WRITTEN QUESTION E-0940/01

by Jonas Sjöstedt (GUE/NGL) to the Commission

(28 March 2001)

Subject: The value of further-processing aid

The EU further-processing aid paid to the food industry in Sweden during the 1995-1999 programming period to improve production efficiency has turned out to have had no effect on either productivity or raw material consumption in the industry. It was therefore of no benefit to agriculture either. On the other hand the companies receiving the aid believed that it was helping to achieve its purpose. These were the findings of an assessment carried out by the Swedish Institute for Food and Agricultural Economics, the SLI, published in February 2001.

According to the analyses carried out by the SLI, there was no evidence of any effect produced by the aid. The companies' main investments would have been made even without the aid. The conclusion was that the aid acted as transfer of money to the companies and thus increased their profits. Over the period in question the investment aid has turned out to be an ineffective instrument for its purpose.

There are also considerable constraints on the use of the aid, which reduce the likelihood that it will have any decisive effect on the viability of the industry. Public investment aid in Sweden amounted to some SEK 329 million in 1996-1999. The cost of administering the aid has been calculated at about SEK 15 million. Further-processing aid is continuing for the 2000-2006 programming period.

If financial aid produces no benefits, should it continue? Does the Commission believe that further processing aid is producing benefits, and have similar assessments been carried out in other Member States?

Answer given by Mr Fischler on behalf of the Commission

(1 June 2001)

The Commission officially received the report referred to by the Honourable Member at the beginning of March 2001 and is currently studying it.

Any examination of an evaluation report must ensure that the evaluation work was carried out in accordance with standard practice and meets the minimum quality requirements. Where an evaluation report draws conclusions, it is important to examine whether the conclusions are tied to the context in which the measures were applied or if they have a wider significance.

The Swedish evaluation report to which the Honourable Member refers was drawn up in accordance with the Community guidelines requiring the Member States to assess the impact of the measures on the processing and marketing of agricultural products. In particular, the guidelines call for answers to a number of common assessment questions covering competitiveness, the situation of the basic agricultural products, the environment, and the implementation and targeting of the measures. They also recommend that the Member States should assess the quality of the individual reports by reference to eight standard criteria.

All the Member States must send the Commission evaluation reports on these measures by 30 September 2001. About forty reports have been announced. The Commission plans to conduct an assessment at Community level, essentially based on the reports provided by the Member States, and intends to publicise the results of the survey. For the reasons indicated above, it is not possible at present to arrive at a verdict on the validity of the conclusions of the Swedish study to which the Honourable Member refers.

The Commission notes that, for the 2000-2006 programming period, the Swedish authorities decided to continue with the processing and marketing measure, as is permitted under Council Regulation (EC) No 1257/1999 of 17 May 1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) and amending and repealing certain Regulations(1). However, in the light of the conclusions of the above report, they opted for a more targeted approach, focusing the measure on small and medium-sized enterprises.

(1) OJ L 160, 26.6.1999.