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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure MT-2022-10/2197 Updated – measures in Malta

Subsidy for importers of cereals and flour

Country Malta , applies nationwide
Time period Open ended, started on 01 March 2022
Context COVID-19, War in Ukraine
Type Other initiatives or policies
Category Responses to inflation
– Other
Author Luke Anthony Fiorini (University of Malta) and Eurofound
Measure added 29 April 2022 (updated 05 September 2022)

Background information

Malta largely imports its essential grains. The price of such grains had been increasing in recent years due to the impact of climate change upon markets as well as due to the impact of COVID-19 upon shipping, amongst others. The price of wheat and other grains, however, rose substantially following Russia's invasion of Ukraine. A Malta Today article reported that by March 2020, the price of wheat had risen by almost 30% since the commencement of the war in Ukraine, and 60% since January. Some importers reported that prior to the war, they sourced their products from the Ukraine, whilst others reported importing their product from Russia, with the latter no longer possible due to restrictions on financial transfers. In fact, newspaper reports stated that Malta's rice starch was entirely derived from the Ukraine, whilst 80% of imports of oats, maize starch and crude sunflower-seed oil were also derived from the Ukraine. Conversely, Malta's largest importer of wheat stated that this was not imported from the Ukraine due to its lower certification standards, with much wheat being previously imported from Russia. Government noted that Malta was particularly susceptible to global price pressure due to the small amount of produce being imported at a go, due to the small market and limited infrastructure for storage.

A substantial rise in the cost of such essential grains would likely impact negatively upon several economic sectors, such as farming and animal husbandry, who depend on grains for animal feeds, as well as other sectors such as those producing or preparing food. Spiraling costs are also likely to have a large impact upon consumers in general. In view of this, the Government stepped in to limit the impact of rising global prices upon the Maltese economy and individuals.

Content of measure

Initially, wheat and other grain importers stated that they were either absorbing the additional costs of importation, or stated that they were relying upon stocks held in Malta and thus had yet to feel the impact of the changing global markets. It was reported that Malta's importers typically have a four month stock of wheat.

Following talks between importers and the Government, it was announced that national funds would provide emergency liquidity for importers, whilst importers would also be provided with access to a national wheat storage facility (Corradino wheat terminals), which are able to store much larger quantities than present, reported to be around 12 months worth of wheat. This was being done to allow prices in Malta to remain stable.

Details of the financial assistance being given to importers was not provided, nor where details of the talks between importers and Government revealed. Importers were invited to write to the Government to obtain details of the scheme. The Minister for Agriculture, Fisheries, Food and Animal Rights, Anton Refalo, did however reveal that €1.5 million will be provided to farmers and €2.5 million to animal breeders in view of the rising costs due to COVID-19, the war in Ukraine and the rising cost of fertilizer.

Updates

The following updates to this measure have been made after it came into effect.

09 May 2022

It was announced that enterprises that wished to apply for this subsidy were required to submit their application forms and supporting documentation by 20 May 2022.

Use of measure

No information is available.

Target groups

Workers Businesses Citizens
Does not apply to workers Sector specific set of companies
Importing/Exporting companies
Applies to all citizens

Actors and funding

Actors Funding
National government
Employers' organisations
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement Consulted
Form Not applicable Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • Unknown
  • Main level of involvement: Sectoral or branch level

Involvement

In early March, the chief executive of Federated Mills, which supplies milled flour to around three quarters of Maltese manufacturers, expressed concern about the difficulty of obtaining grains from the Ukraine and Russia, whilst other countries were reported to be restricting their export. He thus called for Government intervention. The the Malta Chamber of Commerce, also called for support, suggesting that temporary state aid was required for affected sectors, liquidity such as loans, and the establishment of a common purchasing facility to aid in procuring essential items from alternative sources were also needed.

Subsequent measures were announced following an agreement being reached between wheat and animal feed importers and the government.

Views and reactions

No views or reaction were expressed in the media or by public means in terms of this measure. It is worth noting that the measures were announced a week before a general national election and this may have affected coverage.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      A - Agriculture, Forestry And Fishing A1 Crop and animal production, hunting and related service activities
      G - Wholesale And Retail Trade; Repair Of Motor Vehicles And Motorcycles G46 Wholesale trade, except of motor vehicles and motorcycles
      H - Transportation And Storage H52 Warehousing and support activities for transportation

This case is not occupation-specific.

Sources

  • 07 March 2022: Malta Today - Price of Maltese wheat supplies under threat following Ukraine invasion (www.maltatoday.com.mt)
  • 08 March 2022: Malta Independent - Government allocated €4.5m worth of financial aid for farmers and farm animal breeders (www.independent.com.mt)
  • 13 March 2022: Times of Malta - Fresh warning that Ukraine war may lead to shortages, price hikes (timesofmalta.com)
  • 14 March 2022: Wheat prices up 60% since January, importers seek state support (www.maltatoday.com.mt)
  • 19 March 2022: Times of Malta - Price stability agreement reached with wheat importers, Abela says (timesofmalta.com)
  • 19 March 2022: Newsbook - Wheat prices up by 60%, government to absorb price increases (newsbook.com.mt)
  • 09 May 2022: Times of Malta - Emergency subsidy for importers of cereal, flour, animal feed (timesofmalta.com)

Citation

Eurofound (2022), Subsidy for importers of cereals and flour, measure MT-2022-10/2197 (measures in Malta), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/MT-2022-10_2197.html

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