OfficialJournaloftheEuropeanCommunities 43
19.7.72 OfficialJournaloftheEuropeanCommunities NoL163/19
COMMISSION DECISION
of26May1972
ongrantingaidtoestablishareservetocoverappleandpearproducersintheNether­
landsagainsttheriskofhaildamage
(72/251/EEC)
(OnlytheDutchtextisauthentic^
THECOMMISSION OFTHEEUROPEAN
COMMUNITIES ,
HavingregardtotheTreatyestablishingtheEuro­
peanEconomicCommunity,andinparticularArticle
93(1),thefirstsubparagraphofArticle93(2),and
Article93(3)thereof;
\management ,therebybringingthesemeasureswithin
thescopeofthederogationsprovidedforinArticle
92(3)(c)oftheTreaty;whereas,forthisincentiveto
beagenuineone,theaidgrantedorenvisagedshould
meetthefollowingthreecriteria:thesubsidyshould
berelativelylowattheoutset(forexample,notmore
than30%oftheinsurancepremiums)anditshould
bedegressiveandoflimitedduration,forexample
sevenyears;whereas,intheletterof26September
1970addressedtotheNetherlandsGovernment ,it
wasstatedthatthemeasureproposedbythatGovern­
mentintheletterof31July1970fromtheOffice
ofitsPermanentRepresentative wasofthiskind;
Whereas,byletterof1December1970fromtheOf­
ficeofitsPermanentRepresentative totheEuropean
Communities ,theNetherlandsGovernmentinformed
theCommission ofthe'Orderof1970oninsurance
againsthaildamage'decideduponbytheMinister
forAgricultureandFisheriesandwhichwastoenter
intoforceby15December1970;whereasthisOr­
derprovidedforthegrantingofasubsidytofruit
growerscultivatingappleandpearorchardsofnot
lessthanthreehectares(laterreducedtotwohec­
tares2)andofnotlessthanthreeyears'standing,to
reducethecostsofcoveringhaildamageriskforthe
year1970;whereasboththepremiumpayablebythe
fruitgrowerinrespectofinsuranceagainsthaildam­
ageandthesumssetasidebyhimtoestablisha
reservetocovertheriskofhaildamagewere
consideredascostsofcoveringhaildamagerisk;
whereasthesubsidyhadbeenfixedataflatrateof
140florinsperhectare,anamountcorresponding to
30%oftheannualpremiumnormallypayablein
respectofinsuranceagainsthaildamage;
WhereastheCommission ,havinglearnedinMay
1971thatthesubsidywouldagainbepaidfrom1
May1971until1975atannualratesof115,90,70,
50and25florinsperhectarerespectively,initiated
theprocedureprovidedforinArticle93(2)oftheHavingregardtoRegulationNo231of4April1962
ontheprogressiveestablishmentofacommonorgani­
zationofthemarketinfruitandvegetables,andin
particularArticle7thereof;
Havingregardtothecommentssubmittedbythose
concerned;
WhereastheNetherlandsGovernment,byletterof
31July1970fromtheOfficeofitsPermanentRe­
presentativetotheEuropeanCommunities,notified
theCommission,inaccordancewithArticle93(3)
oftheEECTreaty,ofitsintentiontopaybywayof
subsidypartofthepremiumofthecompanyfor
mutualinsuranceagainsthailinthefruitsector;
whereasthissubsidywouldbedegressiveandof
limitedduration;whereasitsamountandduration
wouldbefixedassoonastheCommission had
reachedadecisiononthegeneralissue;
WhereastheCommission,byitsletterof26Septem­
ber1970ontheapplicationofArticle93(1)and
(3)oftheEECTreatytocertainaidgrantedorpro­
videdforinthefruitandfruitpreparationssector,
excludingcitrusfruit,informedalltheMemberSta­
testhataidcoveringpartoftheinsurancepremium »
fornaturaldisastersmaybeanincentivetothetak­
ingoutofinsurancefornaturaldisastersofakind
againstwhichcropscannotbetotallyprotected;
whereas,sinceinmostMemberStatesonlyarela­
tivelysmallproportionoffarmersareinsuredagainst
suchrisks,itappearedthattheaimofimprovingthe
efficiencyofagriculturalproductionwouldbeserved
bythusencouragingapracticeofmodernfarm
2NoticeintheNederlandse Staatscourant of2March
1971. 'OJNo30,20.4.1962,p.265/62.

44 OfficialJournaloftheEuropeanCommunities "
Treatytoopposethismeasure,seeingthatitincluded
provisionforgrantingaidfortheestablishment of
reservestocoverthehaildamagerisk;whereasthe
Commissiongavenoticetothepartiesconcernedto
submittheircomments,asregardsMemberStatesby
aletterof17September1971,andasregardsother
interestedpartiesbyanoticepublishedintheOffi­
cialJournaloftheEuropeanCommunities 1;
Whereasthegrantingofthisaidisnotsubjecttoany
conditionsandthereforeconstitutesanadvantageto
appleandpearproducersintheNetherlandsofthe
samekindasanincreaseinthesellingprice;whereas
thisadvantagemightinduceacertainnumberof
thoseproducerstolowertheirsellingpriceortoin­
creaseproduction;whereasthismeasurecouldinany
casetendtolowerprices;
Whereasthisadvantagetoappleandpearproducers
intheNetherlandsislikelytofavourtheproduction
andmarketingoftheirfruitincompetitionwithfruit
ofotherMemberStatesandpossiblyevenwithpro­
ductswhich,withintheCommunity,areincompeti­
tionwithapplesandpears;
WhereasthesubsidygrantedbytheNetherlands
Governmentnotonlydistortscompetitionbutalso
affectstradebetweenMemberStates;whereasthere
issubstantialtradeinapplesandpearswithinthe
Community(in1969/70about600000metrictons
ofapplesinamarkettotalling5-6millionmetric
tons,and260000metrictonsofpearsinamarket
totalling21millionmetrictons);whereasexports
ofapplesandpearsfromtheNetherlandstoother
MemberStatesexceed,onaverage,thequantitiesex­
portedbyMemberStatestothe.Netherlandsand
whereasduringthe1968/69and1969/70marketing
yearssuchexportsrepresentedonaverage15%of
thepearsalesand11%oftheapplesalesofNether­
landsfruitgrowers;whereasthecontinuingsurplus
oftheseproductsontheCommunitymarkethasled
theCounciltoadoptspecial,measuresforreorganiz­
ingfruitproduction 2;whereas,therefore,thegrant­
ingofasubsidy,whichcouldconstituteanincentive
totheexpansionofappleandpearproductioninthe
Netherlands,islikelytoincreasetheimbalanceofthe
marketandtoreducetheshareoftheCommunity
marketavailabletoproducersofotherMemberSta­
tesunderconditionsoffreecompetitionwithinthe
commonmarket;
WhereasthesubsidygrantedbytheNetherlands
Governmentdistortsorthreatenstodistortcompeti­
tionandaffectstradebetweenMemberStates,and
whereasitthereforecomesundertheprohibitionset
outinArticle92(1)oftheTreaty;
Whereasexemptionfromthisprohibitioncannotbejustifiedunderoneofthederogationsprovidedfor
inparagraphs2and3ofthatArticle,norinparti­
cularunderArticle92(3)(c),sincetheconditions
statedbytheCommissioninitsletterof26Septem­
ber1970forbringingtheaidthenenvisagedwithin
thescopeofthatparagraphassumedthatitwould
helptopopularizeapracticeofmodernfarmman­
agement,thatistosaythetakingoutofinsurance,
whereasthemeasurenowcomplainedofoffersno
guaranteeastohowthemoneygrantedwillbespent;
WhereastheNetherlandsGovernmenturgesinsup­
portofitsmeasureofaidthefactthatmanyNether­
landsfruitgrowersareopposed,onprinciple,tocov­
eringtheriskbyacontractofinsurance;whereas,
however,theGovernmentdoesnotrequirethereci­
pienttoshowproofthattheaidgrantedisactually
usedtoestablishareservetocoverthehaildamage
riskandhasmadenoprovisionforgovernmentcon­
troloverthewaytherecipientusestheaid;whereas,
inthesecircumstances ,thereisnoguaranteethatthe
amountsgrantedwillbeusedforthepurposesfor
whichtheaidmeasurewasintended;
WhereastheNetherlandsGovernmentalsourgesin
supportofitsmeasureofaidthattheestablishment
ofareservetocoverthehaildamageriskmustbe
equated,fromaneconomicpointofview,withthe
paymenttoamutualinsurancecompanyofanin­
surancepremiumagainsthaildamage;accordingto
thatGovernment ,itisthendifficulttomaintainthat
oneformofriskcoverisamoremodernformof
managementthananother;whereas,evenallowing
thattheestablishment byanundertakingofitsown
reservewouldbeeconomicallyadvantageousif,for
example,itcarriedinterestandtakingintoaccount
alsothattheaidisdegressive,thefactremainsthat
thismethodprovidesinsufficientsecurityforittobe
generallyequatedwithinsurancecover;whereasthe
takingoutofinsurancecoveragainsthaildamage
offersfruitgrowersgreater.economicadvantages,
particularlyinthelongterm;whereas,bytakingout
insurance,fruitgrowersrunsmallereconomicand
financialrisksthanbyestablishingtheirownre­
serves;whereas,therefore,suchinsuranceistobe
consideredasapracticeofmodernfarmmanagement
whichshouldbeencouraged;whereasonlyregularly
recurringchargesresultingfromobligationsunder­
taken(paymentofpremium)canjustifythelimited
grantingofdegressiveaid;whereas,althoughincer­
taincasestheestablishment ofindividualreserves
mayseempreferable,itdoesnothoweverlenditself
inthesamewayasinsurancetoverificationthat
fundsgrantedbywayofaidareactuallyusedto­
getherwiththegrower'sowncontributiontoprovide
effectivesecurityagainsttheserisks;
Whereas,finally,themeasureofaidoftheNether­
landsGovernmentwhichprovidesforgrantingto
appleandpeargrowersaidtoestablishreservesto
covertheriskofhaildamageisincompatiblewith
thecommonmarket,1OJNoC95,28.9.1971,p.1.
2CouncilRegulation(EEC)No2517/69of9December
1969(OJNoL318,18.12.1969,p.15.).

OfficialJournaloftheEuropeanCommunities 45
HASADOPTEDTHISDECISION :
Article1theestablishmentbythefruitgrowerofareserveto
covertheriskofhaildamage.
Article2
ThisDecisionisaddressedtoKingdomoftheNether­
lands.TheKingdomoftheNetherlandsshall,notlaterthan
1August1972,abolishtheaidprovidedforbyAd­
ministrativeDecisionNo83onfixingacontribution
towardsthecostofcoveringtheriskofhaildamage
(Decisionof1April1971oftheDevelopmentand
Improvement Fund)-Bestuursbesluit nr83inzake
devaststellingvaneenbijdrageregeling indedekking
vandekostenvanderisico'svanhagelschade (Be­
sluitvanhetontwikkelings -ensaneringsfonds van
1April1971)-insofarasthisaidisgrantedforDoneatBrussels,26May1972.
FortheCommission
ThePresident
S.L.MANSHOLT