ARCHIVESHISTORIQUES
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COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(73)2119
Vol.1973/0382

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(73)2119final
Brussels,21December1973
NOTTOBEPUBLISHED
COMMISSION OPINION
of21December1973
onthedraftprovisionstoimplement
CouncilDirectivesNos72/159/EECand73/131/EEC
forwarded "bytheIrishGovernment
COM(73)2119final

NOT TOBEPUBLISHED
COMMISSION OPINION
of21Deoember 1973
onthe draft provisions to
implement Council Directives Kos72/159/EECand .73/l3l/EEC
forwarded bytheIrish Government
Pursuant toArticle 17(l )ofCouncil Directive No72/159/EEConthemodernization
offarms ,the Irish Government forwarded totheCommission on5November 1973
the draft ofaFarm Modernization Scheme which will implement the said Directive
andDirective No73/l3l/EEC.
Following consultation with theStanding Committee onAgricultural Structures
(71st meeting on15November 1973 )•theCommission nowissues thefollowing
opinion onthedraft ,pursuant toArticle 17(3 )ofDirective No72/159/EEC :
1. Part II.section 3
1.1 Part II,section 3ofthedraft defines thepersons eligible foraidand
specifies that afarmer shall bedeemed tohave farming ashismain occu­
pation ifatleast 501°ofhisearned income isgained from farming .
1.2 Article 2(l)(a )oftheDirective specifies that thesystem ofincentives
referred toinArticle l(l)applies tofarmers whopractise farming as
their main occupation .Article 3(l)oftheDirective requires
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Member States todefine what ismeant bytheexpression "afarmer practising
farming ashismain occupation ".Thedefinition must atleast include the
condition that theproportion ofincome from farming benotless than 50
ofthe farmer 'stotal income *
1.3 IntheCommission 'sview thefarmer 'stotal income within themeaning of
Article 3(1)oftheDirective includes notonly earned income butalso
investment income from agricultural andnon-agricultural activities .There -
for the exclusion ofinvestment income from the definition of"main occu­
pation offarmer "inPart II,seotion 3ofthe draft does not satisfy the
conditions laid down inArticle 3(l)oftheDirective .
However theCommission isofthe opinion that allthis means inpractice is
that farms which arenotoperated bywayofmain occupation within the
meaning oftheDirective could qualify forincentives .What isinvolved
therefore isanincrease inthenumber ofeligible persons ,which inprac­
tice should prove tobeofminor significance .
Accordingly ,theCommission confines itself under this procedure torecommen­
ding that the Irish Government bring Part II,section 3ofthedraft into
line with Article 3(l)oftheDirective .
2.Part II,section 5
2.1 Part II,section 5ofthedraft speoifies that earned income perlabour unit
onadevelopment farm istobecalculated after allowance ismade fora
return oncapital employed onthefarm ;forthis purpose thereturn onland ,
including buildings ,istobecalculated at2$.
•/.
(
/

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2.2 Thesecond indent ofArticle 4(4)(a)oftheDirective requires Member States
todetermine what constitutes anadequate return onthecapital invested
inthefarm business .This return oncapital must "beattained "bythefarm ,
inaddition totheearned income ,upon completion ofthedevelopment plan .
2.3 Atthemeeting oftheStanding Committee onAgricultural Structures held
on15November 1973 »theIrish delegation stated that thereturn onland
wasbased onthe-low-value fortax purposes ofland .The intention was
however toincrease these lowfigures toarrive atacceptable standard values .
TheCommission isoftheopinion that a2$return onland canberegarded
asacceptable only ifitiscalculated onthebasis ofactual market value ,
but itwould have noobjection tostandard values being established to
facilitate administrative implementation oftheDirective .However a2%-re­
turn based onlowtaxable values cannot beregarded asacceptable within
themeaning oftheDirective .
Accordingly ,theCommission finds that Part II,section 5ofthedraft may
only beconsidered compatible with thesecond indent ofArticle 4(4)(a)
ofthe Directive ifcalculations are based onataxable value which more or
less corresponds tomarket value .
3.Part II,section 6
3.1 Part II,section 6ofthedraft requires theappropriate Minister to
determine before 31December each year ,forthesucceeding year ,thecom­
parable income figure ofnon-agricultural workers .This figure isused
asabasis forcalculating theobjective ofafarm 'sdevelopment plan .
/

Forthepurposes ofthis calculation ,Ireland istreated asasingle region .
For1974 thecomparable income figure will heh1670 .
3.2 Initsnote of5November 1973 the Irish Government stated that aneffort
hadbeen made tocompare farm incomes andtheearnings ofindustrial
workers .For this reason Dublin was excluded from the determination of
comparable income .The city hasaparticularly high concentration of
highly-specialized andmanagerial workers ,afactor which pushes comparable
income toalevel which isnotvalid fortherest ofthecountry .
For1974 forexample ,comparable income including Dublin isi1918 *
whereas comparable income excluding Dublin ish167O .
Moreover ,since industrial earnings were more orless the same forthe
entire country ,separate regions hadnotbeen defined .
3.3 Under Article 4(l)and .(2)oftheDirective ,thefarm undergoing moderniza­
tion must becapable ,upon completion ofthedevelopment plan ,ofattaining
asaminimum ,foreach annual working period of2300hours ,alevel of
earned income comparable totheaverage gross earnings ofallnon-agricul -
tural workers intheregion inquestion .
3.4 TheCommission isoftheopinion that Article 4(l)and (2)oftheDirective
requires that theaverage income from allnon-agricultural paid employment
betaken astheyardstick fordetermining theearned inoome tobeattained
byafarm upon completion ofthedevelopment plan .

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Generallyspreadingtherefore,alimitationofthecomparisontothe
earningofindustrialworkersisincompatible withtheobjectiveof
Article4oftheDirective,
Furthermorethesecanbenoquestionofexcludinglargecities-in
whichthereisusuallysomeconcentration ofmanagerialcategorieswith
higherincomesthanthoseofindustrialworkers-whentheregionsfor
whichthecomparableincomefromnon-agricultural employmentistobe
determinedarebeingdefined.
Ireland *snationalaccountsstatistics showthat,in1971,averageincome
fromgainfulemployment,lesstheemployer'snationalinsurancecontribution ,
was3068u.a.Assuminganominalgrowthrateof8.4$basedonaverage
growthforthelasttenyears,averageincomefromgainfulemploymentin
1974willbe3900u.a.ori1800.Howeversincetheactualnominalgrowth
rateinrecentyearshasbeenhigherthan8.4.$,thecomparableincomefrom
nonagricultural employmentin1974willprobablybeevenhigherthani-1800.
Itfollowsthatthefigureofi1670givenbytheIrishGovernmentasthe
comparableincomefromnon-agricultural employmentfor1974istoolow.
Itprovesthatthefactofexcludingcitiescanleadtoaconsiderable
reductioninthecomparableincomefigureforagivenregionandthiscannot
beconsideredcompatiblewiththeaimsoftheDirective.
TheCommissionrecognizeshoweverthatifDublinisincludedforthepurpose
ofdetermining comparableincomefromnon-agricultural employmentcomparable
incomeforsomepartsofIrelanddoesreachaninjustifiable highlevels.
TheCommissionfeelshoweverthatthiseffectcanonlybecounteredby
definingspecificregionsforthedetermination ofcomparableincome,as
providedforinArticle4(l)oftheDirective.
Tosumup,therefore,theCommissionfindsthatPartII,Section6ofthe
draftmustbebroughtintolinewiththeconditionslaiddowninArticle
4(l)and(2)oftheDirectivesothat,
comparableincomeisfixedattheleveloftheaveragegrosswageofall
non-agricultural workers,inoludingworkersinIXiblin.

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4*PartII,Section12(i)(c)
4.1»PartII,Section12(i)(c)ofthedraftspecifiesinteraliathat
aidmaybegrantedinrespectoffemalebreedingstock.
4.2.Article8(l)(b)oftheDirectivelaysdownthataidistohegiven
towardstheinitialpurchaseoflivestock(otherthanpigs,poultry,
orcalvesintendedforslaughter)providedforbyadevelopmentplan.
4.3.TheCommissionisoftheopinionthatArticles8and9oftheDirec­
tivearesospecificthatitisvirtuallyimpossibleforMemberStates
torestricttheirapplication andexcludefromaidinvestmentsfor
whichincentivesareexpresslyprovidedintheDirective.
Consequently ,theCommissionconsidersthat,byrestrictingaidin
respectofinvestmentinlivestocktothepurchaseoffemalebreeding
stock,theIrishdraftisincompatible withtheDirective.Thisincom­
patibilityisallthemoremarkedsinceArticle10oftheDirective
andCouncilRegulationNo1353/73makeexpressprovisionforincentives
toassistfarmsswitchingtobeefandmuttonproduction.Butthepossi­
bilityofswitchingtobeefandmuttonproductionisconsiderably
restrictediffarmersreceivenohelpwiththeinitialrestockingof
thefarm.
TheCommissionwouldalsopointoutinthisconnectionthat,under
Article8(l)(b)oftheDirective,aidmaybegrantedonlyinrespect
oftheinitialstockingofafarmunderadevelopmentplan.Thedraft
howevercontainsnocorresponding provision.
/.

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TheCommissionthereforefindsthatPartII,Section12(i)(c)of
thedraftmust"bebroughtintolinewithArticle8(l)("b)ofthe
Directivesothataidisgrantedfortheinitialpurchaseof
livestockprovidedforbyadevelopmentplanandinparticular
fortheinitialpurchaseoflivestookintendedfor"beefandmutton
production.
5.PartIII,Section3(b)
5.1.PartIII,Section3(h)ofthedraftprovidesforacapitalgrant
of40/0oraninterestsubsidyofTfaforlandimprovementworkon
farmswhichdonotsatisfytheconditionslaiddowninPartII,
Section6.
5.2.Underthefirstsubparagraph ofArticle14(2)oftheDirective,
MemberStatesmaygrantaidstofarmBwhichdonotsatisfythe
conditionslaiddowninArtioles2and4onlyiftheinterest
remainingpayablebythebeneficiary ,ortheequivalentofthat
interestiftheaidisgiveninanotherform,amountstonotless
than5%peryear.
5.3.1»TheCommissionisoftheopinionthatthefirstsubparagraph of
Article14(2)oftheDirectivemustbereadinconjunctionwith
Article8(2)oftheDirective.
UnderArticle8(2)farmerswhosedevelopmentplanshavebeen
approvedmayreceiveaninterestratesubsidynotexceeding5%
inrespectofaneligibleinvestmentnotexceeding40000u.a.;
therateofinterestremainingpayablebythebeneficiary must
notbelowerthan3>fo»Inprinoiple,theinterestratesubsidy
coversaperiodof15years,butitmayextendto20yearsfor
investmentsinimmoveableproperty.
MemberStatesarefreetosubstituteanequivalentcapitalsubsidy
forthisinterestratesubsidy.Thefirstsubparagraph ofArticle
14(2),ontheotherhand,fixestheinterestremainingpayableby

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thebenefioiaryat5%»althoughthisdoesnotaffecttheother
figuresinArticle8(2).
Thismeansthenthatforinvestments infarmswhichdonotsa­
tisfytheconditionslaiddowninArticles2and4of"theDirec­
tive(anddependingonthegoingrateofinterest)aninterest
ratesubsidynotexceeding5%maybegrantedforaperiodnot
exceeding20yearsinrespectofaninvestmentnotexceeding
40.000u.a.perman-workunit.Therateofinterestremaining
payablebythebeneficiary mustnotbelowerthan5$«Article
l(l)oftheDirectiverequiresMemberStatestointroducea
"systemofselectiveincentives"tofarmswhicharetobemoder­
nizedinaccordance ,withArticles2and4»–inotherwords,a
systemwhichisclearlymorefavourablethanthesystemincentives
applicabletootherfarms.
Accordingly ,theinterestratesubsidytobegrantedinaccordance
withArticle14(2)mustbefixedatalevelwhichguaranteesthe
"selectivity "ofincentivestodevelopment farms.
ItfollowsthataninterestratesubsidyofT%oranequivalent
capitalsubsidyof40^areincompatiblewiththefirstsubparagraph
ofArticle14(2)oftheDirective,eveniftheminimum5%rateof
interestremainingpayablebythebeneficiaryisguaranteedandthe
corresponding incentivestofarmswhichhavesubmitteddevelopment
planspursuanttoArticle2areclearlymorefavourable.
TheCommissionthereforefindsthatPartIII,Section3(b)ofthe
draftisincompatiblewiththefirstsubparagraphofArticle14(2)
oftheDirective.
5.3.2.AccordingtoastatementmadebytheIrishdelegationatthemeeting
ofStandingCommitteeonAgricultural Structures,"landimprovement
works"refersmainlytothedrainageofagricultural land.
./■

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TheCommissionfeelshoweverthattheleveloftheincentives
todrainageonfarmswhiohdonotsatisfytheconditionslaid
downinArticles2and4isunlikelytojeopardizethebasic
objectiveoftheDirective(namely,togiveprioritytopromo­
tingthecreationofdevelopmentfarms)aslongastherequired
"selectivity "infavourofsuchfarmsisguaranteed.Thisis
infactthecase,sincefarmswithadevelopmentplanmay
receivea9i°interestratesubsidyforlandimprovement.The
Commissionisoftheopinionthat,insofarasArticleII
3(b)oftheprojectislimitedtodrainageandancillaryworks,
theincompatibility ofthisprovisionwithArticle14(2)ofthe
Directivedoesnothoweverpermitthedecisiontobemadethat
theconditionsforfinancialcontribution bytheCommunity
havenotbeencompliedwith.
5.3.3.UnderthisprocedurepursuanttoArticle17(3)oftheDirective,
theCommissionthereforeconfinesitselftofindingthatPart
III,Section3(b)ofthedraft,insofarasitconcernsthe
promotionofdrainageandancillaryworks,isincompatible with
thefirstsubparagraphofArticle14(2)andtorecommendingthat
theIrishGovernmentbringthesaidSectionintolinewiththe
conditionslaiddownintheDirective.InsofarasPartIII,
Section3(b)ofthedraftconcernsinvestmentsotherthan
drainageandancillaryworks,theCommissionisoftheopinionthat,
ifitistofind,pursuanttoArticle17(3)»thatthesaid
SectioncomplieswiththeDirective,theSectionmustbebrought
intolinewithArticle14(2)sothattheinterestratesubsidy
doesnotexceed
•/

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6.PartIV,Section3(b)
6.1.UnderPartIV,Section3(b)ofthedraft,acapitalgrantof
50$°ranequivalentinterestsubsidymaybegrantedinrespect
oflandimprovement workstofarmsoperated "bywayofmain
occupationwherethefarmerisnotyeteligiblefortheannuities
providedforinDirectiveNo72/16Q/EECandcannotsubmita
developmentplansatisfyingtheconditionslaiddowninPartII,
Section6.
6.2.UnderArticle14(2)(a)ofthedirective,MemberStatesmay
grantinvestmentaidstofarmerswhoarenotcapableofattaining
thelevelofearnedincomelaiddownunderArticle4andwhoare
,notyeteligiblefortheannuitiesprovidedforinDirective
No72/160/EEC.Suchaidsmaynothoweverbegrantedonmore
favourabletermsthanthoselaiddowninArticle8(2).
6.3.UnderArticle8(2)aninterestratesubsidynotexceeding5%
maybegrantedforaperiodnotexceeding20yearsinrespect
ofaninvestmentnotexceeding40000u.a.perman-workunit.
Therateofinterestremainingpayablebythebeneficiary must
notbelowerthan3%•Itisclearthattheaidsprovidedfor
inPartIV,Section3(b)ofthedraftaregrantedonconside­
rablymorefavourabletermsthanthoselaiddowninArticle8(2)
oftheDirective.
Inthecircumstances ,theCommissionwouldreferbacktoits
observationsin5^*2.'onPartIII,Seotion3(b)ofthedraft.

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UnderthisprocedurepursuanttoArticle17(3)ofthe
Directive,theCommissionthereforeconfinesitself,in
thiscasealso,tofindingthat,insofarasitinvolves
thepromotionofdrainageandancillaryworks,PartIV,Section
3(b)ofthedraftisincompatiblewithArticle14(2)(a)and
torecommending thattheIrishGovernment "bringthesaid
SectionintolinewiththeconditionslaiddownintheDirective.
InsofarasPartIV,Section3{b)ofthedraftconcerns
investmentsotherthandrainageandancillaryworks,theCommission
isoftheopinionthat,ifitistofind,pursuanttoArticle
17(3)»thatthesaidSectioncomplieswiththeDirective,the
SectionmustbebroughtintolinewithArticle14(2)(a)sothat
theaiddoesnotexceedtheequivalentofa5i°interestrate
subsidyforaperiodof20years.
7.PartIV,Section5
7.1.UnderPartIV,Section5iofthedraft,theschemedescribed
inPartIVwilloperateuntil31December1978*
7.2.UnderArticle14(2)(a)oftheDirective,temporaryaidsmay
begrantedtothefarmersreferredtoin6.2.duringaperiod
offiveyearsfromthetimewhentheDirectivetakeseffect.
7.3.DirectiveNo72/l59/EECwasnotifiedtoMemberStateson
20April1972andconsequently tookeffectfromthatdatein
accordancewithArticle191oftheTreaty.
Article14(2)(a)oftheDirectivethereforeenteredinto
forceon20April1972andwillceasetohaveeffecton
19April1977.
TheCommissionthereforefindsthatPartIV,Section5ofthe
draftisincompatiblewithArticle14(2)(c)oftheDirective
inthattheperiodduringwhichtheaidsprovidedofin
PartIVarepayableextendsbeyond19April1977*

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Conclusions
Having regard totheobjectives ofDirective No72/159/EECand .
theneed forinternal cohesion between thevarious measures ,the
Commission hasdrawn thefollowing conclusions from itsexamination
ofthe draft forwarded toit ;
-Part II,Section 5ofthedraft canonly beconsidered tobe
compatible with thesecond indent ofArticle 4(4)(a)ofthe
Directive ifthe calculation isbased onland values which
more orless correspond tomarket value ;
-Part II,Section 6ofthedraft must bebrought into line with
Article 4(l)and (2)oftheDirective sothat comparable income
isfixed atthelevel oftheaverage gross wage ofallnon-
agricultural workers .IfIreland istreated asasingle region ,
workers inDublin must beincluded ;
-Part II,Section 12(i )(c)ofthedraft must bebrought into line
with Article 8(l)(d)oftheDirective sothat aidisgranted for
theinitial purchase oflivestock provided forbyadevelopment
plan ,andinparticular fortheinitial purchase oflivestock for
beef ormutton production ;
-Part III,Section 3(b)ofthedraft must ,insofarasitconcerns
thepromotion ofinvestments other than drainage andanoillary works ,
bebrought into line with Article 14(2 )oftheDirective sothat
theinterest rate subsidy does notexceed 5$»
•/.

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-PartIV,Section3(b)ofthedraftmust,insofarasit
concernsthepromotionofinvestmentsotherthandrainageand
ancillaryworks,"be"broughtintolinewithArticle14(2)(a)of
theDirective BOthattheaiddoesnotexceedtheequivalent
ofaninterestratesubsidyofyfoforaperiodof20years;
-PartIV,Section5ofthedraftmustbebroughtintoline
withArticle14(2)(a)oftheDirectivesothattheperiod
duringwhichtheaidsprovidedforinPartIVarepayable
expireson19April1977*
Inviewoftheforegoing,theCommissionisoftheopinionthat
thedraftFarmModernization Schemeforwardedtoitdoesnotyet
satisfyalltheconditionsforfinancialcontribution bythe
Community.
DoneatBrussels,21December1973
FortheCommission
ThePrésident
Françoise-Xavier ORTOLI