The government will cancel the subsidies received by Agrofert, Hamé or Madeta; she ends up taking milk to schools | News

Minister of Agriculture Zdeněk Nekula (KDU-ČSL) said on Thursday that starting next year “zero crowns” will be allocated to the subsidy. The government wants to save 10.2 billion CZK from the money intended for agricultural subsidies from the state budget, but did not provide more information.

The aim of the subsidy support is to increase the quality of processing of agricultural products or to increase the competitiveness of food and feed production enterprises on the European market, according to SZIF.

After presenting the consolidation package, Minister Nekula said that the cuts should mainly concern subsidies for large enterprises. Dana Večeřová, president of the Food Chamber of the Czech Republic, told ČTK that the ministry is preparing to cancel the only subsidy title for food producers. She said it was meant for investment. According to her, the minister indicates that there is no interest in the processing of domestic production in the Czech Republic. “Unfortunately, a number of Czech food companies have already received investment incentives of up to 50 percent of costs from other EU countries if they build processing plants on their territory,” she added.

Agrofert belongs to the trust funds of the chairman of the ANO movement and former prime minister Andrej Babiš. According to the State Registry of Beneficial Owners, he is the real owner of Agrofert, he also controls it according to the audit of the European Commission.

The holding’s spokesman Pavel Heřmanský said that the cancellation of subsidies will reduce the competitiveness of Czech food companies, because foreign companies receive subsidies. “We don’t do business because of subsidies. Investment subsidies made up only two percent of our investments last year,” he added. At the beginning of this year, on the occasion of the 30th anniversary of its founding, the group stated that over the past ten years it had invested over 106 billion crowns in the development and modernization of its companies. Of this, the holding received 3.9 billion in subsidies, which is 3.7 percent of all investments.

In 2021, a subsidy of around CZK 25 million was drawn from the companies in the holding, among others Vodňany poultrya dairy company received a similar amount Being or Dairy Hlinsko. It was also acquired by enterprises involved in meat processing as a company Kostelecko sausages, which drew over 24 million CZK. The company also received a subsidy of over eight million CZK Krahulík – Meat factory Krahulčí. The bakery received more than CZK 9.6 million Penalty. Holding companies also received subsidies ZZN Pelhřimov, Primagra or asked.

The largest Czech dairy received over 17 million crowns from the subsidy program Madeta, which processes almost a million liters of milk per day in its plants. Madeta according to SZIF website received over 115.1 million crowns from national subsidies in fiscal year 2021. The CEO of the company, Milan Teplý, told ČTK today that if the company loses subsidies, most likely will end milk deliveries to schools. It was a government program, which the cabinet will probably stop subsidizing, the company will also lose technology subsidies. According to Teplý, the reduction of agricultural subsidies is directed against large enterprises, and Teplý doubts that they will cover the demand of small ones instead.

“In our case, it is (subsidy) support for technological investments, the other side of the matter is also school milk, a government program. They’re going to stop subsidizing it, so I’m not going to do charity and load 1,100 schools with milk to lose that much money on every delivery. I will end it as quickly as possible,” said Teplý.

I agree with @MJureka . If a company decides not to supply its products for a certain market segment, it is of course its choice and it will be replaced by competing suppliers. The throttling of one subsidy title in the amount of 230 million CZK will certainly not put large food companies down. https://t.co/qO6hRdXfCR

— Zdeněk Nekula (@ZNekula) May 12, 2023

The company also drew the subsidy Hame, which is one of the leading Czech manufacturers of durable and refrigerated foods, exports to dozens of countries and is part of the Norwegian Orkla group. Hamé already functions as a trademark under the company Orkla Foods Czech Republic and Slovakiawhich itself drew CZK 7.7 million in the subsidy program.

The company received a subsidy in the amount of CZK 25 million in the program Rabbit Market Štěpánov, whose chairman is the former president of the Agrarian Chamber Zdeněk Jandejsek. The company is one of the largest processors of poultry meat.

Cuts of more than ten billion crowns in subsidies are criticized by the Agrarian Chamber of the Czech Republic or the Agricultural Union of the Czech Republic. Chamber president Jan Doležal called it a populist move that no one discussed with the chamber. He also stated that national subsidies are almost the only form of support for livestock production, and cutting subsidies will lead to a decrease in the competitiveness of companies.

Kofola is shocked by the proposal to increase VAT to 21 percent, the director said

Beverage group Kofola is shocked by the government’s proposal to increase VAT on soft drinks to 21 percent. In a statement to ČTK, the CEO of Kofola in the Czech Republic and Slovakia, Daniel Buryš, stated this today. According to him, it will burden restaurants in particular.

“We are shocked by the proposal. It’s a pat on the back that the hard-pressed beverage industry really didn’t expect. The impact on restaurants, which are to increase from ten percent to 21 percent, will be particularly difficult. Gastronomy still hasn’t recovered from covid and the energy crisis, and this will give it another blow,” said Buryš. According to him, this decision, after the cancellation of the EET, may lead to a strengthening of the influence of the gray economy in the future.

“From the point of view of the justification of the government’s upcoming move, the reassignment of mineral waters to a higher rate is very surprising. It is precisely mineral waters that have demonstrably positive health effects and are definitely not among “unhealthy” foods. In the same way, herbal teas or, for example, fresh UGO juices certainly do not belong there,” said the director.

He called the Ministry of Finance’s argumentation that the goal of the decision is to limit disposable beverage packaging completely incompetent. “Manufacturers have been actively preparing the introduction of a deposit system for a long time, which will, on the other hand, enable the repeated and efficient use of PET material, and they are ready to finance the entire system. The circular economy is the solution to this problem. And we are sure that, thanks to backup, the Czech Republic will soon overtake the targets set by the EU,” said Buryš.

He reminded that Kofola today delivers all its assortment for restaurants in returnable packaging. Kofola introduced the Cirkulka project to the retail store – it started selling Kofola, Vinea and Rajec drinks again a year ago in returnable glass bottles.

“We understand the government’s need to stabilize the budget and perceive many of the proposed measures as beneficial. However, the result should definitely not be the impairment of the field, which, as one of the few in the Czech Republic, belongs to the leaders for the entire Central European region. We believe that the government will still correct some of its not fully thought-out proposals,” said Buryš.

Kofola is one of the most important producers of soft drinks in Central Europe, it has 11 production plants in five European markets. In addition to the drink of the same name, the company’s products include the brands Rajec, Korunní, Ondrášovka, Kláštorná Kalcia, Jupí, Vinea and Semtex. The group includes the UGO network, the Czech producer of mixtures of medicinal plants Leros, the Slovenian company Radenska and the Croatian producer of mineral waters Studenac. Kofola has more than 2,000 employees.

Last year, the Kofola group increased sales by 18.7 percent year-on-year to 7.88 billion crowns. Its operating profit before depreciation (EBITDA indicator) reached 1.11 billion crowns, 1.6 percent less than the year before.

The government’s tax reform package is to reduce the number of VAT rates from three to two. The base rate is to be 21 percent, reduced by 12 percent. However, it should only include products or services that, according to the government, are socially important.