The European Commission Freezes Part of Agrofert's Subsidies, But Gas Prices Pose a Bigger Threat

The European Commission has suspended payment of part of the subsidies to the Agrofert holding — Brussels does not believe that transferring the company into the RSVP Trust fiduciary fund has actually resolved the conflict of interest involving Prime Minister and founder of the country's largest agro-industrial conglomerate, Andrej Babiš.

Back in February, the previously classified trust statute was made public. The document contradicted Babiš's earlier claim that Agrofert had been irrevocably handed over: according to the statute, the trust will automatically switch to so-called "family management" mode the moment Babiš ceases to be prime minister.

Only a Small Fraction of Payments Frozen

The main support package — direct payments, most of which consist of per-hectare subsidies — has not been affected by the issue so far. The European Commission has not suspended these, since authorities here have minimal room for their own decisions.

The volume of frozen subsidies is relatively small: for the second quarter, it amounts to €3.18 million, or roughly 76.9 million koruna. While the figure may still change, against the backdrop of Agrofert's overall state support, this looks modest — in 2025 the holding received a combined 1.7 billion koruna in current and investment subsidies, of which 1.3 billion went to current (mostly per-hectare) payments and 402 million to investment support.

The Real Threat Is Gas Prices

Far more serious for Agrofert as a whole conglomerate are problems unrelated to the subsidy saga. Due to the crisis in the Persian Gulf, natural gas prices are once again hitting record highs, which is taking a heavy toll on the chemical industry, for which gas is one of the key raw materials.

This year Agrofert spun off eight of its most important chemical enterprises into a new company, AFG Nitrogen — the second-largest producer of fertilizers and nitrogen products in Europe. The main raw material for fertilizers is ammonia, and AFG Nitrogen has now said it is considering cutting ammonia production.

"Ammonia production and its price are tied to the cost of natural gas and energy, as well as emission allowances. With gas prices and quotas rising — quotas that are several times higher than elsewhere in the world — ammonia and the fertilizers made from it are once again becoming unaffordable for European farmers, who are already cutting back on orders for the new season," said AFG Nitrogen CEO Petr Cingr.

While the subsidy troubles are a specific story stemming from how Andrej Babiš chose to resolve his conflict of interest, the consequences of rising gas prices are being felt much more broadly. In effect, even an ordinary consumer heating their home with gas is left hoping for a mild winter without hard frosts — frosts that would be better off staying far to the east, beyond Ukraine's border.

Source: seznamzpravy.cz