ARCHIVESHISTORIQUES
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DOCUMENTS "COM"
COM(81)285
Vol.1981/0094

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COMMISSION OFTHEEUROPEAN COMMUNITIES
COM(81)285 final
Brussels-10June1981
Proposalfora
S
COUNCILDECISION
ontheleveloftheinterestratesubsidy,providedforbyDirective
72/159/EEConthemodernisation offarms-tobeappliedinIreland
(submittedtotheCouncilbytheCommission )
."7y
.•1o>
C0M(81>285final

EXPLANATORY MEMORANDUM
Farmdevelopment inIrelandhasproceeded atarelatively rapid
ratesincetheaccession ofthecountrytotheEuropean Communities .
Thisdevelopment hasYiecessitatedasubstantial increase infarm
investment ,thecostofwhichhashadtobesupported mainlythrough
theuseofborrowedcapital.' '
Therapidriseininterest ratestogether withtheprogressive increase
innormalfarmoperating costshavecontributed toasignificant
increase inthecoststructure offarminginrecentyears.Asaresult,
farmers whichhaveborrowed substantial amounts ofmoneytofinance
farmdevelopment plansunderDirective 72/159/EECnowfindthemselves
inanextremely difficult situation insofarastheservicing ofsuch
theloansisconcerned .Thissituation isall/moreacutebecauseofthe
significant declineinfarmincomeswhichhastakenplaceinIreland
since1978..Thecurrentinterest ratelevelisapproximately 17to18%
Itisestimated thatinterest payments aloneabsorbaboutaquarterof
thefarmers'totalincome,leavingthemlittleornocapitalfor
reinvestment .
Giventhissituation ,anincrease intheinterest ratesubsidyfor
farmerswithexisting commitments underDirective 72/159/EECaswellas
forthosewhoare*abouttoborrowcapitaltofinancefarmdevelopment
inthefuturewouldappeartobeentirelyjustifiable .Furthermore ,
becauseoftheacutefinancial problems offarmers whoarealready
implementing development plaris,andinaddition owingtothelimited
financial resources available totheIrishexchequer tohelpremedy
thissituation,a50%contribution fromtheEA6GFtowardsthecostof
thisspecialmeasureisproposed .

Proposal foraCouncil Decision onthelevel oftheinterest rate subsidy ,
provided forbyDirective 72/159/EEConthemodernisation offarms ,tobe
applied inIreland . „
THE COUNCIL OFTHKEUROPKAK COI«MJNITIES ,
Having regard totheTreaty establishing theEuropean Economic Community and
particularly itsarticle 43;'
Having regard toCouncil Directive 72/l59/SSCof17April 1971 onthe
modernisation offarms (l)aslast amended byDirective 8l/ EL'C (2)andin
particular ,thesecond sub–paragraph ofArticle 8(2)andthesecond
sub–paragraph ofArticle 19(l )thereof }
Having regard totheproposal from the Commission ;
Having regard totheopinion oftheEuropean Parliament (3); . ' .
Having regard totheopinion oftheEconomic andSocial Committee (4);
Whereas thesecond sub-paragraph ofArticle 8(2)ofDirective 7^/159/SKG
provides that Member States maybeauthorized togrant interest rate
subsidies exceeding 5l/°iif*such action iswarranted bythesituation
ofthecapital market intheKember States ,andtoreduce to2Jothe
minimum rate payable bybeneficiaries incertain regions ;
Whereas theIrish govemement hasrequested authorization toraise the
level oftheinterest rate subsidy to10L/oand .,intheless favoured regions
oftheWest ,ofIreland to12c/o\
Whereas theincreased level ofinterest rate subsidy shall equally apply
toexisting farm loans incurred towards thefinancing ofexpenditure on
development plans eligible forreimbursement bytheEuropean Agricultural
Guidance andGuarantee Fund ,hereinafter called the "Fund "which have not
asyetbeen fully amortized ;
Whereas because ofthe limited funds available totheIrish government
tofinance this latter particular measure a50^contribution from theFund
towards itscost isrecommended ;
(1)0JNoL96,23.4-1972 ,p.1
f2V .
(3)
(4)

WhereastheIrishgovernment hasfurthermore requested thattheexpenditure
resulting fromtheincrease inthesubsidybedeclaredeligible for
financial participation bytheCommunity ;
Whereasthecurrentinterestrateof17»25/»inIrelandforlongterm
agricultural loansandtheinterestratesubsidies of10and12will
meanthattherateremaining tobepaidbythebeneficiary shallexceed
theminimalaiddownbyCouncilDirective 72/159/EECorbyCouncil
Directive 75/268/EECof28April1975onmountainandhillfarmingand
farmingincertainlessfavouredareas(l)aslastamendedbyDirective 80/666/EEC(2);
Whereastheeconomic andagricultural development ofthelessfavoured
areasoftheWestofIreland .withinthemeaningofDirective 75/268/EEC
isclearlylessadvanced thanthatoftheotherregions ;
Whereasparticipation bytheFundintheexpenditure resulting fromthe
increaseinthesubsidyisrecommended ;
HASADOPTED THISDECISION
Article 1
Irelandisherebyauthorized toincrease theinterestratesubsidy (
providedforinthefirstsub–paragraph ofArticle8(2)'ofDirective
72/159/EHCto12'/ointhelessfavouredareasandto10tjoinotherregions.
Article 2
Irelandisherebyauthorized to,grantaninterestratesubsidyin1981and
1982amounting to5c/°on"theoutstanding partofexistingfarmloans
incurredinthefinancing ofeligibleexpenditure onfarmdevelopment plans
alreadyapprovedunderDirective 72/159/SECbythedateofentryinto
application ofthisdecision * <"
(1)OJNoL128,19-5.75 »P-1
(2)OJNoL180.14.7.80 »p.30

Article 3
1.Theexpenditure incurred byIrelandpursuant toArticle 1ofthisDecision
shallbeeligible forassistance fromtheGuidance SectionoftheFund
withinthelimitfixedinthefirstsub-paragraph ofArticleiy(3)of
Directive "]2/l5y/ti£GorinArticle15(l)ofDirective 75/268/j^tiO.
2.Theexpenditure incurred byIrelandinapplication ofArticle 2shall "be
eligible forreimbursement bytheFund.Therateofreimbursement bythe
Fundshallbe50/'»•
Article 4
1.Themeasureprovided forinArticle 2formspartofthecommonmeasure
according toArticle 15ofDirective thefinancial andgeneral
provisions ofwhichapply,takingaccountofthepresentdecision .
2.Theestimated additional costtotheFundofthemeasurereferred toin
Article 2amounts to19.25million EOUs.
Article 5
ThisDecision shallapplyuntil31December 19o3«
Article 6
ThisDecision isaddressed toIreland.
DoneatBrussels ,
FortheCouncil ,
ThePresident

FINANCIAL STATEMENT
*·":22.5.I98I
1.EUDGET HEA0IN6 :8lOO APPROBIATIONS !68l-iliCU
2.TITLEproposal foraCouncil Decision onthelevel oftheinterest rate subsidy
provided forbyDirective 72/159/EEConthemodernisation offarms ,tobe
applied inIreland ·
3.LEGAL BASIS :Article 6ofRegulation 729/70/EEC.
4.AIMS OFPROJECT :Toalleviate theeffects ofthecost ofHIGH interest rates on
farmdevelopment under Directive 72/159/&ECinIreland ,
5.FINANCIAL IMPLICATIONS PERIOD OF12MONTHS CURRENT YE*RFOLLOWII^^IANCIAL YEAR
5.0EXPENDITURE
-CHARGED TOTHE ECBUDGET
(REFUNDS /INTERVENTIONS )
-NATIONAL ADMINISTRATION ·pm
7.4MECU2.75
21.64
-OTHER–
5.1RECEIPTS
-OWN RESOURCES OFTHE EC
(LEVIES /CUSTOMS DUTIES )- -
-NATIONAL
5.0.1 ESTIMATED EXPENDITURE MECU
5.1.1 ESTIMATED RECEIPTS
5.2 METHOD OfCALCULATION
-See Annex .
6.0 ?
rjtmx
6.1 ?
yjUBXK
6.2 ?
RJÜÜM
6.3WILL FUTURE BUDGET APPROBATIONS B£NECESSARY ?
YES /M'1983 1984 1985
8.25 8.25 pm
OBSERVATIONS

ANNEX
1.,CostofArticle 1
Theincrease .ininterestratesubsidywillpermitthecapitalsubsidy on
longterminvestments (20yearsloanequivalent );<obeapproximately ^0
Atpresenttheequivalent capitalsubsidyis30Therefore theincrease
Theforecast reimbursement bytheEAGGFGuidance SectioninI9B2atthe
currentratesis9»C>6million ECU,therefore theadditional costisestimated
at6million ECUperyear.
2.CostofArticle 2
Upto31December 1980thetotalreimbursement toIrelandinrespectof
Directive 72/159/KI3Gras14«94million ECU.
Thisrepresents atotalnationalaidof60million ECU,andtakingthe
national aidatanaverageof25L/orepresents atotalinvestment of240
million ECU.Therefore thecapitalrequired bythebeneficiary was:
240-60=180l'IECU.
Itisassumedthat50/<>ofthisamountremains onloansthatis90Million ECU.
Anaidtowardsinterestcostsof5cj°wouldbe4»5MECU/yearofwhichFEOGA
wouldreimburse 50'Atthatis2.25KECU/year. %
3.Totalcostofproposal
6+2.25=8.75MECUperyear
4.Timingofpayments
Itisassumedthatthisdecision wouldbeoperational iromthe
1stSeptember 1981(l/3oftheyear).incostswillbeapproximately 2/3rdsofthepresentcosts.
YEAR
1982
1983
1984FEOGAReimbursement
2.75MECU
8.25
8.25
Total 19.25