14 million euros to support food sector companies in Estonia
The Estonian scheme of 14 million euros to support companies operating in the food and beverages production sectors, highly impacted by energy's rising costs, has been approved by the European Commission.
The European Central Bank estimated before the Russian aggression that the energy price shocks will reduce GDP growth by around 0.5 percentage points in 2022. Continued high energy prices are likely to increase poverty and affect business competitiveness. Energy-intensive industries, as the food and beverages one in Estonia, have faced higher manufacturing costs.
The Temporary crisis framework
The state aid scheme is part of the Temporary crisis framework, amended by the Commission on 20 July 2022 with the Winter Preparedness Package, in order to help Member States' economies to afford the economical crisis caused by the Russian military invasion in Ukraine.
The new framework enables Member States to:
- grant limited amounts of aid to companies affected by the current crisis or by the related sanctions and countersanctions;
- ensure that sufficient liquidity remains available to businesses;
- compensate companies for the additional costs incurred due to exceptionally high gas and electricity prices.
"I perceive a great risk in terms of food security in the country as some industries that need a lot of gas – where you need to boil, pasteurize and heat things – will grind to a halt" said in an interview to local media Sirje Potisepp, head of the Estonian Food Industry Association. For instance, Nordic Milk, a local company which operates the Tere and Farmi trademarks, has invested hundreds of thousands of euros in switching to shale oil since spring.
Who can enjoy the aid and how?
The financial support will be provided in form of grants to companies of all sizes active in Estonia for at least one financial year. The amount per beneficiary will be calculated as a percentage of the eligible costs, depending on their size. The aid must not exceed 500 thousand euros per single company and will be granted on 31st of December 2022 at the latest.