85/592/EEC: Commission Decision of 31 July 1985 concerning aids granted by the French Government in the beef and veal sector (Only the French text is authentic)
Date: 1985-07-31
Institutions: European Commission
Subjects: France, State aid, calf, suckler cow













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31985D0592

85/592/EEC: Commission Decision of 31 July 1985 concerning aids granted by the French Government in the beef and veal sector (Only the French text is authentic)  


Official Journal L 373 , 31/12/1985 P. 0001 - 0005 





COMMISSION  DECISIONof 31 July 1985concerning aids granted by the French Government in the beef and veal  sector(Only the French text is authentic)(85/592/EEC)THE COMMISSION OF THE  EUROPEAN COMMUNITIES,Having regard to the Treaty establishing the European Economic Community, and  in particular the first subparagraph of Article 93 (2),Having regard to Council Regulation (EEC) N°  805/68 of 27 June 1968 on the common organization of the market in beef and veal (1), as last  amended by Regulation (EEC) N° 868/84 (2), and in particular Article 24 thereof,After giving  notice, pursuant to the first subparagraph of Article 93 (2), to the parties concerned other than  the Member States to submit their comments (3),Whereas:I. BACKGROUND AND DESCRIPTION1BackgroundThe  Commission, being informed of proposed changes to the existing aids granted in the beef and veal  sector under production and supply contracts, asked the French Government on 25 November 1981, 11  January and 17 February 1982 to provide information additional to the brief particulars set out in  the inventory of aids; the planned adjustment of the aid amounts in question was notified by the  French Government on 29 December 1981 as part of the aids coming under the 1981 Annual Agricultural  Conference. A procedure pursuant to Article 93 (2) of the Treaty was initiated on 10 March 1982 in respect  of the 1981 Annual Agricultural Conference aids for lack of information. The aids included, among  other things, a general scheme granting 'aids for the rearing of sheep and cattle'. The French  authorities explained in Memo N° 242 of 26 July 1982 from the French Permanent Representation that  the chapter entitled 'Aids paid in respect of cattle production and supply contracts' included  'premiums to encourage the suckling of calves at foot'. These premiums form part of a scheme  already launched and described in the inventory of aids.On 17 September 1982 the Commission  received further information. Reminders had been sent on several occasions (Commission telexes of  11 January, 16 February, 10 March, 9 June and 18 August 1982) that information notified must  include not only new aid schemes, but also changes to those set out in the inventory, with fuller  details than those given on the inventory sheets.On 23 March 1984, by letter (SG(84) D/3989), the  Commission informed the French Government that it was reserving its position, which would be  notified at a later date, in respect of the premium for calves at foot.On 5 September 1984 by telex  N° 11471, the Director-General for Agriculture requested further information in order to determine  whether the premium for calves at foot was covered by the measure laid down in Council Regulation  (EEC) N° 1357/80 of 5 June 1980 introducing a system of premiums for maintaining suckler cows  2Description(aLegal basis, amount, beneficiaries: The basis for the scheme is a decision of 6  December 1968 of the Minister of Agriculture. In 1982 the aid consisted of a premium of FF 300 per  slaughter calf fed solely at foot on farms not delivering milk and farming specific breeds only. On  1 January 1982 the premium was raised from FF 250 to FF 300. At the rate applicable between 1  January 1982 and 5 May 1983 of 1 ECU = FF 6,08656, this was equivalent to an aid, in ECU, of 49,29  ECU. The premium was apportioned as FF 270 paid to the farmer and FF 30 paid to the national  association of farm calf producers to assist production measures taken to promote this type of  product. According to the inventory sheet, it concerns only about 20 producer groups or small  cooperatives in central France (Corrèze, Lot, Creuse, Dordogne). In October 1984 the French  Government informed the Commission of its intention to raise the ceiling on the premium for suckler  calves from FF 300 to FF 370.(bThe mechanism for granting the aid is comparable with that in cattle  production and supply contracts regarding which the Commission delivered a negative Decision on 14  September 1982 (C(82) 1319 final) as part of the procedure under Article93 (2) of the Treaty. The  incompatible aids consisted firstly in flat-rate premiums granted in connection with livestock  contracts per head of livestock delivered in the case of full-grown cattle and on the basis of  weight in the case of young bovine animals, and price supplement premiums paid for store cattle.At  the beginning of the scheme, the Onibev (National Joint Bureau for Livestock and Meat) concluded  'outline agreements' with individual producer groups specifying the conditions for the award of the  premiums and the quality measures which would have to be complied with and the procedure for  checking them.3GroundsThe producer groups in turn grant aids to farmers who assume contractual  obligations, that is to say, the producers' commitments.The French Government, in its reply, gave  the following reasons for introducing this premium in 1969/70:producers of calves fed at foot  forego the regular guaranteed income that they would obtain for milk in exchange for the long-term  and more hazardous return that they obtain from the sale of a calf,if the calves were fed on the  customary fattening feed, producers would benefit, through the price of the feed, from the  Community subsidy granted for milk powder, the rather limited outlets for this type of product are not sufficiently attractive in themselves  to ensure its development.Output and the market are both very limited. There is no Community market  for these products and consequently no risk of interfering with competition.II. GENERAL DESCRIPTION  OF THE INDUSTRY1Market situationThe suckler herd, that is to say the French herd of suckler mother  cows is as follows compared with the Community suckler herd:On 31 December 1981 the Community of  Ten had 5,9 million suckler cows. France accounted for 48 %, the United Kingdom for 23,9 %, Italy  for 12,8 %, Ireland for 6,8 %, Germany for 2,6 % and Belgium for 2,1 %.The suckler herd supplies  quality products. Suckler cows are cows which, by virtue of the way they are reared and produced,  are not milked and do not therefore produce any milk or milk products for the market.Slaughter  calves suckled by their mothers are reared on natural milk since they suckle their mothers. They  are sold at three months and weigh around 100 kg per carcase. In France they are most frequently  produced on small family farms in the southern Limousin, producing this one product only and in the  south-west engaging in other forms of production. Annual output is around 500 000 animals, of which  approximately 100 000 are marketed by producer groups. It should be noted that there is also a more  specialized category, consisting of heavy calves in the Aveyron, which are sold at six months and  weigh between 150 and 200 kg per carcase.2Links between the French national scheme and the scheme  introduced by Community rulesThe premium for calves suckled at foot is a national scheme altogether  different from the premium for maintaining suckler cows introduced by Regulation (EEC) N° 1357/80  and brought into force in 1981 (Commission Regulation (EEC) N° 1581/81 (1)).According to the French  authorities the aim of the premium for calves at foot is to encourage the production of  high-quality slaughter calves. The suckler cows for which premiums are granted under the Community  rules do not, in most cases, suckle calves intended to be slaughtered very young but, more  frequently, animals to be fattened into adult cattle. The criteria for granting the premium for calves at foot meet the specific requirements of this  measure and differ from those in force for the premium for suckler cows. The premium may be granted  only for:calves sired by bulls of the following breeds: Limousin, Garonnais, Charolais or Blonde  d'Acquitaine,born and fattened on the farm and fed exclusively on whole natural milk.The eligible  producer must:be a member of a producer group approved for this type of production,observe its  rules (total contribution and control of production),register and establish the identity of their  calves on birth with their group.These strict rules for awarding the premium are necessary to  ensure production control in order to guarantee the consumer a quality product.It is not out of the  question, however, that some recipients of the premium for calves at foot should also qualify for  the premium provided for under Community rules.3Expenditure incurredAccording to the information  forwarded by the French authorities on 23 October 1984, expenditure incurred in respect of the aid  (premiums for maintaining suckler cows) governed by Community rules (Regulation (EEC) N° 1357/80),  distinguishing between the part of the premium financed by the EAGGF Guarantee Section (15 ECU per  suckler cow in 1984) and the supplementary part financed by the Member State (a ceiling of 25 ECU  per suckler cow in 1984) can be summarized as in the following table:    >TABLE>The  figures forwarded for 1983/84 concern the partial budget drawn up on 3 April 1984.They have been  notified subject to alteration (in the event of a dispute concerning the file, legal proceedings,  etc.).According to those figures expenditure incurred in respect of the aid for premiums to  encourage the suckling of calves at foot was: >TABLE>The forecast for 1984 is for approximately 80 000 calves.III. INCOMPATIBILITY OF  THE MEASUREThe measure involves the adjustment of existing aids introduced in 1969/70 set out in  the inventory of existing national aids notified by France to the Commission.1According to Article  24 of Regulation (EEC) N° 805/68, Articles 92 to 94 of the Treaty apply to the aids described  above.The premiums in question which are granted to farmers, who are members of producer groups or  small cooperatives place them in a more advantageous position for the sale of calves at foot than  that of other calf producers who are not eligible for the aid. The aid which is granted per  quantity unit is liable to distort competition and affect trade between Member States, particularly  since France is the Community's largest producer of beef/veal and a significant proportion of the  production of calves and French store animals is exported to other Member States.The schemes in  question are consequently caught by Article 92 (1) of the Treaty, which lays down the principle  that aids corresponding to the criteria it sets out are incompatible with the common market.The  exceptions to this incompatibility set out in Article 92 (2) do not apply to the aids in question.  Those set out in paragraph 3 define aims pursued in the interest of the Community and not in that  of particular sectors of the national economy only. These exceptions must be interpreted strictly  when any regional or sectoral aid programme or any individual application of general aim systems is  being examined.In particular they may be granted only in cases where the Commission can show that  the aid is necessary for attaining one of the objectives set out in those provisions. To grant the benefit of these exceptions for aids that donot yield this compensating advantage  would be equivalent to permitting an interference with trade between Member States and distortions  of competition devoid of any justification in terms of the Community interest, and correspondingly  unfair advantages for some Member States.In the case under consideration, the aids do not show any  such compensating advantage. The French Government has been unable to put forward, or the  Commission to detect, any argument that would qualify the scheme for any of the exceptions provided  for in Article 92 (3) of the Treaty.They are obviously not measures to promote the execution of an  important project of common European interest within the meaning of Article 92 (3) (b) since they  are contrary to the principles of the market organization in question.Neither are they measures  intended to remedy a serious disturbance in the economy of the Member State within the meaning of  that same provision.As regards the exceptions provided for in Article 92 (3) (a) and (c) concerning  aids to promote or facilitate the economic development of regions and that of certain of the  activities referred to under (c) above, it should be noted that the aids are granted solely in  relation to the quantities of the product and not of any criteria for adjusting or improving  business structures, energy saving or development in the regional context. The aids are to be  regarded, therefore, as operational aids for the producers in question, a type of aid to which the  Commission is in principle invariably opposed by virtue of the fact that their award is not linked  to conditions that would qualify them for one of the exceptions provided for in Article 92 (3) (a)  and (c).2Also, there are limitations on the power of Member States to interfere directly in the  operation of EEC market organizations involving a common price system, for which the Community is  now solely responsible.The aid is in contradiction to the principle that Member States are no  longer entitled to legislate unilaterally on farmers' incomes under an EEC market organization by  granting aids of this type.Moreover, the scheme is in addition to a measure, similar in its  objective and mechanism, adopted at Community level by Regulation (EEC) N° 1357/80. The main  purpose of the Community measure is to guarantee specialist producers of quality beef an adequate  level ofincome. The premium provided for under the Community rule may be granted only in respect  of farms which do not deliver milk. The measures adopted by the Community rules can be broken into  two parts: one financed by the EAGGF Guarantee Section and the other, known as the 'additional  premium', may be granted within a limit and financed by the Member State; according to the  Community rules this additional premium must not give rise to discrimination between stock farmers  in the same Member State. The information notified to the Commission indicates that the French  Government avails itself of this opportunity of awarding the 'additional premium' up to the limit  authorized under the Community rules.The national aid for calves at foot is to be regarded as an  aid supplement for certain recipients of the premium provided for under the Community rules.Even if  an exception under Article 93 (3) of the Treaty could have been a possibility, the fact that the  aid scheme infringes the market organization rules out the application of such an exception.3The  premium for calves at foot is not covered by the system of compensatory allowances provided for in  Articles 5 and 7 of Council Directive 75/268/EEC of 28 April 1975 on mountain and hill farming and  farming in certain less-favoured areas (1), as amended by Regulation (EEC) N° 797/75 (2). The  latter system provides for a compensatory allowance for the production of cattle for a maximum  amount of 97 ECU per livestock unit.According to the Annex to that Directive, it applies only to  cattle more than six months old (see Annex to the Directive) and the national scheme for calves at  foot applies only to calves sold at three months, or at six months in the particular case of heavy  calves in the Aveyron. The purpose of the Directive is precisely to exclude the compensatory  allowance for calves younger than six months.Article 5 of the Directive prohibits, in addition, the  grant of a compensatory allowance for permanent natural handicaps exceeding those limits or leaving  aside those requirements in the areas shown in the list adopted pursuant to the procedure laid down  in Article 2 (2). The premium for calves at foot could even be granted in addition to the  compensatory allowance provided for by Council Directive 75/268/EEC for the same herd. France  qualifies for application of this Directive. The departments of Creuse, Corrèze and Lot are partly  classified as mountain or hill areas (Article 3 (3) of the Directive) and partly as less-favoured  areas (Article 3 (4) of the Directive); the department of Dordogne is classified as a less-favoured  area (Article 3 (4) of the Directive). The premium for calves at foot is therefore also contrary to  Article 2 (2) referred to above. 4To sum up, the premium for calves at foot must be regarded as an aid which is incompatible with  the common market and must be discontinued.5This Decision is without prejudice to any action that  the Commission may take as regards recovery of the abovementioned aid from the recipients, and as  regards the financing of the common agricultural policy by the EAGGF,HAS ADOPTED THIS  DECISION:Article 1The financial benefit conferred by the premium intended to  encourage the suckling of calves at foot is hereby found to be incompatible with the common market  by virtue of Article 92 of the Treaty and must be discontinued. Article 2The French Government shall inform the Commission within two months of the notification  of this Decision of the action it is taking to comply with the provisions of Article 1.Article  3This Decision is addressed to the French Republic.Done at Brussels, 31 July  1985.For the CommissionFrans ANDRIESSENVice-President(1) OJ N° L 148, 28. 6.  1968, p. 24. (2) OJ N° L 90, 1. 4. 1984, p. 30. (3) OJ N° C 95, 16. 4. 1982, p. 5. (4).The French authorities replied on 23 October 1984. (4) OJ N° L 140, 5. 6. 1980, p. 1. (1) OJ N° L 154, 13. 6. 1981, p. 38. (1) OJ N° L 128, 19. 5. 1975, p. 1. (2) OJ N° L 93, 30. 3. 1985, p. 1.