1 HOW TO APPLY FOR EU FUNDING - MAJOR STEPS THE BULGARIAN EXAMPLE – RURAL DEVELOPMENT PROGRAM Skopje, November 10, 2009

2 GO THROUGH THE NECESSARY INFORMATION Read the Rural Development Program including the appendices and the National Strategic Plan for Rural Development; Go through the state ordinances (the legal base) of the relevant measure that you are going to apply; Read all the manuals published by the Ministry of Agriculture and Food and the Paying Agency; Go through the question and answers regarding the RDP and most common mistakes made when applying for EU subsidy from the RDP; The above mentioned information will help the candidates to be aware about the eligibility criteria under each measure, the expenses they can apply for, the project requirements, the procedures for submission of applications and payment claims in order to make an estimate under which measure to apply. Skopje, November 10, 2009

3 HOW TO PREPARE A PROJECT AND WHAT SIZE IT SHOULD BE? The above mentioned information will be a base for the candidates to decide whether they can prepare the project with all the accompanying documents by themselves or they are going to need consulting services. In addition the candidates have to decide what will be the size of the project. If the candidates need a consultant to help with the project preparation they have to choose very carefully the right one. Very important factors for such decision are the experience of the consultant, its reputation, the terms of project preparation and the price of the services. The market itself defines the good and bad consultants. Be careful when somebody recommends consultants that have “great” lobby with government officials responsible for the relevant program administration. The most important factor to define the project size is how much the candidate can finance with equity and/or debt capital. Sometimes the upper limits of the investment costs you can apply for are very high. However most of the candidates are not able to provide the necessary financing to realize the project. In general the subsidy is paid at the end of the whole process – after the realization of the project. Skopje, November 10, 2009

4 BUSINESS PLAN PREPARATION Whether the business plan is prepared by consultants or by the candidates themselves the following circumstances should be taken into account: Realistic yields of agricultural production should be projected – the yields should be based on production technology used, actual statistics, information from professional associations and organizations, etc.; Production and/or processing should be based on the agro – technical activities or the relevant processing technology; The projected prices should be realistic – to be in compliance with the competitors prices, commodity market prices (if relevant) and the projections should be backed by additional studies, contracts or letters of intend; The accompanying documents should be issued by companies that are actually dealing with the proposed activities; The necessary agricultural machines and equipment should be justified in accordance with the size of the agricultural land of the applicant. Skopje, November 10, 2009

5 BUSINESS PLAN PREPARATION To justify the realistic market share of the candidate based on which the sales plan is made; The financial part of the business plan to be in compliance with the product mix and the structure of financing; To calculate in advance the economic viability of the project according to the set requirements – NPV at certain discount rate, minimum IRR, etc.; NB! Be aware that according to the EU regulations presenting false information or creating artificial conditions for meeting certain requirements or overlapping investment limits for receiving higher subsidy lead to expenses that will not be recognized and subsidized. In addition if there is fraud involved this could lead to legal prosecution. Skopje, November 10, 2009

6 MARKET RESEARCH AND CHOOSING SUPPLIERS OF ASSETS AND SERVICES This is one of the most important part of the procedure of applying for EU funding – the applicant should present a FAIR MARKET PRICE for the assets and/or services that will be subsidized. The market research should be based on quality and quantitative criteria that are measurable and comparable. It is important that the applicants do their own research. Consultants and suppliers can help with the methodology but the final decision should be those of the applicants. Very important is the applicants to get offers from independent companies that have their core business in the same field as what they offer. For example of you need a specialized fruit packing machine you get an offer from producer or dealer of such machines and not from a truck dealer. Finally the applicants MUST NOT present higher prices than the fair market prices of the assets or services that will be subsidized. Skopje, November 10, 2009

7 REALIZATION OF THE PROJECT In general the approved subsidy is paid only after the whole project is finished and the assets and /or services are fully paid. The project should be realized within the set deadlines. Every change from the initial approval should be approved by the Paying agency. The project must be realized according to the approval and submitted documents and the approved subsequent changes. Skopje, November 10, 2009

8 PAYMENT CLAIM PREPARATION The payment claim with the accompanying documents should justify the following important parts in the project: The assets and services purchased are those initially approved. The specific project activity should achieve the program goals. The project activity should comply with the necessary regulations and requirements. The assets/services should be owned by the candidate. The assets/services should be fully paid by the applicant. Read carefully the instructions how to prepare the payment claim. Mistakes can result to payment of less money. Skopje, November 10, 2009

9 PAYMENT OF THE SUBSIDY AND REQUIREMENTS TO THE SUBSIDIZED ACTIVITY After receiving the subsidy, the candidate should follow all the requirements for the period of 5 years in accordance with the EU regulations regarding the subsidized activity. Important requirement that the assets could not be sold, rented or granted. The activity should not be seized except during force major conditions, etc. Not meeting those limitations can result in payment the received subsidy, including the accumulated interest back to the program. Skopje, November 10, 2009

10 MOST FREQUENT MISTAKES MADE BY THE APPLICANTS Some of the listed documents are missing or wrong. The presented competitive offers are not comparable – they have different technical descriptions. There are discrepancies between the size of the arable land and the investment in agricultural machines and equipment. The applicants expect their consultant and/or supplier to provide the competitive offers. In general this is a wrong approach that could lead to mistakes. In the business plans some of the yields and sales prices are overstated. The financial projections have to be adjusted to normal yields and prices and sometimes this results to negative net present value. Skopje, November 10, 2009

11 CONTACT INFORMATION Emil Darev Telephone: Mobile phone: Skopje, November 10, 2009

12 THANK YOU FOR THE ATTENTION! Skopje, November 10, 2009