Community guidelines for State aid concerning TSE tests, fallen stock and slaughterhouse waste
Date: 2002-12-24
Institutions: European Commission
Subjects: EU policy, State aid, agricultural waste, animal disease, animal product, bovine spongiform encephalopathy, health control, management accounting, meat processing industry

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Community guidelines for State aid concerning TSE tests, fallen stock and slaughterhouse waste

(2002/C 324/02)

I. INTRODUCTION

the

economics

1. Community legislation introduced in the wake of

(BSE)
production.

spongiform encephalopathies
of meat

the
crisis has
bovine
changed
For
example, parts of a slaughtered animal which before
could be profitably turned into meat and bonemeal to
be sold for feed are now not only often worthless, but
have to be destroyed at extra cost. Community legis-
lation (1) now requires
specified risk
the slaughterhouse. Compulsory testing of
material at
certain cattle
spongiform encepha-
lopathies (TSE) is another additional cost factor.

the removal of

transmissible

for

2. As a result, several Member States have notified State aid
measures granting aid towards the costs of TSE tests, for
the disposal of fallen stock, and in particular for the elim-
ination of specified risk material and meat and bonemeal.

3. Several Member States have requested the Commission to
look into the possibility of better harmonisation of costs
incurred by farmers and slaughterhouses, for the elimi-
nation of slaughterhouse waste, fallen stock and BSE test
costs. They argue that the current situation, where some
slaughterhouses and farmers receive State aid for covering
these costs, while others do not, causes distortions of
competition. The issue has also been raised on the
occasion of several meetings of the Agriculture Council
in 2001 and 2002.

4. The Commission sent out a questionnaire to all Member
States in the summer of 2001, asking for more specific
information relating to State aid granted towards the costs
of dealing with slaughterhouse waste and fallen stock. A
similar exercise was undertaken in relation to BSE test
costs.

5. On the basis of

the information received, and of

the
experience gathered with State aid notifications received
since 2001,
the Commission presented its findings to
Member States in a meeting on 27 May 2002. Those
findings were also presented to the Standing groups on
the Advisory Committee on
beef
livestock
of
comprising
producers, the processing and marketing sector, as well
as consumers, on respectively 3 and 18 July 2002.
Additional direct contacts have taken place with sectoral
organisations.

and pigmeat of
products,

representatives

(1) See in particular Regulation (EC) No 999/2001 of the European
Parliament and of
the Council of 22 May 2001 laying down
rules for the prevention, control and eradication of certain trans-
missible spongiform encephalopathies (OJ L 147, 31.5.2001, p. 1),
Regulation as last amended by Commission Regulation (EC) No
1494/2002 (OJ L 225, 22.8.2002, p. 3).

6. A draft of these guidelines has been presented to Member

States in a meeting on 8 November 2002.

7. The information gathered shows that the different State aid
policies followed by Member States imply a serious risk of
distortion of competition.
therefore, necessary to
It
create a more level playing field, while also taking into
account the importance of the measures in question for
the protection of human and animal health, and for the
protection of the environment.

is,

8. Ongoing

harmonisation

legislation
requiring the sector to bear the costs is slow and likely
to remain incomplete for some time.

via Community

9. The Commission has therefore decided to clarify and
modify in some respects its State aid policy in relation
to TSE test costs, fallen stock and slaughterhouse waste,
by laying down these guidelines.

10. If the economics of animal by-products should change
the Commission will review

significantly in the future,
the policy set out in these guidelines.

11. The Commission encourages Member States to speed up as
much as possible the provision of sufficient capacities for
proper disposal of animal by-products, and to foster
research into their alternative use.

II. SCOPE AND DEFINITIONS

A. Scope and relation to the Community guidelines for

State aid in the agriculture sector

12. These guidelines concern State aid towards the costs of
TSE tests, fallen stock and slaughterhouse waste granted
to operators active in the production, processing and
marketing of animals and animal products falling within
the scope of Annex I to the Treaty and insofar as Articles
87, 88 and 89 of the Treaty have been declared applicable
to such products.

13. For the purpose of these guidelines, the processing and
marketing of an animal or animal product means an
operation the product resulting from which remains an
animal product, for example the slaughter of animals for
meat. The processing of Annex I products into non-Annex
I products therefore falls outside the scope of
these
guidelines.

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14. These guidelines take precedence over the Community
guidelines for State aid in the agriculture sector (1) (here-
inafter referred to as the agriculture guidelines) in so far as
an issue is expressly covered by these guidelines. The agri-
culture guidelines remain applicable on a subsidiary basis.

B. Analysis

22. In order to determine its future policy, the Commission
following

taken into account

in particular

the

has
considerations:

B. Definitions

15. For the purpose of these guidelines, the following defi-

nitions apply:

(a) The tests serve the purpose of avoiding the spread of
TSE, a disease that is of particular concern from the
point of view of the protection of human health.

16.

17.

18.

kits,

taking,

‘TSE and BSE test costs’ are all costs, including those for
and
test
destruction of samples necessary for tests undertaken in
accordance with Annex X, Chapter C to Regulation (EC)
No 999/2001.

transporting,

testing,

storing

‘Fallen stock’ are animals which were killed (euthanasia
with or without definite diagnosis) or have died (including
stillborn and unborn animals) on a farm or any premise or
during transport, but were not slaughtered for human
consumption.

‘Slaughterhouse waste’ is any waste occurring at the level
of slaughterhouses, cutting plants or butchers, including in
particular animal by-products covered by categories 1, 2
and 3 of Regulation (EC) No 1774/2002 of the European
Parliament and of the Council
laying down health rules
concerning animal by-products not intended for human
consumption (2).

19.

is, from the date referred to in
‘Specified risk material’
Article 22(1) of Regulation (EC) No 999/2001,
the
specified risk materials as designated in Annex V to that
Regulation, and until that date, the specified risk materials
as designated in Annex XI Part A to that Regulation.

20.

storage,
the collection,
‘Disposal’ comprises
transformation to prepare destruction, destruction and
the final disposal of the good to be disposed of.

transport,

III. TSE AND BSE TEST COSTS

A. Introduction

21. Since the introduction of compulsory BSE testing of cattle
over thirty months, the Commission has authorised State
aid of up to 100 % towards the costs of such tests. This
also applies to aid towards the TSE testing of fallen stock
and the recently introduced obligation to perform random
tests on small ruminants, for example. Several Member
States have notified such aid.
In all cases notified and
authorised, the aid schemes are of limited duration. The
Commission decisions authorising such State aid have
been based on point 11.4 of the agriculture guidelines
on aid for combating animal and plant diseases.

(1) Corrected version OJ C 232, 12.8.2000 p. 17.
(2) OJ L 273, 10.10.2002, p. 1.

for TSE tests

(b) There is a risk of distortion of competition arising
from different levels of State aid granted, at least as
far as slaughter cattle is concerned. However, most
Member States do currently grant some State aid.
to vary between
Prices
Member States.
risk of
distortions of competition which could be caused by
aid granted towards TSE tests for cattle slaughtered for
to encourage
human consumption, and in order
research towards
aid should be
limited to EUR 40, currently roughly the best price
available in the Community.

to reduce

In order

low-price

continue

tests,

the

(c) There is concern that making farmers pay for the cost
of testing fallen stock could make some of them try to
avoid controls by illegally disposing of carcasses,
reducing the reliability of statistical data, and create
health risks.

(d) As to low-value animals like sheep and goats, TSE tests
may cost more than the value of the animal. Making
owners pay for tests could entail the risk that such
animals are marketed without testing, again reducing
the availability of data.

(e) For both fallen stock and low-value animals, the risk of
distortions of competition from the granting of aid
seems to be lower than in the case of slaughter cattle.

C. Future policy concerning TSE and BSE test costs

23. In order to promote the taking of measures for the
protection of animal and human health, the Commission
has decided that it will continue to authorise State aid of
up to 100 % towards the costs of TSE tests, following the
principles of point 11.4 of the agriculture guidelines.

bovine

slaughtered
total direct

24. However, from 1 January 2003, as far as compulsory BSE
for human
animals
testing of
consumption is
and indirect
concerned,
public support, including Community payments, may not
be more than EUR 40 per test. The obligation for testing
may be based on Community or national legislation. This
amount refers to the total costs of testing, comprising: test
kit, taking, transporting, testing, storing and destruction of
the sample. This amount may be reduced in future, as test
costs fall.

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25. State aid towards the costs of TSE tests has to be paid to
the operator where the samples for the tests have to be
taken. However,
in order to facilitate administration of
such State aid, payment of the aid may be made to labo-
ratories instead, provided that it can be properly demon-
strated that the full amount of State aid paid is passed on
to the operator.
In any event, State aid directly or
indirectly received by an operator where the samples for
the tests have to be taken must be reflected in corre-
spondingly lower prices charged by this operator.

IV. FALLEN STOCK

A. Introduction

26. In the past, the Commission has received hardly any notifi-
cation of State aid Member States may be granting towards
the costs of collecting and disposing of fallen stock. Due to
this absence of notifications, the Commission so far has
not had the opportunity to clearly define its policy towards
such aid. In view of the information received over the past
it now seems both possible and necessary to
months,
establish a clear policy on how the Commission will deal
with such State aid in the future.

B. Analysis

27. In order to determine its future policy, the Commission
following

taken into account

in particular

the

has
considerations:

(a) Fallen stock is a regular feature of keeping live animals,

and therefore part of normal production costs.

(b) The ‘polluter pays’ principle set out in Article 174(2)
of the Treaty (1) establishes a primary responsibility of
producers to take proper care of removal of fallen
stock, and to finance the costs of it.

(c) Granting aid for the elimination of waste may go
against the principle applied in agriculture that aid
should only be granted for behaviour, which goes
beyond good agricultural practice. Community legis-
lation, which is part of good agricultural practice,
requires proper disposal of carcasses.

(d) The costs of removing fallen stock can be high,

in
particular where
like
cattle or horses have to be removed from remote
locations.

carcasses of heavy animals

(f) Where carcasses have to be tested for TSE,

their
to avoid test costs
uncontrolled disposal
these
could have the additional disadvantage that
animals are not
tested, although it may be that
precisely these animals should be tested, in order to
ensure sound statistical data on TSE.

in order

(g) The risks of distortions of competition from State aid
granted for the removal of fallen stock is considered
relatively low.

(h) State aid should only be accepted for fallen stock
occurring at
farmers, and not at any
other level, such as slaughterhouses, where control of
proper removal is easier.

the level of

(i)

In order to facilitate the introduction of new rules for
State aid for the costs of removing and destroying
fallen stock, a transitional period of one year seems
justified, during which aid of up to 100 % can be
authorised.

C. Future policy concerning fallen stock

28. In order to contribute to the protection of human health
and of the environment, the Commission has decided that
Member States may grant State aid of up to 100 % of the
costs of removal (collection and transport) and destruction
(storage, transformation, destruction and final disposal) of
fallen stock until 31 December 2003; alternatively, aid up
to an equivalent amount may be granted towards the costs
of premiums paid by farmers for insurance covering the
costs of removal and destruction of fallen stock,
if the
principles set out in points 32, 33 and 34 are complied
with.

29. From 1 January 2004 onwards, Member States may grant
State aid of up to 100 % of costs of removal of fallen
stock, which has to be disposed of, and 75 % of
the
costs of destruction of such carcasses; alternatively, aid
up to an equivalent amount may be granted towards the
costs of premiums paid by farmers for insurance covering
the costs of removal and destruction of fallen stock, if the
principles set out in points 32, 33 and 34 are complied
with.

(e)

It is difficult to control what farmers do with carcasses.
There is a risk that carcasses may be disposed of
illegally, creating serious health risks.

(1) As far as State aid is concerned, see in particular point 5 of the
agriculture guidelines, and the Community guidelines on State aid
for environmental protection (OJ C 37, 3.2.2001, p. 3).

30. Alternatively, Member States may grant State aid of up to
100 % for costs of removal and destruction of carcasses
where the aid is
through
compulsory contributions destined for the financing of
the destruction of such carcasses, provided that such fees
or contributions are limited to and directly imposed on the
meat sector.

financed through fees or

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31. Member States may grant State aid of 100 % for the costs
of removal and destruction of fallen stock where there is
an obligation to perform TSE tests on the fallen stock
concerned.

V. SLAUGHTERHOUSE WASTE

A. Analysis

32. In all cases, the approval of such State aid is conditional
upon the existence of a consistent programme monitoring
and ensuring safe disposal of all
fallen stock in the
Member State. State aid for fallen stock may only be
granted to farmers. No aid may be given to operators
active in the processing and marketing of such animals.

33. In order to facilitate administration of such State aid,
payment of the aid may be made to economic operators
active downstream from the farmer, providing services
linked to the removal and/or destruction of fallen stock,
provided that it can be properly demonstrated that the full
amount of State aid paid is passed on to the farmer.

34. Where the choice of the provider of such services is not
freely left to the farmer, and unless it is demonstrated that
there is only one possible provider due to the nature or
the legal basis for the provision of a given service, such
provider must be chosen and remunerated according to
in a non-discriminatory way, where
market principles,
necessary using tendering procedures which are
in
accordance with Community law, and in any event using
a degree of advertising sufficient to enable the services
market to be opened up to competition and the impar-
tiality of procurement rules to be reviewed.

for

35. In cases where fallen stock is directly linked to conser-
vation measures,
instance where the feeding of
endangered or protected species of necrophagous birds
with fallen stock
in accordance with
allowed
Community rules, Member States need to make the
necessary provisions
the conservation
objectives are still met.

to ensure that

is

36. For the sake of clarity,

the Commission confirms that
where animals are culled for disease reasons on basis of
a public order, compensation for the farmer will continue
to be examined and authorised on the basis of point 11.4
of the agriculture guidelines, if the conditions are fulfilled.
In relation to TSE, Article 13(4) of Regulation (EC) No
‘owners shall be compensated
999/2001 specifies that
without delay for the loss of
the animals which have
been killed or products of animal origin destroyed in
accordance with Article 12(2) and paragraph 1(a) and (c)
of this Article’.

37. In order to determine its future policy, the Commission
following

taken into account

in particular

the

has
considerations:

(a) The removal and destruction of slaughterhouse waste
is a major cost factor for slaughterhouses and cutting
plants (and their customers, if they are charged for it).

(b) The polluter pays principle establishes a primary
responsibility of producers of waste to take proper
care of its removal, and to finance the costs of it.

(c) The granting of State aid for this can create serious

distortions of competition.

(d) Control would normally appear to ensure that slaught-

erhouse waste is dealt with properly.

(e) There is broad agreement amongst most Member
States that the costs of the removal of slaughterhouse
waste should be borne by operators responsible for
them.

(f)

It would therefore seem appropriate to clearly exclude
State aid for the cost of the disposal of slaughterhouse
waste, or other operating costs of slaughterhouses.

(g) As to the costs of disposal of specified risk material
and meat and bonemeal or of feed made from it, the
Commission has been authorising State aid of up to
two years, allowing the
100 % for this for almost
sector to calculate these costs, and gradually factor
them into prices.

(h) A specific solution should be provided for specified
and meat and bonemeal produced
risk material
before the date of application of
these guidelines,
which could not be disposed of so far because of a
lack of disposal facilities.

(i) Aid towards the costs of safe and proper storage (but
not the destruction) of specified risk material would
seem acceptable, until sufficient destruction capacity
is available.

B. Future policy concerning slaughterhouse waste

38. Within the scope of these guidelines, the Commission will
not authorise State aid towards the costs of the disposal of
slaughterhouse waste
of
produced
application of these guidelines.

after

date

the

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39. Exceptionally, and in order to allow the meat sector to
gradually integrate the higher costs resulting from the
introduction of legislation related to TSEs, the Commission
will authorise State aid of up to 50 % towards costs
occurred for the safe disposal of specified risk material
and meat and bonemeal having no further commercial
use, produced in the year 2003.

40. For the same reason, the Commission will authorise State
aid of 100 % for the disposal of specified risk material and
meat and bonemeal having no further commercial use
produced before the date of application of these guidelines.

41. In addition, and in order to reduce the risk of unsafe
storage of such material, the Commission will authorise
State aid of up to 100 % towards the costs of safe and
proper storage of specified risk material and meat and
bonemeal waiting for safe disposal, until
the end of
2004. The Commission will
review by mid-2004
whether this should be prolonged.

42. For the sake of clarity, the Commission confirms that State
aid for
investments undertaken in relation with the
disposal of slaughterhouse waste will be examined under
the relevant rules applying to investment aid, such as point
4 of the agriculture guidelines. In relation to TSE, Article
13(4) of Regulation (EC) No 999/2001 provides that
‘owners shall be compensated without delay for the loss
of the animals which have been killed or products of
animal origin destroyed in accordance with Article 12(2)
and paragraph 1(a) and (c) of this Article’.

VI. UNLAWFUL STATE AID

A. Introduction

43. It is also appropriate to clarify the position as to State aid
which may have been unlawfully granted in the past
towards TSE and BSE test costs or the disposal of fallen
stock and slaughterhouse waste within the meaning of
these guidelines.

44. Unless specifically provided for in points 45, 46 and 47 of
these guidelines, unlawful aid within the meaning of
Article 1(f) of Regulation (EC) No 659/1999 (1) will be
assessed in accordance with the rules and guidelines
applicable at the time when the aid has been granted.

B. TSE and BSE tests

45. As to unlawful State aid towards the costs of TSE and BSE
tests granted before the date of application of
these
guidelines, and without prejudice to compliance with
the Commission
other provisions of Community law,

will evaluate the compatibility of such aid in line with
point 11.4 of the agriculture guidelines and its practice
since 2001 of accepting such aid of up to 100 %.

C. Fallen stock

in point 11.4. of

46. As to State aid towards fallen stock, the Commission has
so far not clearly defined its policy, notably as to the
relation between rules for the fight against diseases, as
set out
the agriculture guidelines,
allowing State aid up to 100 %, on the one hand, and
the application of
the polluter pays principle and the
rules for aid to waste treatment on the other hand.
Therefore, as to unlawful State aid towards the costs of
the removal and destruction of fallen stock granted at the
level of production, processing and marketing of animals
before the date of application of these guidelines, and
without prejudice to compliance with other provisions of
Community law, the Commission will authorise State aid
of 100 % towards such costs.

D. Slaughterhouse waste

47. As to State aid for slaughterhouse waste, a series of indi-
vidual decisions have been taken by the Commission since
January 2001, authorising State aid of up to 100 % for the
specific risk material, meat and
cost of disposal of
bonemeal, and animal
feed containing such products,
which had to be disposed of as a consequence of new
Community legislation on TSEs. These decisions were in
particular based on point 11.4 of
agriculture
the
guidelines,
the short-term character of
taking note of
these aids, and of the need to respect the polluter pays
principle in the long run. Exceptionally, the Commission
such State aid is also granted to
has accepted that
operators other than those active in the production of
live animals, for example slaughterhouses. For unlawful
aid granted before the end of 2002 for comparable costs
in relation to new Community legislation on TSEs, and
without prejudice to compliance with other provisions of
Community law,
the Commission will apply the same
principles.

VII. LEGAL BASIS

48. State aid falling under Article 87(1) of the Treaty which
fulfils the criteria set out in these guidelines can benefit
from the derogation provided for by Article 87(3)(c) of the
Treaty because it facilitates the development of the agri-
cultural sector, and does not adversely affect
trading
conditions to an extent contrary to the common interest.
The Commission considers that such aids contributes in
particular to the protection of human and animal health,
and to the protection of the environment.

VIII. NOTIFICATION AND REPORTS

(1) Council Regulation (EC) No 659/1999 of 22 March 1999 laying
down detailed rules for the application of Article 93 of the EC
Treaty (OJ L 83, 27.3.1999, p. 1).

49. Notifications and annual reports are to be undertaken in
line with the rules set out in point 23 of the agriculture
guidelines.

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IX. PERIOD OF APPLICATION AND PROPOSALS FOR APPRO-

PRIATE MEASURES

A. Application

50. The Commission will apply these guidelines to new State
aid, including pending notifications from Member States,
from 1 January 2003.

B. Proposals for appropriate measures

51. In accordance with Article 88(1) of

the
Commission proposes to Member States to amend their
existing aid schemes relating to State aid covered by
these guidelines to conform to these guidelines by 31
December 2003 at the latest.

the Treaty,

52. Member States are invited to confirm that they accept
these proposals for appropriate measures in writing by
31 March 2003 at the latest.

53. In the event

that a Member State fails to confirm its
acceptance in writing before that date, the Commission
will apply Article 19(2) of Regulation (EC) No 659/1999
and,
initiate the proceedings referred to in
that provision.

if necessary,

C. Expiry

54. These guidelines shall apply until 31 December 2013.
the Commission
After consulting the Member States,
may amend them before that date on the basis of
important competition policy considerations, or agri-
cultural of human and animal health policy considerations,
or in order to take account of other Community policies
or international commitments.

Notice as provided for in Article 7(8) of Commission Regulation (EC) No 1148/2001 relating to the
establishment of administrative cooperation between the Czech Republic and the European
Community

(Published under Article 7(8) of Commission Regulation (EC) No 1148/2001 (OJ L 156, 13.6.2001, p. 9))

(2002/C 324/03)

The Commission hereby states that the Czech Republic has sent all the relevant information on the
checking operations referred to in Commission Regulation (EC) No 902/2002, as amended by Regulation
(EC) No 1998/2002, under the administrative cooperation provided for in Article 7(8) of Commission
Regulation (EC) No 1148/2001, as amended by Regulation (EC) No 2379/2001, and established between
the Czech Republic and the European Community.