On Thursday, the Luxembourg Socialist Workers' Party (LSAP) raised the question of how rising diesel prices are affecting the country's agricultural sector, prompting a discussion in the parliamentary agriculture committee.
While Luxembourg's farmers are feeling the pressure from higher fuel costs, the discussion showed that the sector is facing a broader set of challenges.
Diesel prices rose by 95% between January and March this year. However, it was stressed that regular diesel and agricultural diesel should not be confused.
Minister of Agriculture Martine Hansen said the increase was nevertheless having an impact on farming businesses.
"Diesel costs usually account for an average of 3 to 5% of a business' costs. They impact arable farming the most at around 4%, and viticulture the least, at 1%. When I say 3-5%, at current prices that's an average of 12,000 per business", she told RTL. The extra 12,000 euros applies to a whole year.
LSAP MP Claire Delcourt asked whether Luxembourg planned to introduce measures to ease the pressure on agricultural businesses, as neighbouring countries have done. Hansen said Germany and France had both lowered excise duties on agricultural diesel, but Luxembourg does not apply such duties, meaning it could not follow the same approach.
Agricultural diesel is also exempt from the CO2 tax, and its price remains lower in Luxembourg than in neighbouring countries, according to Hansen.
Hansen added that agriculture is not the only sector struggling with rising energy costs, and said the issue was likely to come up during tripartite talks.
MP Luc Emering of the Democratic Party (DP) said the farming sector is not just facing issues with diesel costs: "If we actually consider current grain prices, which crashed on the stock market this week, or if we look at milk prices in comparison to last year, we can see there is a massive structural crisis in agriculture, affecting the economic situation of these businesses."
As agriculture is not a definite topic for the tripartite talks, Emering suggested that MPs consider introducing independent measures to support farmers. If farmers have to pay a few hundred euros per hectare more when harvesting grain later this year, it will pose a massive problem in the autumn, he explained.
Hansen said the government was already aware of the issue. Last year's grain harvest would have resulted in losses for farmers without state aid, and the situation is now being aggravated by falling grain prices and rising fertiliser costs, she explained.
Hansen explained: "At European level we have the opportunity to use 'RENURE' fertiliser, that is, converted organic manure into mineral fertiliser, so we can become less dependent. But in Luxembourg this needs to be included in the nitrate directive so we can use more kilos per hectare if it is counted as mineral fertiliser."
The EU Commissioner responsible is expected to present a fertiliser action plan in the coming days, according to Hansen.
Finally, it was announced that a bill will soon be submitted to the Chamber of Deputies to regulate the framework for temporary government aid, which could also benefit agricultural businesses.
