All the billions raining on Italian agriculture:more than half of the subsidies are "harmful" or "uncertain" for the environment

The ministry's latest report, relating to 2021, identifies 168 subsidies that have impacts on the environment, for a total of 52.5 billion euros

The ecological transition cannot do without state subsidies.To encourage the transition to a more sustainable economy, governments around the world have created an intricate system of incentives, benefits and non-repayable contributions.To date, however, in Italy there are more subsidies that have a negative impact on the environment than those that generate a positive impact.The topic has become current again in the wake of farmers' protests, which started in Germany and France but ended up spreading like wildfire throughout Europe.In Italy, the government has tried to meet farmers by doing backtrack on the reintroduction of Irpef for agricultural income.Since 2017, workers in the sector have been exempt from paying personal income tax, but the 2024 budget law canceled this relief.In the end, the tractor revolt convinced the government to back down, announcing an extension of the Irpef exemption for all incomes below 10 thousand euros, i.e. around 90% of farmers.By 2026, Italy intends to reduce environmentally harmful subsidies by at least 2 billion euros.And among the possible cuts there are also reliefs on agricultural fuels.

How much are subsidies for and against the environment worth in Italy?

The last one relationship of the Ministry of the Environment, relating to 2021, identifies 168 subsidies that have an impact on the environment, for a total of 52.5 billion euros.Of these:22.4 billion are environmentally harmful subsidies (Sad), 18.6 billion are environmentally favorable subsidies (Saf) and 11.5 billion are environmentally uncertain subsidies (Sai).Almost half of all this aid (44%) concerns energy, but the "Agriculture and Fisheries" sector is also one of the main beneficiaries of environmental subsidies.According to an estimate of Political report card, state aid to the agricultural sector is worth over 8 billion euros per year.Of these:approximately one billion euros have negative impacts on the environment, 3.3 billion have a positive impact and 4 billion have an uncertain impact.In the Mase report, a distinction is actually made between two different types of subsidies:direct ones, in which resources are transferred directly to a group of beneficiaries;and the indirect ones, which translate into a loss of revenue to the state coffers.Overall, environmental subsidies grew from 42.8 billion in 2016 to 52.4 in 2021.All items are increasing, both those relating to environmentally favorable aid (from 16.1 to 18.6 billion) and those relating to harmful aid (from 18.2 to 22.3 billion).

Subsidies for agriculture

If we take into consideration the agricultural sector, the most expensive subsidy (2.1 billion) is the so-called "basic payment scheme", financed partly by the government and partly by the European Union.The Mase report describes the measure as «a support assigned to farmers to guarantee equity and stability in agricultural incomes, which on average are lower than those received by operators in other economic sectors and subject to high fluctuations».This subsidy is classified as "environmentally uncertain", since only part of the funds is linked to compliance with virtuous practices by farmers.An example of an environmentally favorable subsidy is the greening, also co-financed by the EU, which is worth 1.1 billion euros.This is a payment paid to agricultural companies that adopt practices beneficial to the climate and the environment, such as crop diversification.An example of Sad is the aforementioned discount on agricultural fuels, which costs the Italian state around 900 million euros per year.For a normal consumer, the excise tax is 73 cents for each liter of petrol and 62 cents for each liter of diesel.For farmers, the two excise duties fall to 40 and 19 cents per liter respectively.Also listed as environmentally harmful subsidies are the reduced VAT rates for the purchase of fertilizers, which are worth 88 million euros per year.

Cover photo:ANSA/Giuseppe Lami | The farmers' protest in front of the Colosseum (Rome, 9 February 2024)