swedish
production, (%)

1996
1997
1998
1999
2000

3 371
3 178
3 009
2 791
2 538

~ 3 150
2 945
2 841
2 682
2 407

18,5

~ 20

18,7

~ 18

18,9

14,7
14,4
14,3
13,7
14,8

The years 1996–2000 were distinguished by the fact that the total number of farms engaged in
milk production in aid areas 1–3 gradually decreased (tables 1 and 2) slightly more significantly
than Sweden as a whole. However, the share of dairy farms receiving Nordic aid has remained
fairly stable. This decrease has been accompanied by a decrease in the number of dairy cows in
these areas, although slightly less than the national average (table 3). The number of dairy cows
eligible for aid did not reach the reference level in any year.

Table 2. No of farms with dairy cows per aid area and for the country as a whole, 1996–2000

Aid year

AA 1

AA 2:a

AA 2:b

AA 3

Total 1–3

Sweden

1996
1997
1998
1999
2000

538
459
522
409
372

1 402
1 362
1 205
1 170
1 073

805
735
736
676
616

626
622
546
536
477

3 371
3 178
3 009
2 791
2 538

16 463
15 790
14 859
13 964
12 691

Table 3. Total number of dairy cows per aid area and for the country as a whole, 1996–2000

Aid year

1996
1997
1998
1999
2000

Ref. number

AA 1

7 816
7 694
8 371
7 247
6 876

8 819

Source: ACR.

AA 2:a

30 362
32 263
30 824
30 494
29 202

34 057

AA 2:b

17 242
17 053
18 350
17 148
16 426

19 465

AA 3

12 820
13 335
11 928
12 172
11 433

14 559

Total 1–3

68 240
70 345
69 473
67 061
63 937

77 000

Sweden

466 355
467 981
449 130
448 521
427 621

As a combined effect of the reduction in number of farms and cows and yield trend, the production
volume has remained quite stable (table 4). However, the total production for each year is well
below the reference level in all areas apart from 2:a.

7

Table 4. Total milk production (tonnes) per aid area, 1996–2000 1)

Aid year

1996
1997
1998
1999
2000

Reference production

AA 1

53 930
50 161
50 168
49 701
47 500

54 763

AA 2:a

209 498
215 879
216 627
221 560
219 161

216 150

AA 2:b

118 970
118 679
118 773
117 513
117 730

121 073

AA 3

88 458
86 799
85 730
84 026
82 039

92 249

Total

470 856
471 789
471 298
472 800
466 430

484 235

1)

Includes also milk from farms that do not receive Nordic aid.

The amount paid out in the different aid areas is below the reference level for each year and each
aid area (table 5).

Table 5. National aid paid out for milk production (MSEK), 1996–2000

Aid year

1996*
1997
1998
1999
2000

Reference level

AA 1

51,45
52,47
52,15
51,59
49,70

53,00

AA 2:a

140,50
151,75
152,21
155,61
155,14

158,00

AA 2:b

AA 3

Total 1–3

45,14
55,00
55,02
54,35
54,86

56,37

4,96
7,55
7,39
7,23
7,05

7,50

242,05
266,59
266,77
268,78
266,76

274,87

*

Reduced aid amount in öre/kg January–April.

Production of goat’s milk in Sweden is relatively small. Calculated as an average yield of 800 kg
per year and goat, total production has been 1 800 tonnes of milk, with little variation, during the
years 1996–2000. National aid, paid per goat, is reported in section 2.6.

2.1.2.

Transport aid

Pursuant to the Commission Decision on national aid to agriculture in northern Sweden aid may
also be granted for the transport of milk. Aid is granted for the quantity of milk collected in each
aid area. An application for transport aid should include information on the amount of milk, which
is collected monthly in each aid area. Payments are made to the dairies after the Swedish Board of
Agriculture has received the application. Transport aid paid and total aid paid for the dairy sector
is shown in tables 6 and 7.

Table 6. National transport aid paid for milk (MSEK), 1996–2000

Aid year

AA 1

AA 2:a

AA 2:b

AA 3

Total 1–3

1996
1997
1998
1999
2000

Reference level

2,18
2,16
2,15
2,09
2,03

2,20

8,40
8,42
8,44
8,48
8,56

8,70

8

4,66
4,63
4,63
4,58
4,59

4,90

2,58
2,60
2,57
2,52
2,46

2,80

17,82
17,81
17,79
17,67
17,64

18,60

Table 7. Total national aid paid for milk production and transport (MSEK), 1996–2000

Aid year

1996
1997
1998
1999
2000

Reference level

2.1.3. Direct sales

AA 1

53,63
54,49
54,30
53,68
51,73

55,20

AA 2:a

148,90
159,98
160,65
164,09
163,70

166,70

AA 2:b

49,80
59,59
59,65
58,93
59,45

61,27

AA 3

7,54
10,15
9,96
9,75
9,51

10,30

Total 1–3

259,87
284,40
284,56
286,45
284,39

293,47

When the Swedish regulation (1996:93) on national aid to agriculture in northern Sweden came
into force, farms with direct sales quotas also became entitled to national aid.

Aid is granted for the amount of milk or other milk products which are sold directly from the farm
during the quota year and which are reported to the Swedish Board of Agriculture’s milk quota
unit. Aid is paid afterwards, once per quota year. The quantity involved has varied between
199 000 - 307 000 kg and aid amount between SEK 131 000 - 236 000.

2.2.

Pigs

To be eligible for aid for pig production it is necessary, in addition to meeting general conditions,
for the animals for which aid is sought to have been within the same aid area during the three
months preceding slaughter (qualification period). In addition,
the meat must have passed
inspection under the national Food Act. Aid per head is granted between 40 and 2 500 pigs per
farm.

The number of farms engaged in pig production during the period 1996–2000 has decreased both
in the Nordic aid areas and in Sweden as a whole. Pig production carried out in aid areas 1–3
during the entire period 1996–2000 comprised 3–4% of total Swedish pig production (tables 8
and 9).

Table 8. Pig production in the aid areas and in the country as a whole, 1996–2000

Aid year

No of pig farms
in Sweden

No of farms
in aid areas 1–3

No of farms
with aid

1996
1997
1998
1999
2000

~ 7 500
~ 6 600
~ 5 700
~ 4 900
~ 3 900

~ 550
~ 500
~ 400
~ 335
~ 300

190
197
167
175
131

Pig prod. share
of Swedish
production, (%)

3,6
3,3
3,8
3,5
3,8

9

Table 9. No of farms with pigs, aid area and the country as a whole, 1996–2000

Aid year

AA 1

AA 2

AA 3

Total 1–3

Sweden

1996
1997
1998
1999
2000

Source: ACR.

54
30
78
37
26

352
315
213
204
192

152
154
119
94
85

558
499
410
335
303

7 461
6 590
5 664
4 907
3 898

Total pig production has been above the reference level for each year apart from 2000 when
production dropped below the level for the first time (table 10). Pig production with aid was,
however, below the reference level in all areas during the period 1996–2000 given the fact that not
all production is eligible for aid.

Table 10. Total pig production (tonnes), aid area, 1996–2000 1)

Aid year

AA 1

1996
1997
1998
1999
2000

Reference level

233
224
194
90
58

214

AA 2

8 228
8 554
8 444
9 092
8 118

8 003

AA 3

2 304
2 105
2 148
1 980
1 770

2 358

Total 1–3

10 765
10 833
10 786
11 162
9 946

10 575

1)

Includes also production that is not eligible for Nordic aid.

The total aid amount paid out was below the reference level each year during the period 1996–
2000. The reference level has on occasion (1996–97) been exceeded in aid area 1 (table 11).

Table 11. Total aid for pig production (MSEK), 1996–2000

Aid year

AA 1

1996
1997
1998
1999
2000

Reference level

2.3.

Sows/piglets

0,50
0,58
0,46
0,23
0,09

0,46

AA 2

8,92
11,52
12,59
12,55
11,02

13,05

AA 3

Total 1–3

0,35
0,48
0,47
0,45
0,41

0,66

9,77
12,58
13,52
13,23
11,52

14,17

To be eligible for aid for piglet production it is necessary for the farmer, in addition to meeting
general conditions, to have at least two sows. Aid can be given for a maximum of 120 sows per
farm. The animals must also be kept at the farm for at least two months from the day after the day
the application is received by the County Administrative Board (qualification period).

Of the total number of farms, which are engaged mainly in the production of piglets, 4-6% is
located in the northern regions (table 12). As with other aid the number of farms engaged in piglet
production, and consequently the amount paid, has decreased during the period 1996–2000. The

10

result has been an increasingly large gap between the reference level and the actual amount paid
(tables 13–14).

Table 12. Piglet production 1996–2000

Aid year

1996
1997
1998
1999
2000

Number of piglet farms
in Sweden

Number of farms in
aid areas 1–3 with aid

~ 7 100
~ 5 900
~ 4 700
~ 4 500
~ 2 800

224
213
188
163
116

Table 13. Total number of sows per aid area and country as a whole, 1996–2000

Aid year

AA 1

1996
1997
1998
1999
2000

Ref. number

Source: ACR.

164
182
170
153
80

216

AA 2

6 063
6 226
6 625
5 567
4 933

5 945

AA 3

1 445
1 409
1 384
951
868

1 254

Total 1–3

7 672
7 817
8 179
6 671
5 881

7 415

Sweden

272 858
268 662
255 326
220 096
201 896

Table 14. Piglet production, aid paid out (MSEK), 1996–2000

Aid year

AA 1

AA 2

AA 3

Total 1–3

1996
1997
1998
1999
2000

Reference level

2.4.

Egg production

0,12
0,14
0,11
0,11
0,06

0,18

1,93
1,80
1,70
1,52
1,24

2,60

0,11
0,09
0,07
0,08
0,07

0,13

2,16
2,03
1,88
1,71
1,37

2,91

To support egg production in northern Sweden national aid is granted for replacement laying hens,
which when put into production are less than 25 weeks old. Aid for egg production is granted to
farms where egg production can provide a boost to the farm from an economic and employment
point of view. Aid is not therefore given to farms with fewer than 1 000 replaced laying hens per
year.

Of the total number of farms engaged mainly in egg production 12% are located in the northern
regions. The number of eggs produced in the northern regions (for which aid is granted)
corresponds to 6,2% of the total number of eggs produced in Sweden. The total number of farms
engaged in egg production and the number of farms eligible for aid in aid areas 1–3 has decreased
during the period 1996–2000 (table 15).

11

Table 15. Egg production no. of farms and production per aid area and country as a whole,
1996–2000

Aid year

No of egg farms
in Sweden

No of egg farms
in AA 1–3

No of farms
eligible for aid
in AA 1–3

Egg production in 1–3,
proportion of Swedish
production, (%)

1996
1997
1998
1999
2000

~ 8 700
~ 8 300
~ 7 000
~ 6 500
~ 5 700

970
~ 1 000
~ 1 100
~ 700
~ 700

35
28
21
19
14

3,7
4,4
7,2

~ 5

6,2

The volume of egg production has varied over the years, but recently there has been a general
reduction in aid areas 1–3. In aid area 3, however, the reference level has been exceeded in recent
years (table 16) although total production has been below the reference level.

Table 16. Egg production with aid* tonnes (estimated), 1996–2000

Aid year

AA 1

1996
1997
1998
1999
2000

Reference level

326
654
723
561
454

900

AA 2

5 227
2 454
2 995
2 474
1 702

3 700

AA 3

Total 1–3

295
997
673
829
581

400

5 848
4 105
4 391
3 864
2 737

5 000

*

Egg production is estimated based on the assumption that 40% of the hens are kept on free-range farms.
Production from free-range hens is 20.5 kg eggs per hen and laying period (4–15 months) giving an annual
production of approximately 17 kg. The corresponding figure for battery hens is 22 kg (18 kg/year).

The reference level for the aid paid in aid area 3 has been exceeded during the whole period. The
same applies to aid area 1, in 1996 and to aid area 2 in 1997 and 1998. The total reference level
was exceeded in 1996 and 1997. As the aid per hen was reduced from 1998 onwards, the amount
paid has since then been lower than the reference level (table 17).

Table 17. Egg production, total aid paid (MSEK), 1996–2000

Aid year

1996
1997
1998
1999
2000

Reference level

AA 1

1,25
0,49
0,41
0,32
0,26

0,67

AA 2

1,26
1,86
1,86
1,40
0,97

1,69

AA 3

0,11
0,29
0,14
0,17
0,12

0,048

Total

2,62
2,64
2,41
1,89
1,34

2,40

As there is a very small number of farms engaged in egg production, relatively small changes have
a considerable marginal effect and therefore the total aid level was exceeded in 1996-97. Since
then, due to the reduced unit aid level the amount of aid granted has remained under the maximum
allowed.

12

2.5.

No of pigs, sows and laying hens eligible for aid

From 1 January 1998 the number of cereal fed animals (pigs, sows and laying hens), converted to
head of livestock has been added together when comparing the number of livestock units eligible
for aid (table 18). For comparison, the same information from the years 1996–97 is also included.

Table 18. Total number of LU of sows, pigs and laying hens with aid, 1996–2000

Aid year

1996
1997
1998
1999
2000

Reference number

2.6.

Goats

Sows

1 896
1 720
1 584
1 454
1 177

2 447

Pigs

10 453
10 388
11 063
10 835
11 881

12 225

Laying hens

Total 1–3

2 119
2 333
2 481
2 195
1 556

1 860

14 468
14 441
15 128
14 484
14 614

16 532

To be eligible for aid for goat production it is necessary for the stock to include at least five goats.
Only nanny goats, which have had kids or are more than one year old, are eligible for aid. The
animals must also be kept on the farm for at least two months from the day after the day the
application is received by the County Administrative Board (qualification period).

Of the total number of Swedish farms producing goat milk as a main production line
approximately 19 percent are located within aid areas 1–3. The total number of animals for aid
areas 1–3 has remained below the reference number during the period 1996–2000. The number of
animals in aid area 2 during the same period has, however, been slightly above the reference
number each year (table 19).

Table 19. Goat production, number of animals receiving aid, 1996–2000

Aid year

1996
1997
1998
1999
2000

Reference number

AA 1

1 125
988
974
887
967

1 173

AA 2

980
1 026
1 039
950
973

936

AA 3

Total 1–3

226
330
412
404
395

468

2 331
2 344
2 425
2 241
2 336

2 577

During the period 1996–2000 the reference level for the total amount aid has not been exceeded
although the level has regularly been exceeded by a couple of percent in aid area 2.

Table 20. Goat production, aid paid out (MSEK), 1996–2000

Aid year

1996
1997
1998
1999
2000

Reference aid level

AA 1

0,48
0,42
0,42
0,38
0,42

0,51

AA 2

0,42
0,44
0,44
0,41
0,42

0,40

13

AA 3

0,10
0,14
0,18
0,17
0,17

0,20

Total 1–3

1,00
1,00
1,04
0,96
1,01

1,11

2.7.

Soft fruit and vegetable production

To be eligible for aid for soft fruit and vegetable cultivation it is necessary, in addition to meeting
general conditions, to cultivate an area of at least 0.3 hectares of these crops. The minimum
permitted plot is 0.1 hectares.

The number of soft fruit and vegetable farms in aid areas 1–3 has decreased during the period
1996–2000 (table 21).

Table 21. Soft fruit and vegetable production within the aid area, 1996–2000

Aid year

1996
1997
1998
1999
2000

Number of farms
receiving aid

Soft fruit/vegetable farms in
AA 1–3, proportion of total
Swedish production, %

190
185
166
177
139

17,9
17,9
14,6
18,1
10,2

The area under cultivation for soft fruit and vegetable production in aid areas 1–3 has decreased
during the period 1996–2000. The consequence of this is that the area cultivated has increasingly
been below the reference area (table 22).

Table 22. Soft fruit and vegetable production, area with aid (hectare), 1996–2000

Aid year

1996
1997
1998
1999
2000

Reference area

AA 1

75,6
86,4
68,5
57,8
59,2

AA 2

497,5
435,4
340,8
319,0
316,2

646

AA 3

98,4
79,8
64,7
52,3
62,0

104

Total 1–3

671,5
601,6
474,0
429,1
437,3

750

Similarly, total production has decreased throughout the period and is now even further below the
reference production level (table 23).

Table 23. Soft fruit and vegetable production, total production in the aid area * (tonnes,
estimated), 1996–2000

Aid year

AA 1

1996
1997
1998
1999
2000

Ref. Prod.

822
499
418
413
403

AA 2

3 365
2 498
2 406
2 130
2 116

5 640

AA 3

635
1 143
1 016
574
583

2 060

Total 1–3

4 822
4 140
3 840
3 117
3 102

7 700

*

Total production is estimated by multiplying the number of hectares by the average yield per hectare.

As can be expected the total amount of aid has also fallen further below the reference level
(table 24).

14

Table 24. Soft fruit and vegetable production, aid paid (MSEK, 1996–2000)

Aid year

1996
1997
1998
1999
2000

Reference level

AA 1

0,21
0,21
0,20
0,16
0,17

AA 2

1,41
1,41
0,97
0,91
0,90

1,84

AA 3

0,18
0,18
0,12
0,10
0,12

0,19

Total 1–3

1,80
1,80
1,29
1,17
1,19

2,03

2.8.

Total national and co-financed aid paid out 1996–2000

The total amount of National aid paid during the aid period has been well below the reference level
(table 25).

Table 25. Total national aid paid out, (MSEK), 1996–2000

Aid year

1996
1997
1998
1999
2000

Cow’s
milk

242,32
266,59
266,77
268,78
266,76

Ref. level

274,87

Goats

Pigs

Sows

Laying
hens

Soft fruit/
vegetables

Transport
aid

1,00
1,00
1,04
0,96
1,01

1,11

9,77
12,58
13,52
13,23
11,52

14,17

2,16
2,03
1,88
1,71
1,37

2,91

2,62
2,64
2,41
1,89
1,34

2,40

1,80
1,80
1,29
1,17
1,19

2,03

17,82
17,81
17,79
17,67
17,52

18,60

Total

277,5
304,4
304,5
305,4
300,7

316,1

The combined analysis of aid to agriculture in northern Sweden also takes into consideration the
effects of co-financed compensatory allowances in less favoured areas and environmental
payments for preserving open agricultural landscapes. Both the compensatory allowance, which
was mainly related to milk production and goats through LUs, and to pig and piglet production
through hectares of cereal crops, and the environmental aid for preserving open agricultural
landscapes have been below the reference level throughout the period 1996–2000 (table 26).

Table 26. Compensatory allowances, aid for environmentally friendly agriculture and national
aid, paid in aid areas 1–3 (MSEK), 1996–2000

Aid year

1996
1997
1998
1999
2000

Reference level

Compensatory
allowances -
R. (EC) No 950/97

Environmental
aid - R. (EEC)
No 2078/92 1)

Compensatory
allowances +
environmental aid

National aid

121,19
115,27
113,75
113,43
119,30

112,56
121,38
122,64
121,08
136,12

233,75
236,65
236,39
234,51
255,42

265,62

277,49
304,45
304,52
305,41
300,71

316,09

1)

The amount of agri-environmental aid is that of total aid per hectare and not only the 20% incentive.

15

3.

DEVELOPMENT IN NORTHERN SWEDEN – IMPACT OF THE AID

Pursuant to Article 142 of the Act of Accession Sweden is permitted to grant national aid to the
northern regions to maintain agricultural activities in these areas. Analysing the profitability of
each branch of production, the number of farms and the changes in the need for labour for various
product types provides a means of evaluating the impact of national aid, particularly in the
development of production and production methods benefiting from the aid.

3.1.

Production and profitability developments

3.1.1. Milk production

The previous Swedish aid for animal husbandry production in northern Sweden (earlier aid areas
1–4) was based on profitability calculations for dairy farms in each aid area. Aid was granted in
the form of a differentiated price supplement. On entry into the EU this aid was replaced by two
different area-based aids; compensatory allowances and environmental aid for preserving open
agricultural landscapes. For some product branches this aid was supplemented by national aid. For
milk production this national aid was provided in the form of production linked and volume
restricted aid differentiated by aid area.

The number of dairy farms in aid areas 1–3 decreased during 1996-2000 by about 25%, compared
to the country average of -23%. The decrease has been most rapid (-31%) in aid area 1, which has
the poorest natural conditions and the lowest population density. On the other hand, the average
herd size has increased by 30% in support area 1 and 2 and by 25% in support area 3.

In its report 2000:10, the Swedish Board of Agriculture published information on the development
of profitability up to 1999 for some branches of production. Here we have chosen only to report on
the milk branch of production as this dominates the trend of national aid to northern Sweden.

Profitability for milk production resulting from changes in product prices (milk and beef), in prices
for different cost items, in direct aid and average yields and from an increase in stock shows an
improvement for northernmost Sweden during the period 1990–1999. The fact that, since 1995,
the aid for milk production in northern Sweden has been granted partly in the form of aid for feed
grain production via CAP-payments and compensatory allowances reinforces the picture. If the
contribution to profit is calculated per estimated labour hour instead of per dairy cow it becomes
higher outside the aid area than within.

The effect of Nordic aid to farm income can be estimated using sector model calculations based on
sampling of dairy farms. Using a model average dairy farm, where the number of milking cows
has increased from 21 to 25 during the period, it can be seen that the Nordic aid presents 19% of
the gross farm revenue in support area 1, 14% in support area 2a and 2% in support area 3 (see
pictures).

16

1 . 4 0 0 . 0 0 0 k r

1 . 2 0 0 . 0 0 0 k r

1 . 0 0 0 . 0 0 0 k r

8 0 0 . 0 0 0 k r

6 0 0 . 0 0 0 k r

4 0 0 . 0 0 0 k r

2 0 0 . 0 0 0 k r

0 k r

1 . 4 0 0 . 0 0 0 k r

1 . 2 0 0 . 0 0 0 k r

1 . 0 0 0 . 0 0 0 k r

8 0 0 . 0 0 0 k r

6 0 0 . 0 0 0 k r

4 0 0 . 0 0 0 k r

2 0 0 . 0 0 0 k r

0 k r

1 4 0 0 0 0 0

1 2 0 0 0 0 0

1 0 0 0 0 0 0

8 0 0 0 0 0

6 0 0 0 0 0

4 0 0 0 0 0

2 0 0 0 0 0

0

S u p p o r t a r e a 1

O t h e r s u p p o r t

N o r d i c a i d

M e a t

I n c o m e

M i l k

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

W i t h s t r u c t u r a l e f f e c t

S u p p o r t a r e a 2 a

§ §

O t h e r s u p p o r t

N o r d i c a i d

M e a t

I n c o m e

M i l k

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

W i t h s t r u c t u r a l e f f e c t

S u p p o r t a r e a 3

O t h e r s u p p o r t

N o r d i c a i d

M e a t

I n c o m e

M i l k

1 9 9 5

1 9 9 6

1 9 9 7

1 9 9 8

1 9 9 9

2 0 0 0

W i t h s t r u c t u r a l e f f e c t

17

3.1.2.

Pig production

As for milk production part of the aid combination is granted in the form of aid for the production
of feed grain (CAP + compensatory allowances) and this was taken into account when defining the
aid level for the pig sector. The basic assumption was that pig farms in northern Sweden should
produce two thirds of their cereal requirement on their own farms. Farms producing a considerably
lower proportion will not therefore achieve the average total aid level, while farms that cultivate
most cereal on the farm will be slightly favoured.

During 1998 the price of pork fell considerably. Prices also fell during the first six months of 1999.
Since then there has been a recovery. Pig production decreased between 1998 and 1999 in aid
areas 1–3. Despite the change in the price trend the decrease continued during 2000. The total
number of pigs in the country as a whole also continued to decrease as did the number of farms
producing pigs. The decrease in the number of pigs during the period was slightly more rapid in
northern Sweden than in other parts of the country, at 22% and 15% respectively.

3.1.3.

Egg production

The price of eggs fell dramatically during 1995 and continued to fall during the following year.
The price recovered in 1997 and 1998 and, after a further fall in 1999, was felt to have stabilised in
2000 at a level comparable with that for 1997–1998. With an index set at 100 in 1995 the index
value has fallen to 97.7% for 2000. The number of farms producing eggs has decreased during the
period by approximately 40% both in northern Sweden and in the country as a whole.

Rapid structural development is underway in the egg sector. It is affecting production throughout
the country. In the latter half of the 1990s the number of laying hens in Sweden decreased from
approximately 6 million in 1996 to around 5.7 million in 2001.

3.2.

Structural development

3.2.1. Number of farms

The number of farms in aid areas 1–3 decreased during the period 1996–2000 by almost 30%
while the number of farms in the country as a whole during the same period decreased by about
20% (table 27).

Table 27. No of farms, aid area and country as a whole, 1994–2000

Aid year

1994
1995
1996
1997
1998
1999
2000

AA 1

3 145
2 937
2 741
2 631
2 612
2 140
1 779

Source: ACR.

AA 2:a

AA 2:b

7 464
6 859
6 872
6 622
6 296
5 618
5 093

5 111
4 810
4 745
4 856
4 437
4 027
3 682

AA 3

4 764
4 491
4 451
4 301
4 210
3 739
3 439

Total 1–3

Sweden

20 485
19 097
18 809
18 140
17 555
15 524
13 993

97 309
92 546
90 854
88 387
85 598
80 543
78 262

The proportion of small farms is considerably larger in northern Sweden than in the rest of the
country. The average number of cows in dairy farms is 25 in support area whereas it is 35 cows in
the rest of Sweden. Many small farms with limited opportunities for expanding business and

18

increasing yields have ceased milk production during the period. Both the cost of labour and the
cost of buildings and fodder are normally higher the further north production takes place. The
higher labour costs are due mainly to the fact that there is a greater labour input per dairy cow. The
main reason for this is that the stockholding is smaller, for structural reasons, and the farm layout
and climatic conditions are poorer leading to lower yields in crop production and high labour
intensity in the production of fodder on the farm.

3.2.2.

Labour requirements of different sectors

A standard working time is estimated for each agricultural farm included in the annual structural
analysis and linked to the Agricultural Farm Register (ACR) and this is used primarily as a
classification variable in the agricultural statistics. This measure gives a picture of
the
development of the economy through changes in the estimated need for labour each year.

In the country as a whole a trend towards decreased labour need in milk production and increased
need in meat production can be observed. In the whole country less than 40% of the total estimated
labour input was occupied in milk production, whereas in the northern regions the share was still
more than 60%. Similarly the proportion of labour used in crop farming as a proportion of total
labour needs has increased. The total labour need during the period decreased by approximately
5%.

In aid area 1, during the period 1996–2000 the labour need for milk production as a proportion of
the total labour need increased slightly. The increase of the share of meat production was even
more distinct. In total the estimated labour need has decreased in absolute terms by almost a
quarter during the period. The greatest fall has been for small farms which is a sign of the rapid
structural development.

One change common to aid areas 2–3 is that the proportion of labour used in milk production is
decreasing in favour of the labour need for meat production. The total, estimated absolute decrease
in labour need during the period was between 5 and 10%.

The total labour need during the period 1996–2000 fell in all aid areas and in the country as a
whole. Milk production is the dominant production branch in all aid areas. Its share of labour need
has, however, decreased from north to south, i.e. from aid area 1 to 3. Crop production, apart from
fodder cereals, is concentrated mainly in the flat country in South and Mid-Sweden which are
located outside the aid areas. Pig production also takes place, for the most part, outside the aid
areas (a third of all pigs are in the county of Skåne). The proportion of small farms (labour
need < 400 standard hours) is considerably greater in northern Sweden than in the rest of the
country, which is shown by the relatively high proportion of small farms.

3.3.

Environmental compensation for preserving open agricultural landscapes

Pursuant to Article 142 of the Act of Accession one of the objectives of long-term Nordic aid is to
guarantee the protection of the environment and the preservation of the countryside, which is an
important feature for the application of the common agricultural policy in Sweden. Within Nordic
aid areas 1–3 environmental aid to farmers who work to preserve open agricultural landscapes has
replaced a significant part of the previous regional aid to agriculture.

Environmental aid for the preservation of open agricultural landscapes aims to stimulate the use of
agricultural land in a way that improves or preserves the countryside and prevents extensive areas
of agricultural land from being taken out of production. In Nordic aid areas 1–3 this environmental

19

aid is given only to farms engaged in milk or meat production with cattle, sheep or goats. Such
milk and meat production takes place in extensive systems throughout the area.

Like the compensatory allowances, environmental aid for preserving open agricultural landscapes
in Nordic aid areas 1–3 is based on the number of hectares of grazing and pastureland the farm
has. There is a need to link this to the number of animals to ensure that there is sufficient animal
density to prevent the agricultural land from becoming overgrown. For the period 1996–1998 a
minimum density of 1,25 head of livestock was required for the area to be eligible for aid. From
1999 the minimum requirement has been reduced and differentiation has been introduced. It is
now adjusted according to variations in production conditions between the different aid areas. Aid
per eligible hectare is SEK 2,050.

Table 28. Minimum animal density for eligibility, head of livestock per hectare

Aid area

Minimum intensity

1
2a
2b
3

0,83
0,95
1,00
1,05

3.4.

General effects

To preserve open agricultural landscapes it is necessary to maintain sufficient number of farms
practising sustainable farming and generally sufficient farm income. Poor climatic conditions in
northern Sweden make the growing season considerably shorter than in the rest of the country and
production costs significantly higher. By increasing the farmer’s income, national aid makes it
possible to preserve production in the area on a long-term basis. The area is distinguished by the
fact that agricultural production methods rely on a low use of fertilisers and pesticides. National
aid,
together with compensatory allowances and environmental aid for preserving open
agricultural landscapes contributes, therefore, to safeguarding sustainable agricultural production.

A decreasing population density, in an area already sparsely populated and where many people are
dependent on agriculture may jeopardise the vitality of the area. It is therefore necessary to
continue farming in order to preserve the less intensive cultivation in these areas and the open and
varied agricultural landscape with its associated biological diversity. The threat to the landscape in
northern Sweden is that it will become overgrown with coniferous woods. An open landscape is a
requirement for the creation of opportunities for tourism and other leisure activities. Agricultural
activity is the core on which to build further through activities which can be combined and which
complement each other.

The aid also makes a contribution in that it allows production to remain close to the consumer and
in so doing limits the need for transport. Primary production also creates opportunities for a
processing and food industry with the increased employment that this brings.

20

4.

CONCLUSION

The report has been prepared on the basis of information from the Swedish authorities pursuant to
Article 143(2) of the Act of Accession and it shows the following:

(1)

(2)

(3)

(4)

In most sectors where aid to the northern regions is granted the permitted level of
production and the permitted level of aid has not been exceeded during 1996–2000.

Combined community aid (compensatory allowance and agri-environmental aid) has not
reached the level determined for aid to the northern regions. Total level of the aid granted
has therefore not increased when compared with the situation before accession.

Audits have been conducted in accordance with sound financial management practice.

The aid granted plays an important role in protecting the environment and preserving the
countryside and consequently complies with the objectives in the third paragraph of
Article 142(3) of the Act of Accession.

On the basis of the information provided by the Swedish authorities, the Commission considers
that the Swedish authorities have globally respected the Commission Decision 96/228/EC on aid
to the northern regions.

21