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COM (84) 163 
 
 
 
Vol. 1984/0 059 
  
 
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concernant l'ouverture au public des archives historiques de la Communauté économique 
européenne et de la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, 
p. 1), tel que modifié par le règlement (CE, Euratom) n° 1700/2003 du 22 septembre 2003 
(JO L 243 du 27.9.2003, p. 1), ce dossier est ouvert au public. Le cas échéant, les documents 
classifiés présents dans ce dossier ont été déclassifiés conformément à l'article 5 dudit 
règlem ent. 
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 
concerning the openi ng to the public of the historical archives of the European Econom ic 
Community and the European Atomic Energy Communit y (OJ L 43, 15.2.1983, p. 1), as 
amended by Regulation (EC, Euratom) No 1700/2003 of 22 September 2003 (OJ L 243, 
27.9.2003, p. 1), this f ile is open to the public. Where necessary, classified documents in this 
file have been declassified in conformity with Article 5 of the aforementioned regulation.  
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom  1. 
Februar 198 3 über die Freigabe der historischen Archive der Europäischen  
Wirtschaftsgemeinschaft und der Europäischen Atomgem einschaft (ABI. L 43 vom  15.2.1983,  
S. 1), geändert durch die Verordnung (EG, Euratom) Nr. 1700/2003 vom 22. Septem ber 2003  
(ABI. L 243 vom 27 .9.2003, S. 1), ist diese Datei der Öffentlichkeit zugänglich. Soweit  
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COMMISSION  
OF THE
EUROPEAN COMMUNITIES
General SecretariatC O M (84) 163 final 
Brussels, 22 March 1984
FOR OFFICIAL USE ONLY
NEGOTIATIONS FOR ACCESSION OF PORTUGAL 
TO THE EUROPEAN COMMUNITY
AGRICULTURE
NATIONAL AID MEASURES  
FOR AGRICULTURE IN PORTUGAL
(Communication of the Commission to the CounciL)
C O M (84) 163 final

-  1 -
1. INTRODUCTION
The Commission submits to thè Council thè present communication concerning  
thè state aids for agriculture in Porgugal. This is based on thè 1978,  
1979 and 1980 inventories of state aids together with supplementary  
Information at thè disposai of thè Commission,  and its main purpose is to  
demonstrate thè basic characteristics,  particularities and trends of thè  
Portuguese regime on state aids (1).
The Commission would like, however, to point out that, as was learned at  
thè beginning of Decomber 19.83, thè Portuguese Government has modified  
significante thè System, of national aids and, in particular, reduced by  
about half thè amount of aids paid for thè five main products (cereals,  
vegetable fats and oils, sugar, milk and fertilizers) in 1982 and intenda  
to abolish them in 1983.
The Commission will examine these developments in thè Portuguese aids  
regime in a second report covering thè calendar years 1981, 1982 and 1983,  
which it will submit to thè Council as soon as possìble.
(1) The present communication will be illustrated at thè Council level with a  
meeting document developing certain technical aspects, and in particular  
with a li t of aids contained in thè inventories communicated by thè  
Portuguese authorities.

-  2 -
2. GENERAL APPRECIATION
2.1. A revlew of thè Portuguese aids to agriculture shows a signifìcant 
increase of thè total amount of aids from 12.578,0 mio escudos in
1978 to 18.530,6 mio escudos in 1979 (an increase of 47,3%), and to  
33.040,4 mio escudos in 1980 (an increase of 78,311). However  
these increases, expressed in reai terms, amounted to only 18,5% in
1979 compared to 1978 figures and 50,3% in 1980 compared to 1979  
figures.
Similarly, thè contribution of national aids towards thè formation 
of thè agricoltura! revanue in Portugal (net value-added at factor  
cost) also increased from 18,0% in 1978 to 20,7% in 1979 and 31,2%  
in 1980, in nominai terms.
The annusi rate of increase in aids «ras not reflected in thè rise of  
final agricultural production, which amounted to only 26,7% in 1979  
compared to 1978, and 17,8% in 1980 compared to 1979. This could 
be explained not only by thè increasing cost of thè means of 
production, but also by thè way in which thè aids were actually 
deployed. Thus,  approximately 85,0% of th< *s were spent with  
thè object of maintaining low prices at consumption level and, at  
thè Barn e time, to support fermerà* revenue (categories 2 and 3),  
while aids which could have increased agricultural output, such as  
those to structure and investment, research and training (categories  
4, 5, 8 and 9) were almost negligible.

- 3 -
2*2. Individuai production sectors
Tho current trend of Portuguese aids during thè period of reference  
is to favour crop at thè expense of animai products. In particular,  
thè percentage of aids paid to croos from 58,8% of thè total amount  
of aids in 1978 and 57,8% in 1979 increased sharply to 73,6% in 1980,  
while aids to animai Products fell progressively from 27,9% in 1978  
to 26,9% in 1979 and further to 17,3% in 1980 (1).
While thè animai sector is receiving lessar financial assìstance than  
thè crop sector, both contributo equally to thè value of final  
agricultural production in Portugal. Thus, thè contribution of thè  
crops produce to thè value of final agricultural production was 47,6% 
in 1979 and 42,0% in 1980, of which state aids accounted for 14,0% in  
1979 and 30,6% in 1980, while thè animai sector contributed to 39,9%  
in 1979 and 44,6% in 1980, of which state aids accounted for only 
7,8% in 1979 and 6,8% in 1980.
Aids applicable to several agricultural Products (horizontal aids)  
accounted for 12,4% of thè total amount of Portuguese aids in 1978  
and 14,3% in 1979, but fell considerably to ' in 1980. About  
one-third of these aids was used to finance measures to thè means of  
production, while most of thè remaining were linked to prices or  
quantities or units of production at commercialization level or  
concerned with investment- at primary production level. Structural  
aids, such as aids to irrigation, redistribution and grouping of land  
and training were negligible.
The percentage for thè forestrv sector remained continuously below  
1,0% throughout thè reference period
<1) It should be noted, however, that thè dlstinction here between aids to  
crop and animai sectors is to some extent artificial, because certain of  
thè aids pnid to feed Industries for thè purchase of cereale and oìl-seed  
caltee coulrt also be considered as aids to thè animai sector. The total 
amount of thè aids given to these producers amounted to 27,0% of thè to  
Porguguese aids in 1980 (maize 10,8%, wheat 0,02%, barley 0,2%, sorghurc  
0,3%, oats 0,4% and oil-seed caltea 15,3%).

- 4 -
2.3. Specific agricultural products
The aids for wheat,  maize,  unrefined sugar,  oil-seed cakes and fresh  
tnilk, taken together, accounted for 46,5% of thè total amount of  
Portuguese aids in 1978, went up slightly to 49,7% in 1979 and  
increased sharply to 62,1% in 1980. With thè exception of maize and  
wheat, for which thè amount of aid increased slightly during thè  
reference period, aids to thè other three products mentioned followed  
a downward trend during thè sanie period. The sudden increase of thè  
aids to thes'e products in 1980 was due to thè payment, for thè first  
time, of an aid for thè purchase of imported unrefined sugar,  
àccounting for 13,2% of thè total amount of Portuguese aids in thè  
sanie year.
The amount paid to industries for thè purchase of wheat, imported or 
home produced, for human consumption increased progressively from  
8,6% of thè total amount of Portuguese aids in 1978 to 9,2% in 1979  
and 10,7% in 1980.
The aid to farmers and feed industries for thè purchase of imported  
maize increased steadily from 5,0% of thè total of Portuguese aids in  
1978 to 6,4% in 1979 and 11,4% in 1980.
The aid to feed industries for thè supply of oil-seed cakes fell  
gradually from 18,8% in 1978 to 17,6% in 1979 and to 15,3% of thè  
total amount of Portuguese aids in 1980.
The aid to processing and distribution of fresh milk in favour of  
industriai enterprises, which respect a fixed maximum price at  
consumption level, declined during thè reference period from 15,0% in  
1978 and 1979 to ÌLI,6% of thè total amount of Portugue'se aids in 1980.

- 5 -
2.4. Fertilizers
The total araount of aids paid for thè production of fertilizers was  
17,9% of thè total amount of aids to Portuguese agricolture in 1978,  
but reduced progressively to 14,8% in 1979 and 14,4% in 1980 of thè  
sanie total.
Fertilizers and thè other five individuai agricultural products  
mentioned above, taken together, accounted for 64,4% of thè total  
amount of aids to agriculture in Portugal in 1978; they remained
virtually thè sanie (.64,5%) in 1979 and increased suddenly to 76,5% in  
1980.
2.5. Classification of aids
Every aid listed in these inventories was classified, taking into  
account its nature and purpose, into one of ten categories of aids.  
Such classification enables thè Commission to form a preliminary 
opinion as to thè compatibility of thè aids in question with  
Community law.
The first three categories of aids, i.e. those linked to prices,  
quantities and units of production at primary production level  
(category 1) or at commercialization level (category 2), and aids to  
thè means of production (category 3) are considered by thè Commission  
to be, in principle, incompatible with Community law unless they are  
admitted under certain conditions.
On thè contrary, thè so-called structural aids (aids given to  
investment at primary production or commercialization and processing

6
levels - categories 4 and 5) are considered to be, in principia,  
compatible with Community law and may, under certain conditions, be  
financed even from thè Community budget.
Aa far as thè aids to training, regearch and naturai disagters  
(categories 7, 8 and 9) are concerned, they are normally considered  
to be compatible with Community law, provided that certain conditions  
are met.
With regard to aids given to marketing,  trade fairs.  market  
prospection.  etc.  (category 6), thè Commission in generai has  
reserved its posltion until appropriate measures are proposed.
Aids for thè measures having a social security objective in thè field  
of agriculture have not yet been integrated to a sufficient degree so  
as to allow thè Commission to distinguish among these measures those  
having a state aid element, within thè meaning of Artide 92 of thè  
EEC Treaty, and to harmonize thera subsequently pursuant to  
Artide 93(1) of thè Treaty (1) .
2.6. Legai appreciation
A detailed examination of thè aids on thè linee of thè compatibility-  
incorapatibility approach has shown that only a very small part of  
these aids can be considered now to be compatible with Community law.
(1) It should be noted that. thè amount spent to finance measures having a
social security character in thè field of agriculture has not been taken  
into account in this report. '

•  7
Thls part amounted to 2,2% of thè total amount of aids to Portuguese  
agricolture in 1980.
On thè contrary, about 89,7% of thè total amount of aids in 1980 was  
found to be incompatible with Community law, either because they  
would infringe thè provisions of Articles 92-94 of thè Treaty and thè  
appropriate measures adopted for their implementation by thè  
Commission or because they would run contrary to Community rules  
establishing thè common organizations of agricultural markets.  
However, certaln of thè above aids whlch are now considered, as  
national aids, to be incompatible with Community law will have to be  
abolished and then rèplaced by a community System of aids and their  
payment will also be. taken up by thè Community budget after  
accession. These aids amounted to 2,6% of thè total amount of  
Portuguese aids in 1980.
A third group of aids comprlses those measures which are neither  
wholly coropatlble nor clearly incompatible with Community law. They  
were classified therefore in an intermediate group (grey zone), as  
aids comoatlble under certaln conditions.  These conditìons may  
concern limltations either as to thè amount of aids permitted or as  
to their application over tlme. These aids accounted for about 2,9%  
of thè total amount of aids to Portuguese agrlculture in 1980.
Some of thè above aids, on thè other hand, fall wìthln thè field of  
application of thè soclo-structural Directives and would have for  
that reason to be appreciated under thè specific aspects of thè  
existing or future socio-structural policy of thè Community. They  
accounted for about 1,2% of thè total amount of aids in 1980.
Another group consìsts of aids given in thè form of low interest  
operat onal credit or to public undertakings and undertakings under  
state control. For these aids thè Commission reserves ite posltlon  
untll appropriate measures are adopted. These aids amounted to 5  
of thè aids to agricolture in Portugal in 1980.

-  8 -
2.7. Conclusion
The above review of thè Portuguese aids to agriculture confirms  
completely thè initial opinion expressed by thè Commission in ita  
recent Communication to thè Council (1), that thè majority of these  
aids should be considered to be incompatible «ritti thè present rules  
of community law.
However thè Portuguese Government in thè meantime, has had recourse 
to vigorous and drastic measures, and has decided to reduce by about  
half thè amount of aids paid for thè five main products (cereals,  
vegetable fata and pila, sugar, milk and fertllizers) in 1982 and  
intenda to abolish them in 1983.
The Commission, whlle regarding these developments with a favourable  
eye, does not wlsh to express any view at present on thè immediate  
consequencea of these measures on thè Portuguese econòmy. It feels  
obliged,  however, to point out that it reserves its right, in case  
thè Portuguese Government decides to reintroduce some of thè  
abolished measures in thè future, to reexamine their compatibility  
with thè relevant community law in force at at tìme.
<1) Communication of thè Commission to thè Council, guidelines and proposals
concerning thè period of transition for Portuguese agriculture, COMC83)310 
final, 22.7.83, page 30, point 6.5.

C W P  11961)
T A B L E  1
P O R T U G A L :  National aid and final agricultural production
Y E A RT O T A L  N A T IO N A L  
‘  A I D  
(final) 
(Esc million)F IN A N C IA L  .A G R IC U L T U R A L  
P R O D U C T IO N 1  
(Esc million)2  as
percentage 
of 3
1 2 3 4
1978 12 578-.0 126 701.0 9.9
1979 18 530.6 160 579.0 11.5
1980 33 040.4 189 234.0 17.5
^Crop, livèstock and forestry sectors 
A t current prices
S O U R C E : Portuguese National Institute of Statistics and National
Accounts, 1983.

(W P  11961)
T A B L E  2
P O R T U G A L :  Total amount of national aid to agricolture and breakdown
between thè crop, livestock and forestry sectors.
S E C T O R SExoendi ture 
1 9 7 8  
(final)
(E sc million)E xpenditure 
1 9 7 9  
(final)
(E sc  million)Increase
3 - 2
2
( % )E xpenditure 
1 9 8 0  
(final)
(E sc  m illion)Increase
5 - 3
3
( % )
1 2 3 4 5 6
P la n t vegetable D r o d u c ts7 393.1 10 700.6 44.7 24 317.4 127.3
L iv e s to c k  products 3 511.2 4 .990.0 42.1 5 713,6 14.5
F o re s try  products 115.7 184.5 59.5 171.8 - 6.9
N crrclassifiable 1 558.0 2 655.5 70,4 2 837.6 6.9
TOTAJL 12 578.0 18 530.6 47.3 33 040.4 78.3
A t current prices in national currency
I

( W P  11961)
T A B L E  3
P O R T U G A L :  Total national aid to agriculture broken dow n according to
crop, livestock and forestry sectors
X O F  T O T A L  A M O U N T  O F  N A T I O N A L  A I D  T O  A G R I C U L T U R E
1978 1979 1980
Plant vegetatale -products 58.8 57,8 73.6
Livestock products 27.9 26.9 17.3
Forestry products 0.9 1.0 0.5
N on-classi fiable 12.A 1A.3 8.6
T O T A L 100.0 100.0\
100.0

(W P 11961)
TABLE 4
PORTUGAL: Breakdown of t o t a l  amount of n a tio n a l a id  by s e c to r
S E C T O R
1
I . C E R E A L S  
I I .  R IC E  
I I I .  S U G A R
IV . V E G E T A B L E  O IL S A N D  F A T S  
V. F R U IT  A N D  V E G E T A B L E S  
V I. P O T A T O E S  
V II. F L O R IC U L T U R E  
VIII.  W IN E
IX . C E R T A IN  P L A N T  P R O D U C T S
x . F O R E S T R Y
XI. M IL K  
XII.  B E E F /V E A L
XIII.  C E R T A IN  L IV E S T O C K  P R O D U C T S  
XIV. C E R T A IN  A G R IC U L T U R A L  P R O D U C T S
T O T A LTotal amount 
1978 
(final)
(Esc million)
2
1 907.4 
607.2
20.5
2 411,2
67,1
44.0
5.9
62.6
2 267.2
115.7
2 685.2
428.0
398.0
1 558.0
12 578.0Total amount 
1979 
(final) 
(Esc million)
3
3 427,8 
778.7 
24.4 
3 314.4 
324.2 
50.8 
8.1 
23.0
2 748.4
184,5
4 264.2
325.9
399.9
2 655.5
18 530.6Increase
3-2
2
(% )
4
79.7
28.2
19.0
37.4 
383.1
15.5 
37.3
-63.2
21.2
59.5
58.8
23.9 
0.5
70.4
47.3Total amount 
1980 
(final) 
(Esc million)
5
8 074.7
517.2
4 363.1
5 522.5
645.3
120,2
9.2 
244,7
4 820,5
171.8
5 190.6
0.0
523.0
2 837.6
33 040.4Increase
5-3
3
(% )
6
135.5 
- 33.6
17 781.6  
66.6 
99.0
136.6 
13.6
964.0
75.4
- 6.9
21.7
-  100.0
30.8
6.9 
78.3