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Vol. 1984/00 60 
  
 
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Conformém ent au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 
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 opening to the public of the historical archives of the European Econom ic 
Communit y and the European Atom ic 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 file 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 1983 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 
erforderlich, wurden die Verschlusssachen in dieser Datei in Übereinstimmung mit Artikel 5 
der genannten Verordnung freigegeben. 
COMMISSION  
OF THE
EUROPEAN COMMUNITIES
General SecretariatCOM(81+) 165 final.  
Brussels, 23 March 198^.
F O R  O F F IC IA L  U S E  O N L Y
NEGOTIATIONS FOR THE ACCESSION OF SPAIN 
TO THE COMMUNITY
AGRICULTURE
NATIONAL AID MEASURES FOR SPANISH AGRICULTURE
(Commission Communication to the Council)
COM (8k)  165 final

1. IN T R O D U C T IO N
In its Communication C O M (83)321 final of 22 July 1983, in which the 
Commission presented to the Council its guidelines and proposals concerning 
the transitional period for Spanish agriculture, it stated that the situation 
regarding aid granted to agriculture in Spain w as being examined in detail, 
and that the results would be presented to the Council at a later date.
Since the examination, which focused on state aids granted to Spanish 
1
agriculture for budget years 1977, 1978, 1979, 1980 and 1981, has been 
completed, the purpose of this Communication is to describe the main
features of the measures applied and of the policy followed by the Spanish
2authorities as regards state aids to agriculture.
This Communication will be followed, w hen appropriate, by further communications 
examining the situation regarding state aids granted to Spanish agriculture 
for the post-1981 budget years.
This examination focused on state aids granted to agriculture throughout 
Spain's terriotry, i.e . including the Balearic Islands, the Canary Islands, 
Ceuta and Melilla.
This Communication w ill  be illustrated at Council level by a meeting paper 
setting out certain technical aspects and presenting in particular the 
list of aids based on the inventories sent by the Spanish authorities.

-  2 -
2. G E N E R A L  A S S E S S M E N T
2.1 An examination of the state aids granted to Spanish agriculture reveals 
that the total amount of aid rose from 42 755.3 million pesetas in 1977 
to 83 195.2 million pesetas in 1981.
In nominal terms, therefore, the total amount of Spanish state aid, with an 
increase of over 95% , almost doubled between 1977 and 1981. While the total 
amount of Spanish aid showed a steady increase throughout the reference 
period, the annual increases were greatest in 1980 and 1981 (25%  and 3 8 %  
respectively).
Expressed in constant values, however, the trend of total Spanish state aid 
is rather different: the amounts how an annual drop in 1978 and 1979, and
an annual increase in 1980 and 1981, so that the real increase in total 
Spanish aid between 1977 and 1981 was only 6%.
It should be noted that between 1977 and 1981 the general index of prices 
paid by Spanish farmers for agricultural inputs increased by 81% , and at 
the same time the general index of prices obtained by Spanish farmers for 
their products increased by 29% .
If a comparison is also made between aid granted to agriculture in Spain
Aand the agricultural income obtained in that country, it is seen that the 
aid amounted to 6.2%  of agricultural income in 1977, 5.6%  in 1979 and 9.5%  
in 1981. These percentages suggest that the potential share of aid in the 
formation of agricultural income in Spain remained relatively small throughout 
the reference period.
defined as net added value at factor cost.

- 3  -
Sim ilarly, although Spanish state aid, as a  percentage of the value of 
Spain's fin a l agricultural production, did not increase to any significant 
degree over the reference period and tended to remain fa irly  low (4.2% in 
1977, 3.7% in 1979 and 5.5%  in 1981), there is one feature of the situation 
regarding state aids to Spanish agriculture which should be emphasized.
Throughout the period 1977 to 1981, investment aid, aimed at improving both 
production and marketing structures, clearly predominated: for the whole
period it  represented almost half the total amount of Spanish state aid 
(46%  in 1977, 4 1 %  in 1979, 4 7 %  in 1981).
1
Aid for inputs also accounts for a  very large share of Spanish state aid. 
There was, however, only a  slight increase in such aid during the reference 
period (10%), so that its  relative share of total Spanish state aid has 
been steadily declining, fa llin g  from 3 9 %  of the total in 1977 to 3 0 %  in 
1979 and 2 2 %  in 1981.
The increase in total Spanish state aid has been reflected, however, in aid 
linked with prices, quantities and production units, the relative importance 
of which increased from 1 3 %  of total aid in 1977 to 2 3 %  in 1979 and 2 7 %  in 
1981. This trend w as particularly marked in the case of aid granted for 
primary production, which, while representing only 2 %  of total aid in 1977, 
accounted for 1 2 %  of the total in 1981 -^
This is mainly aid for the purchase of diesel fuel used on farms, aid 
covering a ll or part of insurance costs, and aid for the fe rtiliz e r 
industries, which sell their products to farmers at fixed prices.
There is also a  wide range of plant health and veterinary aid.
Over the sam e period, the rise in aid for marketing or price support w as 
m uch less marked: 1 1 %  of total aid in 1977, 1 4 %  in 1981.

- 4  -
2.2 Breakdown by type of product
The fir s t feature of note is the very predominant position, throughout the 
period 1977 to 1981, of non-cLassifiable horizontal aid allocated to 
agricultural products, including plant and livestock products: for the
whole period, it  accounted for over half Spain's total state aid, although 
there w as a  net drop (70%  of total aid in 1977, 6 4 %  in 1979, 5 7 %  in 1981).1
For the rest, Spain's state aid is tending to be concentrated on plant 
products: there w as even a  sharp increase in specific aid for plant products
as a  proportion of total aid, from 2 0 %  in 1977 to 2 6 %  in 1979 and 3 4 %  in 
1981. Specific aid for livestock production w as only of relative importance, 
however, and even declined slig h tly during the reference period (its  share 
of total Spanish state aid fe ll from 7 %  in 1977 to just under 6 %  in 1981).
This tendency, which m eans that more aid is being channelled into crop
production than livestock production, is seen even more clearly if  account
is taken of the contribution from the livestock and crop production sectors
2to Spain's fin a l agricultural production. A  comparison of the value of 
specific aid allocated to a  given production sector (crops/livestock) with 
that sector's contribution to the value of Spain's fin a l agricultural
If account is also taken of aid which cannot be broken dow n am ong the 
various plant products and aid which cannot be broken dow n am ong the 
various livestock products (aid subsequently dealt with in this document 
under the heading of plant products and livestock products), the share of 
a ll aid which cannot be broken down am ong specific products then represents 
,7 7 %  of Spain's total state aid in 1977, 6 6 %  in 1979 and 6 3 %  in 1981.
O n  average, between 1977 and 1981, plant products accounted for 55.4% of 
the value of Spain's fin a l agricultural production, livestock products 
for 41.2% and forestry products for 3.4%.

- 5  -
production reveals that in 1977 plant products as a  whole benefited, in 
value terms, from twice as m uch specific aid as livestock products. In 1981, 
plant products as a  whole benefited from five times as m uch specific aid 
as livestock products.
The share of specific aid for forestry products has remained more or less 
stable and is small in relation to Spain's total state aid: 2.8%  in 1977,
2.5% in 1979, and 2.3% in 1981.
2.3 Non-classifiable horizontal aid allocated to a  number of agricultural 
products
The relative share of this aid, which s t i l l  accounts for the bulk of Spain's 
state aid, showed a  net drop between 1977 and 1981, as indicated in 2.2 
above. In absolute value terms, however, the amount of this aid increased 
by 6 7 %  over the sam e period.
It w as mainly aid for investment at primary production level, and took the 
form of irrig a tio n  aid, aid for reparcelling and aid for specific programmes 
for the development of production structures (improvement of farms, 
in stalla tion of young farmers, e tc.). It also covers aid for investment in 
marketing and processing, allocated in particular to producers' associations.
2.4 Specific aid for the various agricultural products
The trend, already indicated, towards greater aid for crops, stems largely 
from the increase in the aid allocated to certain major products.
T he amount of specific aid for cereals has always been the highest for
1
any given sector and it  rose steadily between 1977 and 1981. T he aid 
went mainly to developing the cultivation of maize and sorghum - this aid 
w as introduced in 1977 and increased substantially and rapidly in volume - 
and also towards covering a ll or part of the cost of insurance.
Specific aid for cereals represented 5 %  of Spain's total state aid in 
1977, 8.5% in 1979, and 11.5% in 1981.

-  6 -
Furthermore, specific aid for vegetable oils and fats showed a
particularly significant increase, ending up in second place am ong
1
specific sectoral aid. It should be pointed out that in 1979 (and in 
that year only) temporary aid w as granted for certain less favoured 
oil-producing units, and in particular that in 1979 a  direct grant w as 
introduced for o il production, and w as paid for the fir s t time for the 
1979/80 oil-producing year.
Sim ilarly, specific aid for wine underwent a  spectacular increase, which
2put it  in third place am ong specific sectoral aid. This increase w a s 
the result of the introduction, starting in 1979, of aid for exports of 
wine and grape must, and also of the granting, in 1980 and 1981, of 
temporary aid for the short- and long term storage of wine.
Specific aid for sugar has also developed appreciably: from an
insignificant percentage of Spain's total state aid in 1977, it  rose to 
2.7% in 1981 and so w as f if th  in terms of specific sectoral aid. T he 
aid went mainly to small sugar beet (but also sugar cane) producers, and 
also took the form of management credit.
Special mention should also be m ade of cotton, for which the specific aid 
amounted to 4.9% of Spain's tota l state aid in 1977, 6 %  in 1979 (and 
even 6.8% in 1980) and 3.6% in 1981.
Specific aid for vegetable oils and fats accounted for less than 1 %  of 
Spain's total state aid in 1977, 4 %  in 1979 and 6 %  in 1981.
Specific aid for wine accounted for 0.1% of Spain's tota l state aid in 
1977, 0.7% in 1979 and 4.2% in 1981.

- 7  -
!
Despite this product's limited contribution to the value of Spain's 
fin a l agricultural production, specific aid for cotton ranked fourth 
on the lis t of sectoral aids. The social importance of this product is 
confirmed by the fact that the bulk of the aid goes to the hand-picking of 
raw cotton.
Lastly, it  should be pointed out that fresh and processed fru it and 
vegetables, which account for almost a  quarter, in value terms, of Spain's 
fin a l agricultural production, receive only 2 %  of Spain's total state aid, 
the sam e percentage as received by the milk and milk products sector, 
which accounts for just under 1 0 %  of Spain's fin a l agricultural production.
2.5 Classification of aid
Each of the aid measures listed in the inventories received from the 
Spanish authorities has been classified, on the basis of the nature and 
purpose of the aid in question, into ten categories of aid. This enables 
the Commission to m ake a  preliminary assessment of the compatibility 
of the aid with community legislation.
The f ir s t three categories of aid, i.e . those linked with prices, 
quantities and production units at primary production (category 1) or 
marketing (category 2) level and aid for inputs (category 3) are as a  
rule considered by the Commission to be incompatible with Community 
legislation, unless accepted under certain circumstances.
Cotton represents, in value terms, less than 1 %  of Spain's final 
agricultural production, cereals 9% , vegetable oils and fats 5 % , 
wine 5% , sugar 2 % .

-  8 -
W hat is termed structural aid, however, (aid for investment at primary 
production, marketing or processing level) (categories 4 and 5) is as 
a  rule considered to be compatible with Community legislation and m a y  
even, under certain circumstances, be financed by the Community budget.
Aid for training and research and aid granted in the event of natural 
disasters (categories 7, 8  and 9), is normally considered to be compatible 
with Community legislation, provided certain conditions are fu lfille d .
The Commission has reserved its  overall position on aid for trade fa irs, 
advertising, the search for outlets, etc., (category 6) u n til appropriate 
measures within the meaning of Article 93 of the E E C  Treaty have been 
proposed.
Aid of a  social nature (category 10) is normally considered to be
compatible with Community legislation, provided certain conditions are
fu lfille d . However, aid for measures with a  social security objective
in agriculture has not achieved a  sufficient degree of integration to
enable the Commission to single out those which constitute state aids
within the meaning of A rticle 92 of the E E C  Treaty and then to harmonize
1
them in accordance with Article 93(1) of the E E C  Treaty.
2.6 Legal assessment
It emerges from an examination of the compatibility of Spain's various 
state aids, conducted on the basis of the situation in 1981, that, overall, 
in value terms and account being taken of the following observations, 
just over 6 0 %  of these aids could as a  rule be considered to be compatible 
with Community legislation.
Just over 3 2 %  by value of Spain's state aids are clearly compatible with 
Community legislation.
It should be noted that the amounts earmarked for financing measures of a  
social security nature in agriculture are not taken into account in this 
C om m uni cation.

- 9 -
It should also be added that almost 1.5%  by value of Spain's state aids 
m ay be considered acceptable vis-a-vis Community legislation in so far as 
they are aids to which the Community is not raising any objection at 
present, pending adoption of the appropriate measures. These are the aids 
granted in the form of low-interest credit or credit to state undertakings 
or companies under state control.
Furthermore, almost 2 8 %  by value of Spain's state aids m a y be considered 
to be compatible with Community legislation provided that certain 
conditions are fu lfille d . These conditions m a y involve restrictions on 
the amount of aid or the period for which it  m a y be granted. Within this 
group, certain aids (just over 4 %  by value of Spain's aid for 1981) fa ll 
within the scope of the Community's socio-structural policy and must 
therefore be adapted to the present or future specific terms of this policy.
Lastly, just over 3 8 %  by value of Spain's state aids are incompatible 
with Community legislation because these aids would infringe Articles 9 2  
to 94 of the E E C  Treaty and the measures adopted in implementation of 
those A rticles, or because they would run counter to the provisions 
governing the com m on organization of markets.
It should nevertheless be noted that som e of these aids which are 
considered to be incompatible (9.5% by value of Spain's aid for 1981) 
correspond in practice to aid measures provided for at Community level.
Such aids must therefore be discontinued and be replaced by aids financed 
from the Community budget.
2.7 The above information obtained from an analysis of the situation 
regarding state aids granted to Spanish agriculture confirms the general 
assessment which the Commission had already put to the Council, namely that 
national aids in Spain have a  limited impact, despite the tendency for the 
to ta l su m  involved to increase, with special emphasis on certain aspects.

-  10  -
It should also be pointed out that the support given to Spanish 
agriculture also com es from other mechanisms which do not constitute 
aids within the meaning of this study. These mechanisms include the 
various trade arrangements applied in trade with other countries, which 
enable the frontiers to be opened or closed in line with domestic 
requi rements.^
The Commission considers that the situation regarding Spain's state aids 
as it  emerges from the inventories which served as a  basis for this 
analysis confirms the need, as regards a  number of special, restricted 
cases, to qualify the principle that aids which are incompatible with 
Community legislation must be abolished upon accession.
It is nevertheless necessary to follow attentively the development of the 
situation regarding state aid in Spain for the budget years after 1981 
so that, in the tight of progress on the accession negotiations, the 
Commission can present valid detailed proposals on the subject.
The po ssib ility of obtaining extensive supplies of maize and sorghum on 
the external markets at world market prices is therefore a  major element 
of support for livestock production; conversely, the fact that Spain's 
fru it and vegetable output is not placed in competition with other 
countries' products on the domestic market is also a  measure of support 
for a  sector which does not benefit from any other permanent intervention 
measure.

-  11  -
T A B L E S
1. State aids to agriculture and fin a l agricultural production
2. Total amount of state aids to agriculture and breakdown between 
crop, livestock and forestry sectors
3. Total state aid to agriculture broken down according to crop, 
livestock and forestry sectors

-  1 2  -
T A B L E  1
SPAIN : State aids to agriculture and fin a l agricultural production
(Ptas, m illion at current prices)
Y E A RT O T A L
N ATIO N A L
AID
XPtaq mil lion)FINAL
A G R IC U LT U R A L
P R O D U C T IO N
(Ptas m i llion)2  A S
P E R C E N T A G E  
O F  3
1 2____________ 2____________ 4
19
77 42 755.3 1  o n  734.1 4.2
•
1978 43 687 o 3 1 198 524.0 3.6
1979 48 004.8 1  295 619.3 3.7
1980 60 219.8 1 451 867.5 4.1
1981 83 195.2 1 522 624.9«
5.5
Source: Anuario de Estadistica Agraria de Espana, 1981 (p. 610)
(total contributions of crop, livestock and forestry sectors 
to fin a l agricultural production).

TA B LE  2
i
SPAIN:  Total amount of state aids to agriculture and breakdown between crop, livestock and forestry sectors < ■ » >
i
(Ptas m illio n , at current prices)
1
S E C T O RT O T A L  A M O U N T  
1977 
(FINAL)
(Ptas m illion)T O T A L A M O U N T  
1978 
(FINAL)
(Ptas m illion)IN C R E A S E
3-2
2
(% )T O T A L  A M O U N T  
1979 
(FINAL)
(Ptas m i llio n )IN C R E A S E
5-3
3
(% )T O T A L  A M O U N T  
1980 
(FINAL)
(Ptas m illion)IN C R E A S E
7-5
5
(% )T O T A L  A M O U N T  
1981 
(FINAL)
(Ptas m illion)IN C R E A S E
9-7
7
(% )
1 2 3 4 S 6 7 8 9 10
L A N T
R O D U C T S 8 759,9 9 783.9 11.7 12 557,7 28,4 27 214.9 116.7 28 669.4 5.5
IV E S TO C K
R O D U C T S 2 937.1 2 945.1 0 .3 3 533.9 20.0 3 363.9 - 4.8 4 820.2 43.3
°R E S T R Y  : 1 177 7 R O D U C T S  ”818,9 -30.5 1 195.9 46 „0 979.9 - 18.1 1 949.3 98.9
O N - :
LASSIFIABUE 29 880.6 30 139.4 0.9 30 717.3 1.9 28 661.1 - 6.7 47 756.3 66.6
O T A L  : 42 755.3
--------- * ---43 6
87.3
? _  .. .2.2 48 004.8 9.9 60 219.8 25.4 83 195.2 38.3

- 14 -
T A B LE  3
SPAIN: Total state aid to agricultire broken down according to crop,
livestock and forestry sectors
%  O F  T O T A L AID
S E C T O R
1977 : 1978 : 1979 : 1980 : 1981
Plant products20. 5••
: 22.4••
: 26.1••
: 45,2 : 34.5
Livestock products6.9••
6,7••
: 7.4••
: 5-6 : 5.8
Forestry products 2.8••
: 1.9••
: 2.5••
: 1.6 : 2.3
Non-classi f i able 69,8••
: 68.9••
: 64.0••
: 47.6 : 57.4
T O T A L 100,0••
: 100.0••
: 100.0••
: 100.0 : 100.0