WRITTEN QUESTION E-0611/96 by Carmen Fraga Estévez (PPE) to the Commission (13 March 1996)

Subject: EAGGF subsidies for cold stores

Commission Decision 94/173/EC ((OJ L 79, 23.3.1994, p. 29 )) states that EAGGF subsidies to the food industries, and in particular for cold stores, must be granted only to production and processing establishments, i.e. to cases in which cold stores are essential for preserving the principal activity of the undertaking. This condition makes it impossible to grant such subsidies to publicly-owned cold stores.

What is the basis for this rule? Does it not entail discrimination in the allocation of EAGGF aid between public and private cold stores?

Answer given by Mr Fischler on behalf of the Commission (22 April 1996)

Commission Decision 94/173/EC of 22 March 1994 on the selection criteria to be adopted for investment for improving the processing and marketing conditions for agricultural and forestry products ((OJ L 79, 23.3.1994. )) laid down these criteria in accordance with Community policies, and they reflect the lines of the common agricultural policy (CAP).

One the main objectives of the reform of the CAP has been to reduce the surpluses in certain sectors which were a heavy burden on the Community budget for years. That objective has been attained, with the result that intervention storage requirements have been eliminated.

Accordingly, the abovementioned Decision provides that 'investments in cold store for frozen or deep-frozen products, unless required for normal operation of processing installations,' are excluded, a rule which the Commission deems to be entirely suited to the present CAP and other Community policies.

There is nothing new about this position: as early as 1980 a Commission communication laid down 'criteria for the choice of projects to be financed in the agroindustrial field for the year 1980' ((OJ C 188, 25.7.1980. )) which were similar to those that currently apply (particularly with regard to cold stores). Indeed, for this type of store the selection criterion had already been applied for some time.

The present cold-store over capacity makes it necessary to retain this criterion. The Commission has never encouraged the setting-up of independent cold-storage establishments. Their development was stimulated by economic conditions favourable to the sector.

As regards the possibility of discrimination mentioned by the Honourable Member a distinction must be made between:

- separate cold stores belonging to the private operators which rent their facilities to third parties, including government bodies (for storing intervention products). These cold stores are not encouraged; indeed, there is an explicit ban on their being financed from public funds. There is no benefit for the producer from their operation;

- cold stores connected with measures selected under a partnership between the Member State and the Commission as having priority in terms of the reformed CAP and the need to ensure consistency with other planned structural operations, with the aim of improving economic and social cohesion.

These measures take the form of projects which by definition in the agro-industrial context, consist of integrated facilities for the processing of agricultural products. Those facilities include the cold-storage capacity needed for the normal operation of the projected processing units.

Undertakings created within the framework of such projects, which provide the basic producers with an appropriate and lasting share in the economic benefits flowing from the investment, as required by Article 12(1) of Council Regulation (EEC) No 866/90 of 29 March 1990 on improving the processing and marketing conditions for agricultural products, ((OJ L 91, 6.4.1990. )) are eligible for Community aid.

The Commission does not regard the two types of cold-storage facility described above as being in any way comparable, either in their function or in the sector to which they belong, or in the impact of the benefit of the investment on farmers. No discrimination is therefore possible, because the two sets of operators concerned are different and have nothing in common.