EU establishes a facility for rapid response to soaring food prices in developing countries

As a response to the strong increase of food prices in the developing countries, Regulation (EC) Nº 1337/2008 has been published in the OJEU on December, 31st. This regulation establishes as a complement to the European Union’s current development policy instruments, a financing facility for a rapid response to the crisis caused by volatile food prices in developing countries.

The volatility of food prices has put numerous developing countries and their populations in a dramatic situation. This food crisis, accompanied by a financial and energy crisis and environmental deterioration, risks putting additional hundreds of millions of people in extreme poverty, and in circumstances of hunger and malnutrition and calls for increased solidarity with those populations.

In the scope of this mechanism a certain type of measures will be eligible for implementation, taking into account the specific country-level conditions:

  1. Measures to improve access to agricultural inputs and services including fertilisers and seeds, paying special attention to local facilities and availability.
  2. Safety net measures aiming at maintaining or improving the agricultural productive capacity, and at addressing the basic food needs of the most vulnerable populations, including children.
  3. Other small-scale measures aiming at increasing production based on country needs: microcredit, investment, equipment, infrastructure and storage; as well as vocational training and support to professional groups in the agriculture sector.

Eligible entities

Those countries and entities will be eligible for funding, as far as their programmes contribute to the objectives of this Regulation:

  • Partner countries and regions, and their institutions.
  • Decentralised bodies in the partner countries, such as municipalities, provinces, departments and regions.
  • Joint bodies set up by the partner countries and regions with the Community.
  • International organisations, including regional organisations, UN bodies, departments and missions, international and regional financial institutions and development banks.
  • Community institutions and bodies, but only for the purposes of implementing the support measures referred to in Article 3.4 on this Regulation.
  • EU agencies.
  • Ceratin entities and bodies of the Member States, partner countries and regions and any other third country complying with the rules on access to the Community’s external assistance set out in Regulation (EC) No 1905/2006.

Participation in the appropriate contractual procedures will be open to all natural and legal persons who are eligible pursuant to the geographical development instrument applicable to the country in which the action takes place, as well as to all natural and legal persons who are eligible pursuant to the rules of the implementing international organisation, care being taken to ensure that equal treatment is afforded to all donors. The same rules wil apply in respect of supplies and materials. Experts may be of any nationality.

Types of financing

  • Projects and programmes.
  • Budget support, especially sectoral budget support, if the partner country’s management of public spending is sufficiently transparent, reliable and effective, and if the conditions for budget support set out in the relevant geographical financing instrument have been met.
  • Contributions to international or regional organisations and international funds managed by such organisations.
  • Contributions to national funds set up by partner countries and regions to attract joint financing from a number of donors, or contributions to funds set up by one or more donors for the purpose of the joint implementation of projects.
  • Co-financing with entities eligible for funding as defined in Article 4 of the Regulation.
  • Funds made available to the European Investment Bank (EIB) or other financial intermediaries on the basis of Commission programmes for the purpose of providing loans (in particular to support investment in and development of the private sector), risk capital (in the form of subordinated or conditional loans) or other temporary minority holdings in business capital, and contributions to guarantee funds, to the extent that the financial risk of the Community is limited to these funds.