61985C0312
OPINION OF MR ADVOCATE GENERAL MANCINI
delivered on 23 October 1986 (
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)
Mr President,
Members of the Court,
1.
In the context of proceedings between SpA Villa Banfi on the one hand and the Regione Toscana [Region of Tuscany], the Ispettorato Provinciale dell'Agricoltura [Provincial Agricultural Inspectorate], Siena, and Messrs Svelto Ricco and Luigi Garelli on the other, the Tribunale Amministrativo Regionale della Toscana [Regional Administrative Tribunal of Tuscany, hereinafter referred to as ‘the Tribunal’] has asked this Court to clarify the term ‘a farmer practising farming as his main occupation’ within the meaning of Article 3 of Council Directive 72/159/EEC of 17 April 1972 on the modernization of farms (Official Journal, English Special Edition 1972 (II), p. 324). In particular, the Tribunal wishes to know whether the term refers to all natural and legal persons and, with regard to the latter category, whether Member States may exclude certain types of undertaking, such as companies limited by shares, from the benefits provided for those who are comprised within the term.
2.
The facts are as follows: By applications dated 11 February, 31 May and 13 November 1978, SpA Villa Banfi, whose registered office is in Rome, requested the region of Tuscany to grant it (a) authorization for the planting and replanting of vineyards in the municipality of Montalcino, and (b) a declaration that continuation of the existing use of the land for cultivation and grazing was impossible in view of its incompatibility with the intended use. By Decision No 150 of 30 April 1979 the Regional Council confirmed the authorization previously granted to the company by the Provincial Office for Agriculture, Siena, regarding the planting of 54 hectares of vines for the production of DOC Brunello di Montalcino wine, but in view of the applicable Community, national and regional legislation, refused authorization for the new planting of vines on a further 245.27 hectares. It did not, therefore, issue a declaration as to the feasibility of the agricultural restructuring plan. In support of its refusal the Regional Council cited three reasons: (a) Council Regulation (EEC) No 1162/76 on measures designed to adjust winegrowing potential to market requirements (Official Journal 1976, L 135, p. 32) exempts from the prohibition on the planting of vines any new plantings carried out under farm development plans which meet the conditions laid down in Council Directive 72/159 (cited above), (b) Article 13 of Law No 153 of 9 May 1985, which implements that directive, and Articles 5 and 7 of Tuscan Regional Law No 71 of 7 September 1977 establish a special aid scheme for farms, singly and in association, which, in the case of legal persons, applies only to agricultural cooperatives and associations of farmers practising farming as their main occupation, and (c) Villa Banfi does not fall within that class of persons.
Villa Banfi thereupon commenced proceedings before the Tribunal (by applications of 6 and 7 June 1979) seeking the annulment of the decision refusing it authorization to plant vines, on the ground that it was based on an impermissible synthesis of Community and domestic legislation or, in any event, on domestic measures which conflicted with Community law. In particular, the applicant claimed that in defining ‘a farmer practising farming as his main occupation’ both the national and the regional law exceed the limits of Directive 72/159, in which the right to plant new vines — which in any case is implicit in the right to practise freely the occupation of winegrower — is guaranteed to every type of grower, whether a natural or a legal person. Companies limited by shares cannot, therefore, be excluded from the national scheme giving effect to Community legislation.
By an order of 23 January 1981 (not delivered to the Court Registry until 16 October 1985, incidentally) the Tribunal stayed the proceedings and, being in doubt as to whether the Italian legislation was compatible with either Article 3 of Directive 72/159 or the guarantee of basic rights enshrined in the EEC Treaty and the Italian Constitution, referred to the Court of Justice of the European Communities the question of how the directive was to be interpreted with regard to the national and regional legislation mentioned above.
3.
I propose to begin by considering the four legislative instruments — two Community and two national — whose relationship is at issue between the parties to the main proceedings. Adopted in the framework of the Mansholt Plan, Directive 72/159 seeks to bring about a significant improvement in agricultural incomes, and working and production conditions, by giving incentives to farms capable of development. To that end Article 1 (1) provides that Member States are to introduce a system of selective measures designed to encourage the operation and development of farms under rational conditions, whilst Article 1 (2) authorizes them to vary according to region the amount of the financial incentives provided for in the directive and, in some regions, to withhold them in whole or in part. Under Article 2 a farm is to be considered suitable for development where its owner practises farming as his main occupation, possesses adequate occupational skill and competence, undertakes to keep accounts, draws up a development plan which satisfies the conditions laid down in the directive and has a level of earned income lower than that received for nonagricultural work in the region.
There follows the crucial Article 3. The first subparagraph of Article 3 (1) provides: ‘Member States shall for the purposes of this directive define what is meant by the expression “a farmer practising farming as his main occupation”, [which] shall, in the case of a natural person, at least include the condition that the proportion of income from farming be not less than 50% of the farmer's total income and [the further condition] that the working time devoted to non-farming activities be less than half of the farmer's total working time’. The second subparagraph goes on: ‘Having regard, in particular, to the criteria indicated in the preceding subparagraph, Member States shall define the aforesaid expression in relation to a person other than a natural person, and in respect of a farm owned by a person other than the farmer_... [or] worked under a sharecropping agreement’.
The Italian Republic sought to implement the abovementioned directive by enacting Law No 153 of 9 May 1975(Gazzetta Ufficiale della Repubblica Italiana, p. 3298). Artide 13, in Title III (on the modernization and expansion of agricultural structures), Section I (on aid for carrying out development plans) provides inter alia that the aid available under that title may be granted not only to natural persons but also to agricultural cooperatives set up in accordance with the rules on cooperation, and to farmers' associations. It is further necessary that the members derive at least 50% of their income from farming and related activities, and that they devote to it at least 50% of their working time.
Those principles were observed by Tuscan Regional Law No 71 of 7 September 1977(Bollettino Ufficiale della Regione Toscana [Official Journal of Tuscany] No 52 of 16 September 1977). Law No 71 sets up an aid scheme which, under Article 6, applies to the following: (a) owner farmers, tenant farmers, sharecroppers and tenants in kind; (b) owners, holders of a life interest [‘usufruttuari’] and tenants who are farm managers, provided that they are engaged in agriculture as their main occupation; (c) agricultural cooperatives; and (d) farmers' associations, but, again, only on condition that they devote themselves principally to agriculture.
The last instrument for consideration is Council Regulation (EEC) No 1162/76 of 17 May 1976, which contains measures designed to adjust winegrowing potential to market requirements (Official Journal 1976, L 135, p. 32). Article 2 (1) of this regulation prohibits ‘all new planting of vine varieties classified as wine grape varieties for the administrative unit concerned... during the period from 1 December 1976 to 30 November 1978’. Provision is made, however, for certain exemptions; in particular, new plantings carried out by farmers under development plans which meet the conditions laid down in Council Directive 72/159 are exempted. In its preamble the regulation justifies that exemption by reference to its relative unimportance; in addition, however, the exemption meets the obvious requirement that the work of growers who have obtained approval for such plans should not be impeded, especially in view of the fairly long period allowed for their implementation (in the case of Italy, up to nine years; Article 14 of Law No 153).
Lastly, I would point out that the Commission of the European Communities, by Decisions No 76/480 (as regards the national legislation) and No 77/525 (as regards the regional legislation), declared the Italian implementing measures to be in conformity with Directive 72/159 and accordingly approved them, thereby allowing the resultant expenditure incurred by the Italian Republic to qualify for Community financing (Official Journal 1976, L 138, p. 14, and 1977, L 209, p. 25).
4.
The observations submitted by the region of Tuscany concerning the admissibility of the question referred to the Court for a preliminary ruling need only brief consideration. It claims that the national court did not formulate any questions as such and improperly submitted to the Court problems regarding the compatibility of national provisions with Community provisions. In particular, the national court is (according to the defendant) asking this Court for an impossible appraisal of whether certain national and regional provisions are consistent with Community law.
Those objections are unfounded. Admittedly, the Court is precluded from considering questions of compatibility in proceedings under Article 177 of the EEC Treaty, on account of the well-established division of jurisdiction between national courts and the Court of Justice. It is no less true, on the other hand, that the Tribunal has, albeit without expressing it in the form of a question, referred to this Court a problem concerning the interpretation of Community provisions, and that the answer of the Court is undoubtedly needed for settling the dispute brought before the national court. Its reference to the Court is therefore admissible.
5.
As I have said, the reference is concerned with the meaning and scope of Article 3(1) of Directive 72/159. More precisely, it is a matter of establishing whether, in determining what is meant by ‘a farmer practising farming as his main occupation’ with regard to legal persons, Member States enjoy complete freedom or are subject to certain restrictions — other than those explicitly set by the article itself, that is. The Commission and the region of Tuscany subscribe to the first proposition, whereas the other, naturally, is favoured by Villa Banfi.
According to the region of Tuscany Article 3 (1) is a permissive one par excellence; it confines itself to defining certain minimum requirements and empowers Member States to identify — ‘as they see fit’, it alleges — the class of beneficiary concerned, thereby vesting the Member States with a discretionary power whose exercise is virtually unfettered. The wording of the article and the very nature of the directive militate in favour of that interpretation, given that a directive is binding upon each Member State to which it is addressed as to the result to be achieved (in this case, a definition of ‘a farmer practising farming as his main occupation’ which accords with the conditions under Article 3 (1)), but leaves to the national authorities the choice of form and methods (in this case, the selection of the other elements to be comprised in the definition).
The line of argument pursued by the Commission is different. Since the term in question was introduced in order to define the conditions of access, not to agriculture in general but to a specific aid scheme reserved for farms in difficulties, the Commision emphasizes the special features with which the Community legislature endows that scheme, namely its selectivity and the differential application of incentives in the various regions. The first feature excludes from the scheme efficient undertakings for which no aid is necessary and those which, although receiving aid, would be incapable of attaining the income level (equal, for either one or two man-work units, to the average wage of nonagricultural workers in the same region) which is set by Community law. The second feature is imposed so as to enable the scheme to adapt itself to the economic and sociological differences which are characteristic of agriculture in the Community. It is therefore obvious that, in implementing the directive, Member States are entitled to choose, from amongst the various types of legal person, those whose structure and characteristics in terms of company and tax law offer the best guarantees of being ‘farms suitable for development’.
6.
The problem submitted by the national court presupposes that the aims pursued and the methods employed by Directive 72/159 may be clearly identified. Underlying the Community legislation are two findings: first, that the income of many general undertakings does not ensure those working for them a standard of living comparable to that of nonagricultural workers, and secondly, that it is not possible to close or reduce that gap unless pressure is exerted on the actual structure of those undertakings. That explains the decision to grant aid only to farms considered ‘suitable for development’ — that is, to units of production displaying characteristics which suggest that they will use the aid to attain a level of income on a par with the industrial and services sectors (see Article 2). It is in that perspective that Article 3 (1) introduces the term ‘farmer practising farming as his main occupation’, identifying him in the first subparagraph, which deals with natural persons, by reference to certain criteria. As far as legal persons, on the other hand, are concerned, the second subparagraph provides that it is for Member States to define that term, regard being had ‘to the criteria indicated [above]’.
In view of the striking differences to be found in Member States' systems of company law, this flexible approach was inevitable. The question arises, however, whether that implies complete freedom on the part of Member States in their performance of the task assigned to them by the directive. I do not think that it does. It seems to me on the contrary that, far from entailing autonomous assessments of interests or policy (in its broader sense), the choice left to national legislation is merely a technical one. The reason is that Article 3 must be read not in isolation but in conjunction with Article 2, which is the core of the system and, as seen above, sets out all the requirements to be satisfied by an undertaking before it can qualify for the aid scheme. In delineating those legal persons to which the scheme shall apply, therefore, a Member State's legislation may not have regard solely to the time which the owners devote to farming and the income which they derive from it but must also give consideration to factors such as the aim of the company, the structure of the share capital, the economic record of the activity pursued, the suitability of the employees as agricultural workers, the professional abilities of the owners, and so on.
Nor may it be said that the above conclusion is rebutted either by the nature of the directive as an instrument of Community law or by the fact that that particular directive excluded efficient undertakings from the aid scheme wherever their aim was the attainment of a given income for one or two workers. The first argument is easily countered by the point that, as the case-law of the Court demonstrates, the Community legislature is free to leave Member States some margin of discretion; as for the second, it arguably fails to distinguish as it ought to between the requisite size of a farm suitable for development and the result to be achieved by the implementation of the development plan. It is indeed only for the purpose of measuring that result that the directive, in Article 4 (1), speaks of obtaining a given income ‘for either one or two man-work units’; and, as far as size is concerned, reference should be had to the fifth recital of the preamble, which reads: ‘... in the future, the only farms capable of adjusting to economic developments will be those on which the farmer (
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) has [suitable] occupational skill and competence... ’. A farm which has a manager, on the other hand, usually has a staff or more than one employee as well.
I should add that the Commission, which adduced the second argument, considered that the Italian provisions complied with Community law. Those provisions, however, include cooperatives among the legal persons qualifying for the aid, and these, according to Article 22 of Decree Law CPS No 1577 of 14 December 1947, must comprise at least nine members.
7.
For all the reasons set out above I suggest that the Court should give the following answer to the problem of interpretation referred to it by the Tribunale Amministrativo Regionale della Toscana by order of 24 October 1980, in the legal proceedings brought by SpA Villa Banfi against the region of Tuscany, the Provincial Office for Agriculture, Siena, and Messrs Svelto Ricco and Luigi Garelli:
Article 3 of Council Directive 72/159 of 17 April 1972 on the modernization of farms should be interpreted to mean that, for the purpose of defining which legal persons may be regarded as ‘farmers practising farming as their main occupation’, national legislation must take account of the requirements in that article regarding natural persons and the characteristics of ‘a farm... considered suitable for development’ under Article 2 — that is to say, the aims of the company, the structure of the share capital, the economic record of the activity pursued, the suitability of its employees as agricultural workers and the occupational skill and competence of its owners.
(
*1
)	Translated from the Italian.
(
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)	Translator's note: ‘Farm manager’ is meant (see other language versions of this text).