2002/114/EC: Council Decision of 21 January 2002 authorising the Government of Portugal to grant aid to Portuguese pig farmers who were beneficiaries of the measures granted in 1994 and 1998
Date: 2002-01-21
Institutions: Council of the European Union
Subjects: Portugal, State aid, aid to agriculture, control of State aid, swine

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Official Journal of the European Communities

14.2.2002

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 21 January 2002

authorising the Government of Portugal to grant aid to Portuguese pig farmers who were bene-
ficiaries of the measures granted in 1994 and 1998

(2002/114/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular the third subparagraph of Article
88(2) thereof,

Having regard to the request made by the Government of
Portugal on 23 November 2001,

Whereas:

(1)

(2)

(3)

(4)

The Portuguese pig sector is structurally in deficit and
characterised by small farms with an average, in 1998,
of 18 animals per farm (the Community average is 106),
and 80 % of farms have fewer than 10 breeding pigs.

In relation to the European Union, purchases from other
Member States accounted for 40 % of the final value of
production of the Portuguese pig sector in the period
from 1994 to 2000, whereas sales reached only 4 % of
that value. In particular, the figures show that purchases
from other Member States increased by 30 % in 1995
and by 47 % in 1999 in comparison with preceding
years, and that sales were negligible.

In 1993, the Portuguese pig market witnessed a sharp
drop in producer prices owing to an increase in supply,
coinciding with the first year of the second stage of
accession, which marked the start of full application of
the common agricultural policy in this sector. This had a
profound effect on the profitability of a large number of
farms.

In 1998, the Portuguese market was also affected by the
difficulties in the European pig sector, which experi-
enced its worst crisis of the last decade. The crisis was
largely due to a combination of surplus production in

the Union and the crisis on the Russian market, which
accounted for 50 % of the Union's exports. Domestic
prices registered sharp falls throughout the year, which
once again adversely affected farmers'

incomes.

The Community measures adopted in response to that
crisis (export refunds, aid for private storage and food
aid for Russia) had little effect on the Portuguese market.

In order to alleviate these two situations, which were
affecting small farmers, who as a result were experi-
encing difficulties negotiating with credit institutions, the
Portuguese government granted two aid measures,
in
1994 and 1998.

The aid granted in 1994, implemented by Decree-Law
No 146/94, gave beneficiaries the possibility of renego-
tiating loans they had obtained from credit institutions
in the modernisation of premises, health
to invest
protection and environmental protection.

Furthermore, in 1998, faced with the severe crisis in the
Community sector, the Portuguese authorities adopted
emergency measures by Decree-Law No 4/99 to prevent
cash-flow problems and successive bankruptcies by
granting a moratorium on repayments of loans taken
out with banks and interest rate subsidies in respect of
such loans. This measure was limited to one year.

The aid amounted to EUR 10 million for 1994 and
EUR 6,3 million for 1998 and the total number of
beneficiaries was 2 116. As the pattern of trade shows,
this aid did not have any particular effect on intra-
Community trade and consequently did not cause any
distortion of competition.

(5)

(6)

(7)

(8)

(9)

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(10) With respect to the aid granted in 1994, at the Commis-
sion's request the Portuguese authorities submitted a
letter, registered on 27 May 1997, containing the infor-
mation the Commission had requested.

(11) With respect to the aid granted in 1998, the Portuguese
authorities also submitted a letter to the Commission,
registered on 21 December 1998, giving notification, in
accordance with Article 88(3) of the Treaty, of the aid
measures it had granted.

(12)

In its decisions of 25 November 1999 and 4 October
2000, the Commission held that the measures in ques-
tion were not compatible with the common market.
Pursuant to those decisions, the Portuguese authorities
initiated a procedure to recover the aid granted.

(13) However,

refunding the aid granted threatens

the
economic viability of not a few beneficiaries and would
have extremely damaging social effects in certain regions
because 50 % of the pig herd is concentrated in less than
5 % of the territory.

which has arisen, to be compatible with the common
market on the terms specified in this Decision,

HAS ADOPTED THIS DECISION:

Article 1

Exceptional aid by the Portuguese Government to the Portu-
guese pig sector involving the grant of aid to beneficiaries
covered by the Commission Decisions of 25 November 1999
and 4 October 2000,
totalling not more than EUR 16,3
million, equivalent to the amounts which those beneficiaries
must reimburse under those Decisions, shall be considered
compatible with the common market.

This Decision is addressed to the Portuguese Republic.

Article 2

Done at Brussels, 21 January 2002.

(14)

Exceptional circumstances therefore exist, making it
possible to consider such aid, by way of derogation and
to the extent strictly necessary to remedy the imbalance

For the Council

The President

M. ARIAS CAÑETE